1. ## propration word problems

Hi I am having a hard time understanding how to solveing these kind of problems, I am hoping that if I can get help with one the rest will come with more ease.

The problem is:

Three insurance companies agree to jointly insure a cargo ship for $38.6 Million. If insures A,B, and C allocate premiums received and accept the risk in the ratio 3:8:5, respectively: A) How will the annual premium of$900,000 be distributed?

B) What is the maximum claim exposure of each insurer?

2. Originally Posted by Crys
Hi I am having a hard time understanding how to solveing these kind of problems, I am hoping that if I can get help with one the rest will come with more ease.

The problem is:

Three insurance companies agree to jointly insure a cargo ship for $38.6 Million. If insures A,B, and C allocate premiums received and accept the risk in the ratio 3:8:5, respectively: A) How will the annual premium of$900,000 be distributed?

B) What is the maximum claim exposure of each insurer?

I can help you with the first one. The premium's going to be distributed with a ratio of 3:8:5, this means that there are 16 "parts" altogether.

If you divide \$900,000 by 16, you will obviously have $\frac{1}{16}$ of the whole amount. The first insurer will pay $\frac{3}{16}$ or the whole aount, the second $\frac{8}{16}$ etc.

Does this make sense?