Finance 431Medical Malpractice Class ProjectNames:________________________________________________Form into groups of 2 students. Try to work with someone you haven’t worked with before. For questions 1 - 4, assume the following: - Step Factors of 30%, 55%, 70%, 85%, 95% - Tail Charge of 2.0 x Expiring Mature CM premium - You are at a Mature CM level at the 5th year into a CM program - Annual premium trend of 10% - Occurrence Premium in 2008 of $10,0001. If a doctor graduates medical school in 2008, begins practicing medicine in that year, and wants to buy CM coverage from The Doctors Company what would he/she pay in total for coverage in the first 5 years of practice?2. If the same doctor chose to buy occurrence coverage what would he/she pay in total for coverage in the first 5 years of practice?3. Suppose the same doctor bought five years of CM coverage from The Doctors Company and then decided to switch to Medical Liability Mutual Insurance Company on a first year CM basis, would the doctor need to buy a Tail policy? If so, what would the charge be?4. Suppose the same doctor bought five years of occurrence coverage from The Doctors Company and then decided to switch to Medical Liability Mutual Insurance Company on a first year CM basis, would the doctor need to buy a Tail policy? If so, what would the charge be?Use the following claims log to answer the following questions.Claim # Occ. Date Rept. Date1 1/1/01 7/1/042 7/1/02 8/1/043 3/1/03 8/1/044 4/1/03 5/1/035 7/1/06 7/1/076 7/1/06 12/1/097 1/1/07 12/1/098 1/1/07 7/1/079 12/31/07 1/1/085. What claims are covered by the following policies:a. Occurrence Policy covering from 1/1/06 – 12/31/06b. CM Policy covering from 1/1/07 – 12/31/07 with a retroactive date of 1/1/03c. 1st Year CM Policy effective from 1/1/03 – 12/31/03d. Tail Policy purchased 1/1/07 for a doctor retiring from practice who had been purchasing CM coverage from 1/1/02 –
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