1. Round off the figures in instances where calculations are applicable to a zero decimal.
2. The use of The Invigilator app is compulsory for ISR3702 examinations.
3. The QR code is provided in the separate enclosed document on this platform.
4. The examination rules enclosed in your examination timetable apply.
5. Answer all questions. Note that question 1 has 25 questions that count two marks each.
, Page 3 of 68 ISR3702
Confidential May/June 2024
Question 1 [50 marks]
Use the following information relating to the Taxi Association to answer the questions in this section:
Information about the insured
At its last board meeting, the Taxi Association added a requirement for operating in the industry. The
requirement is that every taxi owner must ensure it employs taxi drivers who have a death policy of at
least R20 000 sum assured. This decision was motivated by the fact that the board attended a risk
financing workshop where life insurance was discussed as part of risk financing. According to data
collected by the Taxi Association, a total of 100 000 applications from taxi drivers were submitted to the
Life Insurer. The board is currently investigating if the school-attending children of taxi drivers could be
insured for R15 000 sum assured. A maximum of ten children per driver will be insured by the Taxi
Association.
Information of the insured
The Life Insurer accepted all 100 000 applications from individual taxi drivers of the Taxi Association
without any proposed changes since all the required information was submitted. In addition, the Life
Insurer observed that 60% of the applications were received from female drivers who were 28 years of
age while the rest of the applications were received from male drivers who were 32 years of age.
The Life Insurer used the following information to underwrite the applications from individual taxi drivers:
(i) Underwriting
Applications received from male drivers were all substandard risks and subject to 3% premium loading.
Underwriting expenses were estimated at R88 900.
All the proposals were finalised within the standard turnaround times.
The applications were underwritten on an individual and not a group basis.
, Page 4 of 68 ISR3702
Confidential May/June 2024
Interest income was estimated at R96 300.
(ii) Actuarial information
Age Male deaths per 1 000 persons Female deaths per 1 000 persons
28 2,11 1,32
29 2,24 1,69
30 2,55 1,73
31 2,68 1,82
32 2,89 1,93
(iii) Accounting (actual figures)
Interest income R83 600
Underwriting expenses R76 400
Reinsurance commission received R68 000
1.1 The policyholder(s) in this case is/are _____.
a. taxi owners
b. taxi drivers
c. the Taxi Association
1.2 The expected total premium amount after the loading for both male and female drivers is _____. a.
R1 584 000
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