Given a pure premium of $1,300 and a loading percentage of 35 percent, which statement is incorrect?

To determine why the gross premium is correctly calculated, the first step is to understand the components of gross premium. The gross premium is calculated by adding the pure premium to the loading amount. In this case, the pure premium is $1,300, and the loading percentage is 35%.

The loading amount is calculated by multiplying the pure premium by the loading percentage:

Loading Amount = Pure Premium × Loading % = $1,300 × 0.35 = $455.

Adding this loading amount to the pure premium gives us the gross premium:

Gross Premium = Pure Premium + Loading Amount = $1,300 + $455 = $1,755.

This calculation shows that the statement claiming the gross premium is $2,145 is incorrect.

The other statements can be validated as correct with the following reasoning:

• The loss ratio is calculated as the pure premium divided by the gross premium. Given that the gross premium is $1,755, the loss ratio is 1,300 / 1,755, which approximates to around 74%—confirming that the original context may contain some rounding or additional context on loss ratios.

• The expense ratio, representing the loading as a percentage of the gross premium, aligns with the