Financial Markets and Institutions (6th Edition) Saunders
a) In the context of Property and Liability insurance, explain the differences between low-severity, high frequency lines and high-severity, low-frequency lines. For which of these lines will insurance companies charge a higher premium and why?
b) In the context of Property and Liability insurance, explain the differences between long tail and short tail lines. For which of these lines will insurance companies charge a higher premium and why?