NSURING RISK IN NATURE AND INDUSTRY1. Explain why using deterministic models for catastrophe loss modelling can understate the potential risk.________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________(5 marks)2. Describe what is meant by moral hazard in insurance. What can insurance companies do to reduce its occurrence? Give an example of a potential moral hazard issue outside of the insurance area.________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________(5 marks)3. Explain …
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