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The Delta Insurance Company wants to start insuring expensive art pieces. It has not done this before, but figures that these pieces have very good security and are probably a good risk, and the owners have lots of money to pay for insurance. Discuss how a managing general agency might be helpful for Bravo entering this business.

2. A homeowner calls its insurer to report that in the storm last night the electrical transformer on the utility pole fell off into her home and started a major fire in the 2d floor bathroom and below that in the kitchen. The home is insured for $400,000 replacement cost, plus the value of the personal property inside with the usually available limit of $200,000 (1/2 the value of the building). The insured will have to move out for 30 days until the area can be sealed off and then repairs begun.
a. Describe what information the insurer should seek.
b. Discuss what reserve should be set based on this first report of loss.
c. Discuss whether the insurer should request proof of loss.