Question

NEED HELP! ASAP! INSURANCE??

Its about Risk Pooling, they give me a scenario about someone leading men into war in ancient Rome.

Here is the information the centurion has given to you:

• He commands 10 units, made up of 10 men each.

• The yearly salary of his men is 225 denarii (silver coins).

• The fund ONLY provides support for the families of soldiers who were killed in battle or who died of their battle wounds.

• Based on army records for the last 10 years, the legion will lose about 5% of its men each year; 2% from battle wounds and 3% from illnesses unrelated to battle.

• These records reflect that this legion has been located far from front lines of battle for several years. An average burial for a soldier costs 50 denarii.

* Remember, troops are expected to contribute to a fund that would pay each soldier’s burial expenses and help support the family for two years following the soldier’s death in battle.

1. How many TOTAL men does the group lose per year in this scenario?

2. How many of those men are covered under the requirement?

3. In any given year, how much TOTAL money do the men have to place in the fund to cover the burials AND two years of lost income for their fellow warriors who will die in battle?

4. How much does each soldier have to put into the fund each year?

5. What do you think would happen to these numbers if the Legion was called to the front lines? What does this do to the risk pool?

Answer 1

The centurion commands 100 soldiers with an expected death rate of 5% annually. To cover the costs of burials and lost income for the deceased soldiers, each of the 100 soldiers would need to contribute 11 denarii per year to the fund. If the legion were assigned to the front lines, the increased risk would necessitate higher contributions.

Step-by-step explanation:

Calculating the Risk Pooling Fund for a Roman Legion

The centurion commands 100 soldiers (10 units each composed of 10 men). With an annual death rate of 5%, we expect 5 soldiers to die each year. Of these, 2% are from battle wounds, which means 2 soldiers will be covered by the fund (since the 3% dying from illnesses unrelated to battle are not covered).

For the burials and two years of lost income of each soldier who died in battle, considering that the annual salary is 225 denarii and the burial costs 50 denarii, the fund must collect a total of (2 soldiers * (50 denarii + 2 * 225 denarii)) = 1,100 denarii every year.

Since there are 100 soldiers contributing to this fund, each soldier must contribute 11 denarii annually to cover this cost (1,100 denarii total fund requirement divided by 100 soldiers).

If the legion was called to the front lines, we could expect a higher rate of deaths due to increased battle activities, which would increase the required contributions to the fund, thereby increasing the risk for each soldier in the risk pool.