Poisson distribution is applicable to rare events.
The expected number of deaths, denoted by $\lambda$, is calculated as $400 \times 0.007 = 2.8$.
The Poisson formula is given by:
\[P(X = r) = \frac{e^{-\lambda} \lambda^r}{r!}\]
Substituting $\lambda = 2.8$ and $r = 2$ into the formula yields:
\[P(X = 2) = \frac{e^{-2.8}.(2.8)^2}{2!} = \frac{0.0608.7.84}{2} = \frac{0.476672}{2} = 0.238336 \approx \boxed{0.238}\]