exercise:5a42bd4a00: Difference between revisions
From Stochiki
(Created page with "An insurer has classified a pool of policies into two classes: class A and class B. The probability of observing more than one claim during a single coverage period is zero fo...") |
No edit summary |
||
| Line 13: | Line 13: | ||
Determine the rate for class B policyholders assuming that the expected profit % is the same for all policies. | Determine the rate for class B policyholders assuming that the expected profit % is the same for all policies. | ||
< | <ul class="mw-excansopts"> | ||
<li>$12.16</li> | <li>$12.16</li> | ||
<li>$12.77</li> | <li>$12.77</li> | ||
| Line 19: | Line 19: | ||
<li>$26.09</li> | <li>$26.09</li> | ||
<li>$30.65</li> | <li>$30.65</li> | ||
</ | </ul> | ||
Latest revision as of 02:33, 18 March 2024
An insurer has classified a pool of policies into two classes: class A and class B. The probability of observing more than one claim during a single coverage period is zero for all policies and claim size is constant for all policies:
| Class | Number of Policyholders | Probability of Claim | Claim Size |
|---|---|---|---|
| A | 400 | 0.05 | 100 |
| B | 500 | 0.04 | 250 |
Using the normal approximation for aggregate losses, the insurer sets insurance rates at the lowest level that guarantees a profit 95% of the time.
Determine the rate for class B policyholders assuming that the expected profit % is the same for all policies.
- $12.16
- $12.77
- $13.31
- $26.09
- $30.65