3. An insurer has a pool of 100 policyholders. Each policyholder has a 10% chance of...
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3. An insurer has a pool of 100 policyholders. Each policyholder has a 10% chance of having a loss. When a loss occurs, the loss distribution X is uniformly distributed on (0,10). All losses are independent. In each of the following cases, calculate the expected cost for the insurer for all 100 policies. Hint: Consider X* = 0.9(No Loss) + 0.1(X) and Y = 100X*. (a) no deductible; no limit; no coinsurance. (b) d = 1; no limit; no coinsurance. 3. An insurer has a pool of 100 policyholders. Each policyholder has a 10% chance of having a loss. When a loss occurs, the loss distribution X is uniformly distributed on (0,10). All losses are independent. In each of the following cases, calculate the expected cost for the insurer for all 100 policies. Hint: Consider X* = 0.9(No Loss) + 0.1(X) and Y = 100X*. (a) no deductible; no limit; no coinsurance. (b) d = 1; no limit; no coinsurance.
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