An Insurance company that insures cars figured the distribution of individual claims for year 2008 as...

      

Transcribed Image Text:

An Insurance company that insures cars figured the distribution of individual claims for year 2008 as follows: Pr[X=2000]=2*Pr[X=4000]=3*Pr[X=6000] . The company has a supreme cover limit in claims equal to 6.000 . For year 2009 there is prediction of inflation with rate 5% (rate of increase in spare parts and car repairs). Calculate the expected percentage change in severity of claims the Company will be charged with between 2008 and 2009. " Compare and comment the relation between inflation and the percent of change in severity. An Insurance company that insures cars figured the distribution of individual claims for year 2008 as follows: Pr[X=2000]=2*Pr[X=4000]=3*Pr[X=6000] . The company has a supreme cover limit in claims equal to 6.000 . For year 2009 there is prediction of inflation with rate 5% (rate of increase in spare parts and car repairs). Calculate the expected percentage change in severity of claims the Company will be charged with between 2008 and 2009. " Compare and comment the relation between inflation and the percent of change in severity.

Answer rating: 100% (QA)

To take care of this issue well initially find the probabilities for each guarantee sum in 2008 then ... View the full answer