An insurance company has a portfolio of 10,000 car insurance policies. The probability of any given policyholder
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Question:
An insurance company has a portfolio of 10,000 car insurance policies. The probability of any given policyholder filing a claim in a given year is 0.05. The company has a reinsurance agreement with a third party that will cover 90% of any losses above a certain deductible. The deductible is $10,000 per claim. What is the expected loss for the insurance company in a given year, taking into account the reinsurance agreement?
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