Question: How do I set up a Monte Carlo simulation (using 5000 iterations) with the following: -Homeowners insurance policy with a $7,000 deductible, so that if
How do I set up a Monte Carlo simulation (using 5000 iterations) with the following:
-Homeowners insurance policy with a $7,000 deductible, so that if I have a claim and the damage is less than $7000 I pay out of pocket. If the damage is greater than $7000 I pay the first $7000 and the insurance pays the remaining balance. In the current year there is a probability of .079 that I will have a claim. If I have a claim for damages on your home, the damage amount is normally distributed with a mean of $9000 and a standard dev of $4000.
-I need to find out how often the claim was filed and how often the claim amount met or exceeded the deductible (showing both as percentages of the 5000 interactions).
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