Problem 1. An employer self-insures a life insurance program with the following two characteristics: . Given that a claim has X occurred, the claim amount is 2,000 with probability 0.3 and 3,000 with probability 0.7. The number of annual claims N has the distribution P(N = 0) = 0.1, P(N = 1) = 0.2, P(N = 2) = 0.3, P(N = 3) = 0.25, P(N = 4) = 0.15. The employer purchases aggregate stop-loss coverage that limits the employer's annual claims cost to 5,000. The aggregate stop-loss coverage costs 1,900. Determine the employer's expected annual cost of the program, including the cost of stop-loss coverage. (This is similar to Exercise 9.24, page 165 of the text.) Problem 1. An employer self-insures a life insurance program with the following two characteristics: . Given that a claim has X occurred, the claim amount is 2,000 with probability 0.3 and 3,000 with probability 0.7. The number of annual claims N has the distribution P(N = 0) = 0.1, P(N = 1) = 0.2, P(N = 2) = 0.3, P(N = 3) = 0.25, P(N = 4) = 0.15. The employer purchases aggregate stop-loss coverage that limits the employer's annual claims cost to 5,000. The aggregate stop-loss coverage costs 1,900. Determine the employer's expected annual cost of the program, including the cost of stop-loss coverage. (This is similar to Exercise 9.24, page 165 of the text.)