Homework_Assignment_6 - Homework Assignment 6(1 For 2003...

Homework Assignment 6:
(1) For 2003, loss sizes follow a uniform distribution with f(x) = 1 / 2500, 0 < x < 2500.
Inflation of 3% impacts all losses uniformly from 2003 to 2004. In 2004 a deductible of
100 is applied to all losses. Determine the expected value of the claim payment in 2004
in the event that a loss is incurred. (Ans 1189.44)
(2)
Losses in 2003 follow a two-parameter Pareto distribution with α = 2 and θ = 5. Losses
in 2004 are uniformly 20% higher than in 2003. An insurance covers each loss subject to
a deductible of 10. Calculate the Loss Elimination Ratio in 2004.
(Ans 0.625)
(Recall that the parameter θ is a scale parameter.)
(3) Loss amounts in the year 2000 have the distribution function
(x/100)
2
, 0 ≤ x ≤ 100
F(x) =
1 , 100 < x
Losses are uniformly 10% higher in 2001.
An insurance policy reimburses losses subject to a deductible of 11 up to a maximum
reimbursement of 11.
Calculate the expected reimbursement for a loss in 2001. (Ans 10.74)
(4) A population is equally divided into two classes of drivers. The number of accidents per
individual driver is Poisson for all drivers.