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Homework_Assignment_6

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

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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.

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