19. The typical claim X in an insurance portfolio has density function fx(x)=2x/10 for 0

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19. The typical claim X in an insurance portfolio has density function
fx(x)=2x/10 for 0<r<1000, and 0 otherwise.
The insurance company handling the claims has made an excess of loss
treaty with a reinsurer with excess level M 800. If Y represents the
part paid by the ceding company for the claim X, determine E(Y). If
claims inflation of 5% is expected for next year and the same reinsurance
treaty remains in effect, what will be the expected cost of a claim to the
ceding insurer?
Transcribed Image Text:19. The typical claim X in an insurance portfolio has density function fx(x)=2x/10 for 0<r<1000, and 0 otherwise. The insurance company handling the claims has made an excess of loss treaty with a reinsurer with excess level M 800. If Y represents the part paid by the ceding company for the claim X, determine E(Y). If claims inflation of 5% is expected for next year and the same reinsurance treaty remains in effect, what will be the expected cost of a claim to the ceding insurer?
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