An insurer writes a large book of home warranty policies. You are given the following information regarding claims filed by insureds against these policies: (i) A maximum of one claim may be filed per year. (ii) The probability of a claim varies by insured, and the claims experience for each insured is independent of every other insured. (iii) The probability of a claim for each insured remains constant over time. (iv) The overall probability of a claim being filed by a randomly selected insured in a year is 0.10. (v) The variance of the individual insured claim probabilities is 0.01. An insured selected at random is found to have filed 0 claims over the past 10 years. Determine the Bühlmann credibility estimate for the expected number of claims the selected insured will file over the next 5 years. (A) 0.04 (B) 0.08 (C) 0.17 (D) 0.22 (E) 0.25
An insurer writes a large book of home warranty policies. You are given the following information regarding claims filed by insureds against these policies: (i) A maximum of one claim may be filed per year. (ii) The probability of a claim varies by insured, and the claims experience for each insured is independent of every other insured. (iii) The probability of a claim for each insured remains constant over time. (iv) The overall probability of a claim being filed by a randomly selected insured in a year is 0.10. (v) The variance of the individual insured claim probabilities is 0.01. An insured selected at random is found to have filed 0 claims over the past 10 years. Determine the Bühlmann credibility estimate for the expected number of claims the selected insured will file over the next 5 years. (A) 0.04 (B) 0.08 (C) 0.17 (D) 0.22 (E) 0.25
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
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Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Transcribed Image Text:An insurer writes a large book of home warranty policies. You are given the following
information regarding claims filed by insureds against these policies:
(i)
A maximum of one claim may be filed per year.
The probability of a claim varies by insured, and the claims experience for each
insured is independent of every other insured.
(ii)
(ii)
The probability of a claim for each insured remains constant over time.
(iv)
The overall probability of a claim being filed by a randomly selected insured in a year
is 0.10.
(v)
The variance of the individual insured claim probabilities is 0.01.
An insured selected at random is found to have filed 0 claims over the past 10 years.
Determine the Bühlmann credibility estimate for the expected number of claims the selected
insured will file over the next 5 years.
(A)
0.04
(B)
0.08
(C)
0.17
(D)
0.22
(E)
0.25
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