i) The proportion of incidents in which the loss is borne entirely by the policy holder. The proportion of incidents which will involve the direct insurer as well as the reinsurer. The average loss met personally by the policy holders. The average amount paid by the direct insurer in respect of all losses. The average amount paid by the reinsurer in respect of claims which involve a reinsurance payment.
i) The proportion of incidents in which the loss is borne entirely by the policy holder. The proportion of incidents which will involve the direct insurer as well as the reinsurer. The average loss met personally by the policy holders. The average amount paid by the direct insurer in respect of all losses. The average amount paid by the reinsurer in respect of claims which involve a reinsurance payment.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:(a)
Claim sizes in a portfolio of an insurance company for the present year appear
to follow a Pareto distribution with mean claim size of £1500 and standard
deviation of £3500. It is expected that, next year, all claims will be inflated by
10% and the company's retention under an excess of loss treaty (currently
£9000) will be increased by the same percentage. In addition, a policy
excess of £150 will also be introduced. Estimate the following quantities.
(i)
(ii)
(iii)
(iv)
(v)
The proportion of incidents in which the loss is borne entirely by the
policy holder.
The proportion of incidents which will involve the direct insurer as well
as the reinsurer.
The average loss met personally by the policy holders.
The average amount paid by the direct insurer in respect of all losses.
The average amount paid by the reinsurer in respect of claims which
involve a reinsurance payment.
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