Question The Central Bank in a certain country is responsible for regulating life insurance companies and deciding how much capital they need to hold on their balance sheets for insurance risks in respect of life insurance policies they sell. Insurance companies receive a fixed premium at the beginning of a new insurance contract but face an uncertain amount of insurance claims over a year. Because of these fixed premiums but uncertain claims, insurance companies need to hold capital to meet future insurance claims. The risk management approach taken by the Central Bank is based on three principles: to set capital requirements based on the age of the insured person the capital required would then be a certain amount per $1 million of life assurance benefit sold for people of that age III. that the capital to be held by the insurance company should be enough to pay annual insurance claims in 199 out of every 200 years. I. II. The Central Bank collects data from six different insurance companies on the amount of life assurance claims they have paid per $1 million of life assurance sold to policyholders of different ages (between 30 and 55) in the last year. (c) Construct R code to produce a simple linear regression model using this data and a scatterplot of the data plus the regression line.

MATLAB: An Introduction with Applications
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Chapter1: Starting With Matlab
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Question
The Central Bank in a certain country is responsible for regulating life insurance companies
and deciding how much capital they need to hold on their balance sheets for insurance risks
in respect of life insurance policies they sell. Insurance companies receive a fixed premium
at the beginning of a new insurance contract but face an uncertain amount of insurance
claims over a year. Because of these fixed premiums but uncertain claims, insurance
companies need to hold capital to meet future insurance claims. The risk management
approach taken by the Central Bank is based on three principles:
I.
to set capital requirements based on the age of the insured person
II. the capital required would then be a certain amount per $1 million of life assurance
benefit sold for people of that age
that the capital to be held by the insurance company should be enough to pay
annual insurance claims in 199 out of every 200 years.
III.
The Central Bank collects data from six different insurance companies on the amount of life
assurance claims they have paid per $1 million of life assurance sold to policyholders of
different ages (between 30 and 55) in the last year.
(c) Construct R code to produce a simple linear regression model using this data and a
scatterplot of the data plus the regression line.
Transcribed Image Text:Question The Central Bank in a certain country is responsible for regulating life insurance companies and deciding how much capital they need to hold on their balance sheets for insurance risks in respect of life insurance policies they sell. Insurance companies receive a fixed premium at the beginning of a new insurance contract but face an uncertain amount of insurance claims over a year. Because of these fixed premiums but uncertain claims, insurance companies need to hold capital to meet future insurance claims. The risk management approach taken by the Central Bank is based on three principles: I. to set capital requirements based on the age of the insured person II. the capital required would then be a certain amount per $1 million of life assurance benefit sold for people of that age that the capital to be held by the insurance company should be enough to pay annual insurance claims in 199 out of every 200 years. III. The Central Bank collects data from six different insurance companies on the amount of life assurance claims they have paid per $1 million of life assurance sold to policyholders of different ages (between 30 and 55) in the last year. (c) Construct R code to produce a simple linear regression model using this data and a scatterplot of the data plus the regression line.
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