CAS Exam 8 Fall 2015, Question 22
Study guide: Exam 9
An insurance company is exposed to three independent catastrophic risks in three different regions in a given year. More than one event can occur in a year but each event can only occur once in a year. Events have the following size and probability:
| Event | Loss Amount | Annual Probability of Occurrence |
|---|---|---|
| 1 | $10,000,000 | 0.10 |
| 2 | $15,000,000 | 0.05 |
| 3 | $35,000,000 | 0.02 |
Part a (2.25 points)
Calculate the Aggregate Exceedance Probabilities associated with the insurance company's exposure.
Part b (0.5 points)
Using a randomly generated number of 0.86, simulate the insured total loss.
Answer this question and see the worked solution