SOA Exam FAM Sample Question 1
Study guide: Exam FAM
You are given:
(i) The number of claims has a Poisson distribution.
(ii) Claim sizes have a Pareto distribution with parameters \theta = 0.5 and \alpha = 6
(iii) The number of claims and claim sizes are independent.
(iv) The observed average total payment should be within 2% of the expected average total payment 90% of the time.
Calculate the expected number of claims needed for full credibility.
- A) Less than 7,000
- B) At least 7,000, but less than 10,000
- C) At least 10,000, but less than 13,000
- D) At least 13,000, but less than 16,000
- E) At least 16,000
Answer this question and see the worked solution