SOA Exam FAM Sample Question 8
Study guide: Exam FAM
You are given the following information about a commercial auto liability book of business:
(i) Each insured's claim count has a Poisson distribution with mean \lambda, where \lambda has a gamma distribution with \alpha = 1.5 and \theta = 0.2.
(ii) Individual claim size amounts are independent and exponentially distributed with mean 5000.
(iii) The full credibility standard is for aggregate losses to be within 5% of the expected with probability 0.90.
Calculate the expected number of claims required for full credibility using limited fluctuated credibility.
- A) 2165
- B) 2381
- C) 3514
- D) 7216
- E) 7938
Answer this question and see the worked solution
Concepts tested
- Limited Fluctuation Credibility
- Full Credibility Standard
- Negative Binomial Distribution
- Aggregate Loss Model