SOA Exam FAM Sample Question 23
Study guide: Exam FAM
A group dental policy has a negative binomial claim count distribution with mean 300 and variance 800.
Ground-up severity is given by the following table:
| Severity | Probability |
|---|---|
| 40 | 0.25 |
| 80 | 0.25 |
| 120 | 0.25 |
| 200 | 0.25 |
You expect severity to increase 50% with no change in frequency. You decide to impose a per claim deductible of 100.
Calculate the expected total claim payment after these changes.
- A) Less than 18,000
- B) At least 18,000, but less than 20,000
- C) At least 20,000, but less than 22,000
- D) At least 22,000, but less than 24,000
- E) At least 24,000
Answer this question and see the worked solution