SOA Exam FAM Sample Question 31
Study guide: Exam FAM
A company insures a fleet of vehicles. Aggregate losses have a compound Poisson distribution. The expected number of losses is 20. Loss amounts, regardless of vehicle type, have exponential distribution with \theta = 200.
To reduce the cost of the insurance, two modifications are to be made:
(i) A certain type of vehicle will not be insured. It is estimated that this will reduce loss frequency by 20%.
(ii) A deductible of 100 per loss will be imposed.
Calculate the expected aggregate amount paid by the insurer after the modifications.
- A) 1600
- B) 1940
- C) 2520
- D) 3200
- E) 3880
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