SOA Exam FAM Sample Question 59
Study guide: Exam FAM
A risk has a loss amount that has a Poisson distribution with mean 3.
An insurance policy covers the risk with an ordinary deductible of 2. An alternative insurance policy replaces the deductible with coinsurance \alpha, which is the proportion of the loss paid by the policy, so that the expected cost remains the same.
Calculate \alpha.
- A) 0.22
- B) 0.27
- C) 0.32
- D) 0.37
- E) 0.42
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