SOA Exam FAM Sample Question 91
Study guide: Exam FAM
You are given:
(i) The number of claims follows a Poisson distribution.
(ii) The number of claims and claim severity are independent.
(iii) The severity distribution is:
| Claim Size | Probability |
|---|---|
| 5 | 0.60 |
| 40 | 0.35 |
| 60 | 0.05 |
Calculate the expected number of claims needed so the total cost of claims is within 5% of the expected with probability 0.90.
- A) 511
- B) 726
- C) 1083
- D) 2044
- E) 3126
Answer this question and see the worked solution