SOA Exam FAM Sample Question 109
Study guide: Exam FAM
You are given the following for a class of auto insurance:
(i) For a large group of auto insurance companies, the recent annual loss per insured for this class has a mean of 800 and a standard deviation of 300.
(ii) Last year, Company Z had 150 insureds in this class with an average loss per insured of 750.
The full credibility standard is set so that the observed annual loss per insured is within 5% of the true value with probability 0.95.
Calculate Company Z's net premium for this class using limited fluctuation credibility and the normal approximation.
- A) 753
- B) 758
- C) 761
- D) 769
- E) 789
Answer this question and see the worked solution