SOA Exam FAM Sample Question 110
Study guide: Exam FAM
In Year 1, individual losses follow the Pareto distribution with \alpha = 3 and \theta = 1200.
Losses experience 10% inflation in Year 2.
An insurance policy covering these losses has a 250 deductible, a 700 policy limit, and 70% coinsurance.
Calculate the expected cost per payment for the policy in Year 2.
- A) 205
- B) 218
- C) 313
- D) 344
- E) 409
Answer this question and see the worked solution