Exam MAS-I Practice Question 75

Study guide: Exam MAS-I

Ground-up losses X are exponential with mean 1,000, so E[X \wedge x] = 1{,}000\left(1 - e^{-x/1{,}000}\right). A policy has an ordinary deductible of 250, a maximum covered loss of 3,000, and 75% coinsurance.

Part a (1 point)

Calculate the expected payment per loss, E[Y^L]. Give your answer to the nearest whole number.

Part b (1 point)

Calculate the expected payment per payment, E[Y^P]. Give your answer to the nearest whole number.

Part c (1 point)

All losses inflate by 10%, while the deductible, maximum covered loss and coinsurance stay the same. Calculate the new expected payment per loss. Give your answer to the nearest whole number.

Answer this question and see the worked solution

Concepts tested

• Coverage Modifications
• Limited Expected Value
• Exponential Distribution
• Deductible
• Coinsurance
• Payment Random Variable
• Inflation

More questions from this set

• Exam MAS-I Practice Question 74
• Exam MAS-I Practice Question 76