CAS Exam MAS-II Fall 2018, Question 4
Study guide: Exam MAS-II
An insurance company writes automobile policies in various regions across the country. You are given the following information:
- The company wrote 2,500,000 policies countrywide with a pure premium of 960.
- In Region X, this company wrote 72,000 policies with a pure premium of 530.
- The expected variance of the pure premium within each region is 1,800,000,000.
- The variance of the region pure premium means is 45,000.
- Within each region, the losses for each automobile policy are identically distributed.
Calculate the credibility-weighted pure premium for Region X using Bühlmann credibility.
- A) Less than 610
- B) At least 610, but less than 640
- C) At least 640, but less than 670
- D) At least 670, but less than 700
- E) At least 700
Answer this question and see the worked solution
Concepts tested
- Bühlmann Credibility
- Expected Value of Process Variance
- Variance of Hypothetical Means
- Pure Premium
- Complement of Credibility