CAS Exam MAS-II Spring 2019, Question 3
Study guide: Exam MAS-II
An insurance company is determining limited-fluctuation credibility standards for its automobile losses. You are given the following information:
- The company selects all of its credibility standards to be the number of claims at which there is a 99% probability that the observed amount is within 10% of the mean.
- The standard for full credibility for aggregate loss is 4,800 claims.
- Claim frequency follows a Poisson distribution.
- Claim frequency and claim severity are independent.
Calculate the limited-fluctuation credibility standard for claim severity.
- A) Less than 4,100
- B) At least 4,100, but less than 4,300
- C) At least 4,300, but less than 4,500
- D) At least 4,500, but less than 4,700
- E) At least 4,700
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