SOA Exam P Sample Question 49
Study guide: Exam P-1
An insurance company sells a one-year automobile policy with a deductible of 2. The probability that the insured will incur a loss is 0.05. If there is a loss, the probability of a loss of amount N is K/N, for N=1, \dots, 5 and K a constant. These are the only possible loss amounts and no more than one loss can occur.
Calculate the expected payment for this policy.
- A) 0.031
- B) 0.066
- C) 0.072
- D) 0.110
- E) 0.150
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