SOA Exam P Sample Question 360
Study guide: Exam P-1
An insurance company surcharges a driver, based on the year of the driver's last accident, using the following table with the current year denoted by t:
| Year of Last Accident | t-1 |
t-2 |
t-3 |
t-4 |
|---|---|---|---|---|
| Surcharge | 20% | 15% | 10% | 5% |
The probability that a driver has at least one accident in any given year is 0.10, independent of the number of accidents in all other years.
Calculate the expected surcharge in year t for a driver who has been driving since the beginning of year t-4.
- A)
4.5\% - B)
5.0\% - C)
8.6\% - D)
10.0\% - E)
19.4\%
Answer this question and see the worked solution