SOA Exam P Sample Question 361
Study guide: Exam P-1
Auto accidents for an individual driver can result in annual losses of 0, 1000, 5000, 10,000, or 15,000 with probabilities 0.75, 0.12, 0.08, 0.04, and 0.01, respectively. An auto insurer offers a policy that insures individual drivers against such losses, subject to an annual deductible of 500.
The insurer charges an annual premium that exceeds its expected annual payment by 75 to provide for insurer expenses and profit.
Calculate the annual premium that the insurer charges.
- A)
870 - B)
945 - C)
1020 - D)
1070 - E)
1145
Answer this question and see the worked solution