An automobile insurance company sells an insurance policy with an annual premium of $720. Based on data from past claims, the company has calculated…

Published by admin at October 30, 2023

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An automobile insurance company sells an insurance policy with an annual premium of $720. Based on data from past claims, the company has calculated the following probabilities:

An average of 1 in 70 policy holders will file a claim of $9500.

An average of 1 in 30 policy holders will file a claim of $5200.

An average of 1 in 20 policy holders will file a claim of $1300.

What is the expected value to the company for each policy sold?

An automobile insurance company sells an insurance policy with an annual premium of $720. Based on data from past claims, the company has calculated…

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