The claims department at Wise Insurance company believes thatyouner drivers have
ID: 2914775 • Letter: T
Question
The claims department at Wise Insurance company believes thatyouner drivers have more accidents and, therefore, should becharged higher insurance rates. Investigating a sample of 1,200Wise poslicy holders revealed the following breakdown on whether aclaim had been filed in the last three years and the age of thepolicyholder. Is it reasonable to conclude that there is arelationship between the age of the policyholder and whether or notthe person filed a claim? Use the .05 significancelevel. AgeGroup NoClaim Claim 16 up to25 170 74 25 up to40 240 58 40 up to55 400 44 55 orolder 190 24 Total 1,000 200 The claims department at Wise Insurance company believes thatyouner drivers have more accidents and, therefore, should becharged higher insurance rates. Investigating a sample of 1,200Wise poslicy holders revealed the following breakdown on whether aclaim had been filed in the last three years and the age of thepolicyholder. Is it reasonable to conclude that there is arelationship between the age of the policyholder and whether or notthe person filed a claim? Use the .05 significancelevel. AgeGroup NoClaim Claim 16 up to25 170 74 25 up to40 240 58 40 up to55 400 44 55 orolder 190 24 Total 1,000 200Explanation / Answer
Observed
No claim
Claim
Total
16 to 25
170
74
244
25 to 40
240
58
298
40 to 55
400
44
444
55 or older
190
24
214
1000
200
1200
Expected
No claim
Claim
16 to 25
203.3333333
40.66666667
25 to 40
248.3333333
49.66666667
40 to 55
370
74
55 or older
178.3333333
35.66666667
Observed
Expected
Oi-Ei
(Oi-Ei)^2
(Oi-Ei)^2/Ei
170
203.3333333
-33.33333333
1111.111111
5.464480874
240
248.3333333
-8.333333333
69.44444444
0.279642058
400
370
30
900
2.432432432
190
178.3333333
11.66666667
136.1111111
0.763239875
74
40.66666667
33.33333333
1111.111111
27.32240437
58
49.66666667
8.333333333
69.44444444
1.398210291
44
74
-30
900
12.16216216
24
35.66666667
-11.66666667
136.1111111
3.816199377
Total
53.63877144
Observed
No claim
Claim
Total
16 to 25
170
74
244
25 to 40
240
58
298
40 to 55
400
44
444
55 or older
190
24
214
1000
200
1200
Expected
No claim
Claim
16 to 25
203.3333333
40.66666667
25 to 40
248.3333333
49.66666667
40 to 55
370
74
55 or older
178.3333333
35.66666667
Observed
Expected
Oi-Ei
(Oi-Ei)^2
(Oi-Ei)^2/Ei
170
203.3333333
-33.33333333
1111.111111
5.464480874
240
248.3333333
-8.333333333
69.44444444
0.279642058
400
370
30
900
2.432432432
190
178.3333333
11.66666667
136.1111111
0.763239875
74
40.66666667
33.33333333
1111.111111
27.32240437
58
49.66666667
8.333333333
69.44444444
1.398210291
44
74
-30
900
12.16216216
24
35.66666667
-11.66666667
136.1111111
3.816199377
Total
53.63877144
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