An auto insurance company is analyzing the claim frequency on a block of 50 poli

Question

An auto insurance company is analyzing the claim frequency on a block of 50 policies. Historical data suggest that 10% of policyholders in this block will file at least one claim in the coming year. Let X-the number of policy holders in this block 3. Give the name of the distribution that best models X and the value(s) for the parameters of the distribution 4, what is the probability that more fewer than 8% of the policyholders in this block will file at least one claim in who will file at least one claim in the coming year. chosen. the coming year?

Explanation / Answer

Ans:

3)X has binomial distribution with n=50,p=0.1

4)8% of 50=4

P(X<=4)=50C0*0.10*0.950+50C1*0.11*0.949+50C2*0.12*0.948+50C3*0.13*0.947+50C4*0.14*0.946

or binomcdf(50,0.1,4)

=0.4312

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