2016.Spring #26 a.)

AdamDougallAdamDougall
in Freihaut.Reins

I interpreted the table as there is a:
1% chance of a claim =113K,
1% + 4% = 5% chance of a claim >= 43k
1% + 4% + 5% = 10% chance of a claim >= 30k

so I used 30k in my calculation for the 10-10 rule. But I see the mark scheme used 20k.

Have they made a mistake or have I?

Comments

  • Staff - ACStaff - AC

    I think this able matched probabilities with aggregate loss outcomes. So, these are not independent events, but rather the total loss outcome in each case. So, they go straight to the 10% prob, because that is the least acceptable by the test.

  • AdamDougallAdamDougall

    yeah ok, I wondered if this were the case. I assumed they were independent since they summed to 1. Hopefully they'd accept either answer given the ambiguity. I was beginning to question whether I misunderstood percentiles

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