7Claims for a group follow a lognormal distribution with μ = 7, σ = 1.2. Claim counts follow a Poisson distribution. The manual premium is 20,000 per insured. 3356 claims are observed, with average...

7 Claims for a group follow a lognormal distribution with μ = 7, σ = 1.2. Claim counts follow a Poisson distribution. The manual premium is 20,000 per insured. 3356 claims are observed, with average aggregate claims per insured of 18,000. Classical credibility methods are used to determine the credibility premium. The standard for full credibility is set so that the aggregate losses are within 5% of expected losses with probability p. Based on this standard, the credibility premium is 18,500. Determine p.

Jun 02, 2022
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