Answer to Question #316210 in Economics of Enterprise for Naafu Peter

Question

1). For each risk in class 2, the number of claims per year follows a binomial distribution with mean

m = 8 and q = 0.55.

Find the Buihlmann credibility?

Answer 1

You are given: >A portfolio of independent risks is divided into two classes. Each class contains the same number of risks. For each risk in Class 1, the number of claims per year follows a Poisson distribution with mean 5. â–º For each risk in Class 2, the number of claims per year follows a binomial distribution with m = 8 and q = 0.55. A randomly selected risk has 2 claims in Year 1, 3 claims in Year 2 and four claims in Year 3.