An insurance company holds fraud insurance policies on 6,000 firms. In any given year the probability...

An insurance company holds fraud insurance policies on 6,000 firms. In any given year the probability that any single policy will result in a claim is 0.001. Find the probability that at least 3 claims are made in a given year. Use the Poisson approximation to the binomial distribution.

Expert Solution

Average = 6000*0.001 = 6 claims per year

Hence,

P(Atleast 3 claims)

= 1 - P(Less than 3 claims)

= 0.938

orchestra answered 2 years ago

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