An insurance policy has an ordinary deductible of 100 and a maximum covered loss of 10,000....

An insurance policy has an ordinary deductible of 100 and a maximum covered loss of 10,000. You observe the following six payments:
100 200 500 600 1000 5000
In addition, there are three payments at the limit. You ﬁt a single parameter Pareto distribution with θ = 50 to the ground up distribution using maximum likelihood. Determine the estimated parameterα.

Solutions

Expert Solution

X_i	log X_i	log (X_i /Ɵ)
100	4.605	0.0921
200	5.298	0.1060
500	6.215	0.1243
600	6.397	0.1279
1000	6.908	0.1382
5000	8.517	0.1703
Sum	37.940	0.7588

orchestra answered 1 year ago

Next > < Previous

Related Solutions

If a loss is not covered by a primary insurance policy, it might be covered by:

If a loss is not covered by a primary insurance policy, it might be covered by: An exclusion in the policy An ancillary form An excess insurance policy Statutory law An experience modification factor in a workers' compensation insurance policy is calculated based upon: Prior losses Future expected losses Payroll Credit worthinessAn employer with a lower experience modifier will pay:Less in premium than a similar employer More in premium than a similar employer The same in premium as a similar employee Twice as much in premium than a similar employer An insurance agent...

A insurance policy reimburses a loss X up to a maximum benefit of 1250. X has...

A insurance policy reimburses a loss X up to a maximum benefit of 1250. X has an exponential distribution with mean 1500. Calculate the median benefit for this policy. Answer to the nearest whole number.

A company has three buildings and the corresponding insurace: () building A is covered by a property Insurance of which maximum Indemnity is $10,000;

A company has three buildings and the corresponding insurace: () building A is covered by a property Insurance of which maximum Indemnity is $10,000; (l) building B is covered by a property insurance of which maximum indemnity is $5,000, and (1) building is covered by a valued policy of which sum insured is $10,000. Unfortunately, all three buldings were damanaged by a covered peril, and the value of each building decreases from $9116 to $1593. How much is the company...

With a certain medical insurance policy, the customer must first pay an annual $100 deductible, and...

With a certain medical insurance policy, the customer must first pay an annual $100 deductible, and then the policy covers 60% of the cost of dental work. The first dental insurance claims for a specific year submitted by a person are for two procedures. The first procedure cost $700, and the second procedure cost $990. How much, in total, will he need to pay for these procedures?

With a certain medical insurance policy, the customer must first pay an annual $100 deductible, and...

With a certain medical insurance policy, the customer must first pay an annual $100 deductible, and then the policy covers 80% of the cost of x-rays. The first insurance claims for a specific year submitted by a person are for two x-rays. The first x-ray cost $620, and the second x-ray cost $960. How much, in total, will he need to pay for these x-rays?

1. A health insurance policy pays 60 percent of physical therapycosts after a $100 deductible....

1. A health insurance policy pays 60 percent of physical therapy costs after a $100 deductible. In contrast, an HMO charges $19 per visit for physical therapy. How much would a person save with the HMO if he or she had 10 physical therapy sessions costing $35 each?A: Amount of savings = $2. The Kelleher family has health insurance coverage that pays 80 percent of out-of-hospital expenses after a $500 deductible per person. If one family member has doctor and...

Georgio has a health insurance policy that includes a deductible of $400 and a coinsurance of 20%.

Georgio has a health insurance policy that includes a deductible of $400 and a coinsurance of 20%. If her total is $6000, how much will her insurance pay?

Suzanne has no deductible on her health insurance policy she will tend to engage in a...

Suzanne has no deductible on her health insurance policy she will tend to engage in a lifestyle that is less healthy than a person with $1,200 insurance deductible this is said to be a problem of

Suppose you have purchased Home Owners Insurance. This insurance policy has a $5,000 deductible, so that...

Suppose you have purchased Home Owners Insurance. This insurance policy has a $5,000 deductible, so that if you have a claim and the damage is less than $5,000 you pay for it out of pocket. However, if the damage is greater than $5,000, you pay the first $5,000 and the insurance pays the rest. In the current year, there is a probability of 0.085 that you will have a claim. If you have a claim for damages on your home,...

Elise's health insurance policy has a deductible of $500, a $20 copayment on doctor visits, and...

Elise's health insurance policy has a deductible of $500, a $20 copayment on doctor visits, and coinsurance of 10% on all expenses other than those for which there are copayments. She visited the doctor four times last year (doctor's fee is $40 per visit) and underwent a surgery that cost $3,000. If instead she had had a policy with a $1,000 deductible, a $10 copayment on doctor visits, and no coinsurance, which of the following is TRUE regarding her expenses...

Subjects