Question

While attempting to measure its risk exposure for the upcoming year, an insurance company notices a trend between the age of a customer and the number of claims per year. It appears that the number of claims keep going up as customers age. After performing a regression, they find that the relationship is (claims per year) = 0.245*(age) + 8.873. If a customer is 45 years old, how many claims would you expect them to make in a given year?

Question 7 options:

	1) 11.03
	2) 19.9
	3) 147.46
	4) 399.53
	5) We do not know the observations in the data set, so we cannot answer that question.

Answer 1

Solution :

Given that ,

(claims per year) = 0.245*(age) + 8.873

Plug age = 45 we get

(claims per year) = 0.245 * 45 + 8.873 = 19.9

Option 2)