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#1




SOA sample #102
What's the meaning of ? Also I don't understand the way they found E(Dividend)?

#2




Quote:
E(dividend) = sum of [(dividend given repairs costs are k) * probability repair costs are k)] 
#3




Can anyone explain to me why I can't calculate retained major repair costs using 2*E[X^1]? thanks a lot

#4




"Retained major repair costs" = Major repair costs  costs paid by insurer.
So if X (major repair costs, before applying deductible) = 1, then Retained major repair costs = 11 = 0 but 1^1 = 1. They are also different if X = 2 or X = 3. 
#5




If major repair costs before applying deductible =1, then retained major repair costs should be 1, right? Because insurer don't need to pay anything in this case with d=1.
Last edited by uncafe; 10242008 at 11:37 PM.. 
#6




there are two factories so there are two insurance contracts with ordinary deductible d, does that help?

#7




Quote:
Why does the insurer pay 1 if the problem states that the insurer pays the cost in excess of the ordinary deductible of 1? Also, shouldn't E(X) = E(retained cost) + E(cost paid by insurer) so 1 = 0.6 + 0.4 ? 
#8




Gee thanks. Remind me of stupid things I wrote back on 2008? Isnīt there a statute of limitations?
I should have just said that retained major repair costs are a random variable, not the expected value of a random variable. Calculating E(X^1) does not help you solve E(Dividend). I should have stopped without giving specific examples of retained repair costs, especially not wrong specific examples. 
#9




Isn't retained repair cost K ^ 1?
So for example, k=0, retained repair cost = 0, Probability=0.4 k=1, retained repair cost = 1 Probability=0.3 k=2, retained repair cost = 1 Probability=0.2 k=3, retained repair cost = 1 Probability=0.1 What can't we say the expected retained repair cost is E(K ^ 1)=0.6 for each factory since E(K)= 1 = E(K ^ 1) + E((K1)+) and ((K1)+)=0.4? This is super confusing to me Last edited by Ren_St; 10082017 at 09:07 PM.. 
#10




Why do you want the expected retained repair costs? You cannot use it to calculate the expected dividend, at least without further adjustment for retained claims = 2.
I.e, it is not true that Expected Dividend = Expected revenues  Expected insurance premiums  expected expenses  Expected retained repair costs. If you think itīs most efficient or understandable to calculate Expected retained repair costs and the adjustment term, go ahead. It would give you the right answer, which would match the SOA answer. 
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