Bharti Singla
Senior Member
In the below attached text, I got the difference between both the probabilities and how they are affected by change in poisson parameter. But my qus. is in finite-time ruin prob. :-
As Lembda increases, the prob. of finite-time ruin also increases. But, by increasing lembda, both the premium rate and the claim rate increases.
Premium increases→Ruin prob. decreases
Claim rate increases→Ruin prob. increases
So, how do we know that the overall ruin prob. will increase? It means the rate of increasing premium < rate of increasing claim? If yes, can we prove it?
Please anyone help.
Thanks
As Lembda increases, the prob. of finite-time ruin also increases. But, by increasing lembda, both the premium rate and the claim rate increases.
Premium increases→Ruin prob. decreases
Claim rate increases→Ruin prob. increases
So, how do we know that the overall ruin prob. will increase? It means the rate of increasing premium < rate of increasing claim? If yes, can we prove it?
Please anyone help.
Thanks