Hii all Qus.1.34 of Q&A bank part-1 In part(ii) of this qus., why didn't they use the conditional distribution of claims paid by insurer to find the expected claim amount paid by insurer? In my knowledge we always use conditional dist. for insurer when there is policy excess in force. Please anyone give the reason. Thanks
I must confess that there has been some confusion in exam questions as well. Sometimes they work with the conditional distribution and sometimes they don't. I suggest that in the exam you state your assumptions.
