C
confused_actuary
Member
Hello!
I hope this is the case, because if it's not I'm really missing something with this part of the course!!!!
Question:
Assume:
Claim Frequency follows a Poission.
Individual Claim Sizes follow a log normal with mean 100 and Standard deviation 250.
Need to be 90% sure that the observed mean claim size will not differ from the underlying mean claim size by more than 5%. How many observed claims are needed to assign full credibility?
The answer works out the frequency full credibility as 1,082, which makes sense. Now, from what I understand they should then multiply this by (250/100)^2 as we know the mean and SD of the log normal. However, in the answers they calculate the paramaters of the log normal and use these values instead. Is there something I am completely missing that explains why do this done?
Thank you for any replies that people give to this and I wish you all the best of luck come the exam!!!!!!!
I hope this is the case, because if it's not I'm really missing something with this part of the course!!!!
Question:
Assume:
Claim Frequency follows a Poission.
Individual Claim Sizes follow a log normal with mean 100 and Standard deviation 250.
Need to be 90% sure that the observed mean claim size will not differ from the underlying mean claim size by more than 5%. How many observed claims are needed to assign full credibility?
The answer works out the frequency full credibility as 1,082, which makes sense. Now, from what I understand they should then multiply this by (250/100)^2 as we know the mean and SD of the log normal. However, in the answers they calculate the paramaters of the log normal and use these values instead. Is there something I am completely missing that explains why do this done?
Thank you for any replies that people give to this and I wish you all the best of luck come the exam!!!!!!!