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QUESTION
An automobile insurance company sells an insurance policy with an annual premium of $720. Based on data from past claims, the company has calculated...
An automobile insurance company sells an insurance policy with an annual premium of $720. Based on data from past claims, the company has calculated the following probabilities:
An average of 1 in 70 policy holders will file a claim of $9500.
An average of 1 in 30 policy holders will file a claim of $5200.
An average of 1 in 20 policy holders will file a claim of $1300.
What is the expected value to the company for each policy sold?
