Course Solutions Uncategorized (Answered) : Question Insurance Company Wants Estimate 1 Proportion Houses 25 Loss Due Fire Theft Vanda Q33096747

(Answered) : Question Insurance Company Wants Estimate 1 Proportion Houses 25 Loss Due Fire Theft Vanda Q33096747

June 27, 2024June 27, 2024| adminadmin| 0 Comment| 6:55 pm
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Question An Insurance company wants to estimate: 1)the proportion of houses that have had 25% loss due to fire, theft, vandalism, and natural calamities in a certain region in the state, and 2) the premium to be charged for a $200,000 home owners policy that covers these damages. Flood and earthquakes are not covered. The company has estimated from historical data that a total loss, a 50% loss, and a 25% loss may happen with a probability of 0.05%, 0.1% and 1 % respectively Ignoring all other losses i. In order to estimate the proportion to within 2% of the true value with a confidence level of 95% how many houses should be sampled? ii. What premium should the company charge to make an average net profit of 1.5 % of the policys face value?

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