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1. A dental benefit is designed such that an insurer pays 80% of the first 600 of annual losses and 100% of annual losses in
1. A dental benefit is designed such that an insurer pays 80% of the first 600 of annual losses and 100% of annual losses in excess of 600. The number of losses in one year follows a Poisson distribution with a mean of 2. Individual loss amounts follow a two-parameter Pareto distribution with a = 2 and 0 = 600. You simulate both the number of losses in one year and individual loss amounts using the Inverse Transform Method. The uniform (0, 1) random number to simulate the number of losses in one year is 0.83. The uniform (0, 1) random numbers to simulate the individual loss amounts, to be used in the given order and only as needed, are 0.71, 0.36, 0.80, 0.21, and 0.91. Low uniform (0, 1) random numbers correspond to both low frequencies and low severities. Determine the simulated annual insurance payment. 1. A dental benefit is designed such that an insurer pays 80% of the first 600 of annual losses and 100% of annual losses in excess of 600. The number of losses in one year follows a Poisson distribution with a mean of 2. Individual loss amounts follow a two-parameter Pareto distribution with a = 2 and 0 = 600. You simulate both the number of losses in one year and individual loss amounts using the Inverse Transform Method. The uniform (0, 1) random number to simulate the number of losses in one year is 0.83. The uniform (0, 1) random numbers to simulate the individual loss amounts, to be used in the given order and only as needed, are 0.71, 0.36, 0.80, 0.21, and 0.91. Low uniform (0, 1) random numbers correspond to both low frequencies and low severities. Determine the simulated annual insurance payment
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