Question
8. Loss size for an insurance coverage follows a two parameter Pareto distribution with pa- 3 and 0 which varies by insured according to
8. Loss size for an insurance coverage follows a two parameter Pareto distribution with pa- 3 and 0 which varies by insured according to an exponential distribution. An insured has 4 losses in the first year with average size 1000 and 8 losses in the second year rameters a = with average size 1300. The resulting Bhlmann-Straub estimate of average loss size for this insured is 1100. Determine the mean of the exponential distribution.
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