Actuarially Fair Insurance Consider an insurance market that covers full losses with: - 3000 individual policy holders each with $15000 of wealth - The probability of a $10000 loss Pr( Loss =$10000)=0.02 - The probability of a $6000 loss - Pr( Loss =$6000)=0.06 - The probability of a $800 loss Pr( Loss =$800)=0.28 - The probability of a $0 loss - Pr( Loss =$0)=0.64 Unfortunately, the insurer experiences the following mix of losses: 10. Create a single graphic showing the both the predicted and the actual distribution of losses for the group. 11. Calculate the total amount of loses the insurer will need to pay out. 12. Assuming no other costs, what is the level of profit for the insurer (premiums - payouts). Actuarially Fair Insurance Consider an insurance market that covers full losses with: - 3000 individual policy holders each with $15000 of wealth - The probability of a $10000 loss Pr( Loss =$10000)=0.02 - The probability of a $6000 loss - Pr( Loss =$6000)=0.06 - The probability of a $800 loss Pr( Loss =$800)=0.28 - The probability of a $0 loss - Pr( Loss =$0)=0.64 Unfortunately, the insurer experiences the following mix of losses: 10. Create a single graphic showing the both the predicted and the actual distribution of losses for the group. 11. Calculate the total amount of loses the insurer will need to pay out. 12. Assuming no other costs, what is the level of profit for the insurer (premiums - payouts)