Question
An insurance company is running business under following conditions: - it earns in average EUR 50 000 per day from selling insurance policies, -
An insurance company is running business under following conditions: - it earns in average EUR 50 000 per day from selling insurance policies, - it receives in average 10 claims per day, - the average claim is EUR 4 000. the claim size is bounded from above by EUR 100 000. 1) Assuming that all conditions of the classical risk process are fulfilled, estimate the ruin probability for initial capitals EUR 10k, 100k, 1m, 5m, and 10m, using the Lundberg inequality. 2) Draw a graph of the upper bound of the ruin probability (with initial capital on the x-axis.)
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