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Assume an insurer writes n policies. The data in the table below shows historical loss information from a previous year. How much should the insurer

Assume an insurer writes n policies. The data in the table below shows historical loss information from a previous year. How much should the insurer charge each policyholder to be 99.5 percent sure it can meet all its claim obligations at the end of the policy year assuming n=1000? Rework your answer for n=1500, n=2000. Discuss what happens to the premium per policyholder as you adjust n.

Range

Start

End

Num

0

400

12

400

800

45

800

1200

42

1200

1600

37

1600

2000

26

2000

2400

16

2400

2800

8

2800

3200

4

3200

3600

1

3600+

0

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