Can we calculate the number of losses through traffic accidents if we were the insurer and insureds had some insurance policies with us ( out of X many policies Y many had an accident ) We know the total collected premiums and we can calculate how much losses we paid and how much premium we received ( in technical terms it is called loss ratio , (losses/ premiums ) a measure that shows the performance of an insurer. We can calculate the biggest loss and average loss, correct ? We can also calculate the deviation from the expected loss that we calculated in the previous year. We can compare the expected loss with deviations from expected ( plus , minus ) Accordingly we can make a prediction for the future as an insurer , number of insurance policies covering accident risk , the number of possible losses based on history and the average losses and we can decide accordingly the premium we will get from the insureds .. You see all is related to calculation . Yes or No ?

No worries, I am not going to ask you statistics . However, pls remember if you have seen all these in your statistics class, frequency and loss distributions , the calculation of average loss ( expected loss) and standard deviation , variance ) You see now insurance is one of the fields where the statistics are very important . It is the actuaries task in insurance to make all these calculations and come up with premiums and as well as provisions to be seperated . Provisions are seperated once the expected loss and worst case loss is calculated .

Can you give an example to subjective risk ? Why do you think that the higher the subject risk perception we have , we display a more conservative ( risk averse ) behaviour ? Why ?