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In a block of car insurance business you are considering, there is a 50% chance that a claim will be made during the upcoming year.

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In a block of car insurance business you are considering, there is a 50% chance that a claim will be made during the upcoming year. Once a claim is submitted, the claim size has the Pareto distribution with parameters a = 3 and 0 = 1000, for which the mean is given by the 292 . Only one claim will happen during the year. Determine the a . . formula and the second moment 1s g1ven by the formula W al' variance of the unconditional distribution of the claim size. Possible Answers A 62500

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