QUESTION 2 a) Explain the concept of deductible and state two reasons why a policyholder would adopt this when buying a policy. [3 mks) b) An insurance company sells a one-year automobile policy with a deductible of 2. The probability of a loss of amount N is K/N, for N = 1, 2, ...5 and K is a constant. These are the only possible loss amounts and no more than one loss can occur. Calculate the expected payment for this policy [6 mks c) An insurance policy is written to cover a loss, X, where X has an uniform distribution on [0, 800). The policy has a deductible of 50 and the expected payment under the policy is a fraction, Y, of what it would be with no deductible. Calculate Y. [6 mks) QUESTION 2 a) Explain the concept of deductible and state two reasons why a policyholder would adopt this when buying a policy. [3 mks) b) An insurance company sells a one-year automobile policy with a deductible of 2. The probability of a loss of amount N is K/N, for N = 1, 2, ...5 and K is a constant. These are the only possible loss amounts and no more than one loss can occur. Calculate the expected payment for this policy [6 mks c) An insurance policy is written to cover a loss, X, where X has an uniform distribution on [0, 800). The policy has a deductible of 50 and the expected payment under the policy is a fraction, Y, of what it would be with no deductible. Calculate Y. [6 mks)