question 4

An insurance agent will receive a bonus if his loss ratio is less than 70%. You are also given: - His loss ratio is calculated as incurred losses divided by earned premium on his book of business a The agent will receive a percentage of earned premium equal to 1B of the difference between ?0% and his loss ratio. a The agent receives no bonus if his loss ratio is greater than 70% 0 His earned premium is 500,000. 0 His incurred losses are distributed according to the Pareto distribution _ 000,000 3 FIE) _ 1 _ (\"000000) Calculate the expected value of his bonus