Question 6 (10 marks) An insurer has a portfolio of 1000 independent policies. Each policy has a probability of 0.01 of making a claim, and the claim size is uniformly distributed between 5000 and 25000. The insurer purchases reinsurance to cover any amount above 15000 for individual claims. The reinsurer charges a relative security loading of @ to ensure (using the normal approximation) a 95% probability that reinsurance premium collected will exceed reinsurance claim. The ceding insurer also charges a relative security loading (before reinsurance is taken into account) of e. Given that relative security loading is the proportion that the premium is above the expected loss, what is the ceding insurer's expected gain on the portfolio of policies? Question 6 (10 marks) An insurer has a portfolio of 1000 independent policies. Each policy has a probability of 0.01 of making a claim, and the claim size is uniformly distributed between 5000 and 25000. The insurer purchases reinsurance to cover any amount above 15000 for individual claims. The reinsurer charges a relative security loading of @ to ensure (using the normal approximation) a 95% probability that reinsurance premium collected will exceed reinsurance claim. The ceding insurer also charges a relative security loading (before reinsurance is taken into account) of e. Given that relative security loading is the proportion that the premium is above the expected loss, what is the ceding insurer's expected gain on the portfolio of policies