Use the following information to answer the next two questions, which pertain to the previous two questions.

Range of loss amount	Midpoint dollar amount of loss	Number of losses	Total $ amt. of losses
$1 - 2000	$1,000	270	$270,000
$2001-10,000	$6,000	30	$180,000
Greater than $10,000	NA	0	0

B. Use the above information to find the average severity per claim.

$270,000 + $180,000 = $450,000

270 + 30 = 300

= 450,000 / 300 = $1500 Average severity per claim

D. Use the above information to estimate a probability distribution for the loss severity per claim.

270 / 300 = 0.9

30 / 300 = 0.1

Therefore,

$1-2,000 $2001-10,000 Greater than $10,000

0.9 0.1 N/A

1. Using your answers from questions b and d above, use convolution to find the average loss