An insurance company needs to determine the annual premium required to break eve

Question

An insurance company needs to determine the annual premium required to break even for collision protection for cars with a value of $10,000. The random variable x is the claim size on these policies and the analysis is restricted to the losses $1000, $5000, and $10,000. The probability distribution of x is as shown in the table. What premium should customers be charged for the company to break even? Solve each of the following. E(x) = V(x) = SIGMA = Which value is most useful for finding the break even point for the company? expected value frequency standard deviation random variable variance Determine the break even value. $

Explanation / Answer

The premium which should be charged by the company to break even

= Expected Value

= $ 196

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