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expected amount paid per loss VS per payment

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  • expected amount paid per loss VS per payment

    Hi there,

    I am quite confused when it comes to expected amount paid per loss and per payment. For example, if the question is asking for the expected amount paid by the insurer, is this referring to expected amount paid per loss or per payment?

    If someone could answer my question, that would be great~~

    Thx^^

  • #2
    Originally posted by Cat View Post
    Hi there,

    I am quite confused when it comes to expected amount paid per loss and per payment. For example, if the question is asking for the expected amount paid by the insurer, is this referring to expected amount paid per loss or per payment?

    If someone could answer my question, that would be great~~

    Thx^^
    The payment per payment is conditional on the fact that the insurer makes a nonzero payment. For example, if an auto policy has a $500 deductible, only losses above 500 will result in an insurance payment, so if you are asked to calculate the expected payment per payment, you would have to divide by the probability that the loss exceeds 500. hope this helps.

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    • #3
      Originally posted by Cat View Post
      For example, if the question is asking for the expected amount paid by the insurer, is this referring to expected amount paid per loss or per payment?
      If the question is written in this way, I think most probably it refers to expected amount paid per loss.
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      • #4
        ..........
        Last edited by R_T; February 10 2010, 04:00 PM. Reason: deleted

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