Compound Event | Definition, Probability & Examples

Probability: Compound Events

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Assume the aggregate-loss distribution follows a compound distribution with the claim frequency distributed as a Poisson with mean 569 , and the claim severity distributed with mean 120 and standard deviation 78 . (a) Calculate the mean and the variance of the aggregate loss. (b) Calculate the probability that the observed aggregate loss is within 6 % of the mean aggregate loss. (c) If the mean of the claim frequency increases to 620, how might the claim-severity distribution be changed so that