Explore BrainMass

Explore BrainMass

    Companies using descriptive statistics and probability distributions

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    How do insurance companies use descriptive statistics and probability distributions to project health and auto insurance premiums? In regards to age, why is there an inverse relationship between the two premiums?

    © BrainMass Inc. brainmass.com April 3, 2020, 3:28 pm ad1c9bdddf

    Solution Preview

    The insurance companies charge insurance premium based on the risk they are taking. The actuary statisticians collect data for a large sample for a long period of time (longitudinal data) and establish the insurance premium. Insurance premiums are fixed such that the expected value of risk is equal to the ...

    Solution Summary

    The solution explains why companies charge insurance premium. The expert discusses descriptive stats and the probability distribution helps establishing the premiums.