Model Aggregated Claims Value with Compound Poisson Distribution
Values of claims of certain collision insurance with a $500 deductible follow a ParetoDistribution. The number of claims per year follows a PoissonDistribution and averages 20 claims per month. Hence the aggregated claims value follows a CompoundPoissonDistribution.
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The average value of all the claims per year.
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Find the probability density function of the aggregated claims value using simulation.
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Use the distribution obtained from the simulation to compute the probability that the aggregated claims have a value higher than 80,000.