Do The Math Q18

An insurance policy pays for a random loss X subject to a deductible of C, where 0 < C < 1. The loss amount is modeled as a continuous random variable with density function

Given a random loss X, the probability that the insurance payment is less than 0.5 is equal to 0.64 .

Calculate C.

  1. 0.1
  2. 0.3 Correct Answer
  3. 0.4
  4. 0.6
  5. 0.8


Denote the insurance payment by the random variable Y. Then


It follows that the expected claim payment is 328.