an insurance company reckons the probability of an accident occuring during the year is 0.1 for a low risk person and .35 for a high risk person. 25% of the customers are low risk and the rest are high risk. Mr. Z is randomly selected from the customers, what is the probability he has an accident during the year?
2006-11-08 22:13:51 · 10 answers · asked by kate 1 in Business & Finance ➔ Insurance
0.25 x 0.10 = 0.025
0.75 x 0.35 = 0.2625
= 0.2875 (which is the same as 28.75%)
Mr Z has 28.75% chance of an accident thoughout the year.
2006-11-08 22:33:05 · answer #1 · answered by Sandie 4 · 0⤊ 0⤋
Overall Probability of accident=.1*.25+.35*.75=.2875
cheers
2006-11-09 06:39:10 · answer #2 · answered by Rahul 2 · 0⤊ 0⤋
Insurance isn't based on the probability of ONE person having an accident - that would be wildly innacurate.
Insurance principals and rates are based on the Law of Large Numbers - which is, the more people you have in a group, the more accurately you can predict the future losses of that group.
When you come down to predicting the losses of one individual - that's when you get skyrocketing rates - even if Mr. Z. is from one of the low risk groups, because the accuracy of the predictability drops to the floor.
2006-11-09 08:22:32 · answer #3 · answered by Anonymous 7 · 0⤊ 0⤋
well there's a 4 to 1 chance he's in the low risk group!
2006-11-09 06:17:12 · answer #4 · answered by Anonymous · 0⤊ 0⤋
25 x 0.1
75 x 0.35
add the 2 answer divide by 100
2006-11-09 06:17:49 · answer #5 · answered by ? 5 · 0⤊ 0⤋
There is no probability of him having an accident at all... Only if he is careless and engages in things like to be dangerous..
Insured for what anyway..
For gods sake do your own homework!
2006-11-09 06:19:00 · answer #6 · answered by Harrison N 3 · 1⤊ 2⤋
Without writing it again, I agree with giggles_007. And Joanne and Blue
2006-11-09 06:33:33 · answer #7 · answered by CT 2 · 0⤊ 0⤋
He probably would have an accident if you were in the car with him
2006-11-09 06:15:50 · answer #8 · answered by Anonymous · 1⤊ 1⤋
THE PROBABILITY IS ZERO
2006-11-09 06:22:39 · answer #9 · answered by Nnamsco 3 · 0⤊ 0⤋
0.2875
2006-11-09 06:22:47 · answer #10 · answered by jo 2 · 0⤊ 0⤋