Wolfram Language & System 10.0 (2014)|Legacy Documentation

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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:
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