Laboratory (home) work N 1 Insurance from COVID-19

At the beginning of a year, your company concluded insurance contracts for defense from
severe disease COVID-19 (with hospitalization) for a period of one year in a city with a
population . It is known that every day in this city on average people get sick, and

-part of them needs hospitalization, . The cost of standard inpatient treatment of one
patient is equal to conventional units. You need to find a fair price for an annual insurance
policy from COVID-19.
The Task:
1) Find the probability of infecting one person during a year.
2) Find the probabilistic distribution of costs of the insurance company for a year under the
concluded agreements.

3) Find the average value, standard deviation and -quantile of the company's costs,
, on the concluded agreements.
4) Find the average costs of the company per customer.

5) If the company's capital at the beginning of a year is conventional units, and the value of

the policy is equal to conventional units, then find the probability of bankruptcy of the
company during this year.

6) What should be the cost of the policy so that the probability of ruin does not exceed the

value .

7) Build an effective boundary for the performance of the company in the plane of "risk
(probability of ruin) - income" when changing the cost of the policy from 0 to .

Personalization of tasks. Let the number of the company's customers be proportional to

the number of the student in the group list, , as well

; ; ; ;

; ; ; .

Hints.
A) The work can be performed analytically with numerical calculations using a binomial
distribution with a parameter , where we assume that the value
estimates the probability of getting sick in one day.
A discrete random variable (in our case, the number of sick clients per year) is said to have a

binomial distribution, if the probability of acquiring specific values is as follows:

, .

Distribution function (cumulative):

, .

Thus, the average costs of the company under insurance contracts are equal , the

variance of costs is and the cost distribution function is

, .

B) The work can be performed by the method of statistical simulations (Monte Carlo method).

To obtain a random value (the number of sick clients per year) it is necessary to conduct

independent tests in which the probability of "success" (to get sick) is equal .

To obtain an empirical distribution of the value , it requires many ( ) such series of

trials with random outputs , .

The estimate of the average number of patients per year and its variance:

, .

The empirical distribution function (for the number of sick clients per year):

Where the indicator function of the event is

А) An example of answers for :

1) , , , .

, .

Risk=Probability_of_ruin:

Premium .

2)