Insurance Claim & Settlement Process
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Insurance Claim & Settlement Process
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There are two types of claims that are made to an insurance company. Let Ni(t) denote the number of type i claims made by time t, and suppose that {N1(t), t ⩾ 0} and {N2(t), t ⩾ 0} are independent Poisson processes with rates λ1=10 and λ2=1 . The amounts of successive type 1 claims are independent exponential random variables with mean $ 1000 whereas the amounts from type 2 claims are independent exponential random variables with mean $ 5000 . A claim for $ 4000 has just been received; what is t
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