Question

Workers' compensation claims are reported according to a poisson process of with mean of 100 per month. The number of claims reported and the claim amounts are independently distributed. 2% of the claims exceed 30,000. Calculate the number of complete months of data that must be gathered to have at least a 90% chance of observing at least 3 claims each exceeding 30,000.

Answer 1

Solution:

While 2 is a reasonable first guess, it was not critical to the solution. Wherever you start, you should conclude 2 is too few, and 3 is enough.

So, the answer is 3 months...

End of the Solution...