Question

Medical care and compensation costs for workers injured on the job vary a lot and are strongly skewed as a whole. The National Academy of Social Insurance reports that the mean worker's compensation claim cost in a year is = $439 per insured μworker, with standard deviation = $20,000. The law of large numbers says that σ

a) an insurance company can get an average workers’ compensation cost lower than the mean by insuring a large number of people

B) as a company insures more and more workers chosen at random, the average costs gets closer to $439

C) if a company insures a large number of workers chosen at random, that company’s average claim cost will have approximately a Normal distribution.

D) as a company insures more and more workers chosen at random, the average claim cost diverges even more from $439.

Answer 1