Question 5
(The following is a purely imaginary scenario)
An insurance company believes that people can be divided into two classes: “Class-1: Those who are accident prone” and “Class-2: Those who are not accident prone”. The company’s statistics show that an accident-prone person will have an accident at sometime within a fixed 1-year period with probability 0.4, whereas this probability decreases to 0.2 for a person who is not accident prone. It is assumed that 30 percent of the human population is accident prone. Given this information, answer the sub-questions.
The insurance company has to pay an insurance fee of Rs. 10 per accident if the accident happens in the first year. If the company has sold 1000 insurances in total, then how much money (in Rs.) will it expect to pay at the end of the first year for Class-2 people? (Note: Enter the answer rounded to two decimal places. For example, if the answer is “Rs. 1.235”, then enter it as “1.24”)