A portfolio of independent risks is divided into two classes. Class 1 contains 60% of the risks in the portfolio and the remaining risks are in Class 2.
For each risk in the portfolio, the following shows the distributions of the number of claims in a calendar year.
A risk is randomly selected in the portfolio and is observed for two calendar years. The observed results are: 2 claim in the first calendar year and 3 claims in the second calendar year.
Determine the Bayesian expected number of claims for the selected risk in year 3.
Using the same information as in Problem 3-A, determine the Buhlmann credibility estimate for the selected risk in year 3.