Application
An application is in actuarial science when considering the total claim amount
within a certain time period, say one year, arising from a random number N of individual insurance claims, whose sizes are described by the random variables (Xn)n ∈ N. Under the above assumptions, Wald's equation can be used to calculate the expected total claim amount when information about the average claim number per year and the average claim size is available. Under stronger assumptions and with more information about the underlying distributions, Panjer's recursion can be used to calculate the distribution of SN.
Read more about this topic: Wald's Equation
Famous quotes containing the word application:
“There are very few things impossible in themselves; and we do not want means to conquer difficulties so much as application and resolution in the use of means.”
—François, Duc De La Rochefoucauld (1613–1680)
“Courage is resistance to fear, mastery of fear—not absence of fear. Except a creature be part coward it is not a compliment to say it is brave; it is merely a loose application of the word. Consider the flea!—incomparably the bravest of all the creatures of God, if ignorance of fear were courage.”
—Mark Twain [Samuel Langhorne Clemens] (1835–1910)
“Great abilites are not requisite for an Historian; for in historical composition, all the greatest powers of the human mind are quiescent. He has facts ready to his hand; so there is no exercise of invention. Imagination is not required in any degree; only about as much as is used in the lowest kinds of poetry. Some penetration, accuracy, and colouring, will fit a man for the task, if he can give the application which is necessary.”
—Samuel Johnson (1709–1784)