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
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—René Descartes (1596–1650)
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—Philip Dormer Stanhope, 4th Earl Chesterfield (1694–1773)