On an average 3% of medical claims paid out by an insurance company per month is over rs 1,00,000 /-. What is the probability that in the next month they pay out 100 claims but no claim was over rs ,100,000/-
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Probability that none of 100 medical claims given in the next month is over Rs. 100000 = (0.97)^100
The probability that a medical claim is over Rs. 100000 = 3/100 = 0.03
Probability that a medical claim is less than Rs.100000 = 1 -0.03 = 0.97
Total number of medical claims given in the next month = 100
Probability that none of medical claims given in the next month is over Rs.100000 = 0.97 × 0.97 × 0.97 --------- till 100 times
= (0.97)^100
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