Pricing in General Insurance

517Pricing Multiple Lines of Business and Risks

7. Monkey business. Assume that you own an establishment with a troop of 120

macaques (on average) that you sell as domestic pets and that the probability of

one of your monkeys dying in a normal year is approximately p = 1.1%. However,

this probability can increase to approximately p = 15% if there is an epidemic of

tuberculosis. The value of each monkey is distributed roughly uniformly in your

troop between £5000 and £8000 (depending on age, cuteness and other factors).

Your in-house veterinarian estimates that the probability of an epidemic of tuber-

culosis happening next year is around 4%. Using the Monte Carlo simulation or

other methods, estimate the mean, standard deviation, 75th, 90th ...