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Find the insurance company expected profit per policyholder

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Reference no: EM13916941

A health insurance company charges policyholders a $1250 annual premium for health insurance for hospitalization. The company estimates that each time a patient is hospitalized costs the company $2500. Furthermore, they have estimated that 85% of patients will not be hospitalized, 10% will be hospitalized once a year, and no one will be hospitalized more than twice.

(a) Find the insurance company's expected profit per policyholder.

(b) What is the expected profit if they enroll 80,000 policyholders?

Reference no: EM13916941

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