SOA Exam P Question 50 | Expectation of Poisson with Conditions

A company buys a policy to insure its revenue in the event of major snowstorms that shut
down business. The policy pays nothing for the first such snowstorm of the year and
10,000 for each one thereafter, until the end of the year. The number of major
snowstorms per year that shut down business is assumed to have a Poisson distribution
with mean 1.5.
Calculate the expected amount paid to the company under this policy during a one-year
period.
(A) 2,769
(B) 5,000
(C) 7,231
(D) 8,347

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