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240 weeks of accuracy in. 14 out.
A 95% accuracy guarantee, $25,000 per breach. Mean accuracy is comfortably above the line, which is exactly why the naive premium is wrong.
Priced off the mean
$0
Priced off the tail
$102,375
Mean accuracy 97.2% sits above the 95.0% guarantee, so an average-based quote sees no risk at all — while 14 of 240 weeks actually breached.
Breach rate
5.8%
Tail shape
-0.500
Worst modelled year
84.8%
Break-even breaches
4.1
Frequency comes from the record, severity from the fitted tail. Conflating the two — using the tail to estimate how often as well as how bad — would double count and overprice, which is the other way this goes wrong.