Monte Carlo Simulation
10,000 claim scenarios using Poisson frequency and lognormal severity distributions by territory.
Monte Carlo Deductible Optimization
Rather than a single recommendation, Veloqua runs 10,000 simulated claim scenarios for each deductible level from $500 to $10,000. Each scenario draws from calibrated distributions:
- Claim frequency: Poisson distribution by peril, calibrated to territory loss ratios
- Claim severity: Lognormal distribution fitted to historical claims data
- Expected annual cost: Premium + E[out-of-pocket claims] for each deductible
- Optimal deductible: The level that minimizes total expected cost given your risk tolerance
The simulation produces confidence intervals so you can see both expected and worst-case costs at each deductible level.