Estimate the total market size of the insurance business

Question

Assignment:

Estimate the total market size of the insurance business for the target population (i.e., estimate the total dollar volume of the insurance business done by the entire population of the bank's target customers).

Estimate the number of customers that may be willing to do insurance business with BankTen.

Compare the amount spent on insurance and customer satisfaction rates among BankTen customers with the national average.

Describe whether it is possible to estimate annual insurance expenses based on the annual income of customers?how reliable would such an estimate be?

From: Cindy Parker, VP of Corporate Strategy
To: You, Analyst
Subject: Insurance Data

As BankTen moves toward becoming an integrated services provider, we are investigating the feasibility of starting an insurance business (excluding health insurance) for a segment of our customers. There are about 80,000 bank customers in the target population. Ideally, we would have contacted every customer to directly assess the potential amount of insurance business from each customer. However, the process of contacting and interviewing customers is extremely expensive, and we only had enough money in the budget to interview 100 customers. With the help of branch mangers and information technology staff, we successfully obtained responses from 100 randomly selected customers from the target population.

Customer Data 5b, that contains information on the total dollars each customer spends on insurance and an indication of whether each is happy with the current insurance provider(s). In addition, we have been able to get an estimate of the annual income of these customers from the bank's own database. I'd like you to analyze the data and make a short report to the management that shows the estimated total market size of the insurance business for the target population (i.e., the total dollar volume of the insurance business done by the entire population of the bank's target customers), as well as the estimated number of customers who may be willing to do insurance business with BankTen.

In addition, a recent national study done by the American Banking Association showed that a typical customer in our target population spends about $5,000 per year and about 25 percent of the customers are dissatisfied with their insurance providers. You should compare the BankTen customer population to find out if it is different from the national population as a whole.

Finally, is it possible for us to estimate annual insurance expenses based on annual income of customers? How reliable would such an estimate be?

Thanks,

Cindy

Compare the amount spent on insurance and customer satisfaction rates among BankTen customers with the national average.

This is actually 2 different questions. The first question asks you to compare insurance rates from the data file (Bank Tem) to the 'population' insurance rates (in the email). This requires a hypothesis test comparing means. The second question asks about comparing satisfaction rates from the data file (Bank Ten) and the population (in the email). This requires a hypothesis test of proportions.

	$70,500	$4,500	1
	$55,900	$3,400	1
	$78,700	$5,200	0
	$94,200	$4,600	0
	$93,000	$5,700	0
	$101,000	$7,300	0
	$42,300	$4,100	0
	$71,500	$3,200	0
	$91,500	$8,400	0
	$58,700	$5,700	0
	$64,700	$2,000	1
	$49,700	$4,200	0
	$47,300	$5,300	1
	$60,400	$4,500	0
	$63,400	$6,700	0
	$43,300	$1,500	0
	$66,500	$2,600	1
	$69,000	$6,500	0
	$77,100	$7,600	0
	$69,600	$6,900	0
	$70,100	$5,800	1
	$69,500	$6,400	1
	$95,200	$8,800	1
	$73,800	$3,300	0
	$72,300	$4,300	0
	$67,400	$6,300	0
	$104,600	$8,300	1
	$88,000	$5,900	0
	$110,700	$5,000	1
	$65,200	$3,800	0
	$100,000	$8,600	0
	$50,900	$3,700	0
	$83,100	$6,000	0
	$88,600	$5,200	0
	$103,800	$5,200	0
	$73,800	$5,500	0
	$67,200	$2,200	0
	$85,200	$4,700	1
	$69,300	$6,700	0
	$86,400	$3,600	0
	$53,400	$6,100	0
	$62,300	$4,700	0
	$52,200	$3,500	1
	$69,600	$5,000	0
	$74,600	$5,900	1
	$75,500	$5,000	0
	$70,200	$6,700	1
	$108,000	$8,500	0
	$48,900	$2,000	0
	$64,000	$6,700	0
	$36,400	$2,700	0
	$96,800	$8,000	0
	$55,900	$5,800	0
	$65,200	$6,700	0
	$86,400	$5,400	0
	$82,100	$3,700	0
	$88,200	$6,300	0
	$84,000	$3,700	0
	$54,500	$4,600	0
	$58,300	$5,800	0
	$85,500	$6,400	1
	$79,900	$7,900	0
	$61,000	$3,400	1
	$71,400	$3,500	0
	$77,000	$3,700	0
	$83,400	$7,100	1
	$77,100	$4,400	1
	$61,400	$4,100	0
	$103,300	$6,600	1
	$82,400	$7,300	0
	$76,100	$4,400	0
	$87,500	$6,900	1
	$88,000	$8,000	0
	$65,500	$5,500	0
	$61,200	$4,300	0
	$91,700	$5,900	0
	$57,000	$4,900	0
	$51,700	$3,000	0
	$85,700	$4,100	0
	$84,600	$4,400	1
	$108,100	$5,900	0
	$96,700	$5,500	1
	$94,600	$8,200	1
	$76,700	$5,000	0
	$75,100	$2,700	0
	$81,900	$4,400	1
	$59,200	$4,600	0
	$48,400	$1,200	0
	$87,500	$8,100	0
	$81,700	$7,300	0
	$84,300	$7,400	0
	$78,300	$5,100	1
	$59,600	$5,900	0
	$93,600	$7,100	1
	$70,400	$6,200	1
	$62,500	$5,800	1
	$62,700	$6,200	0
	$68,600	$3,800	1
	$68,200	$3,400	0