G
guest009
Member
Hello,
Can someone help me solve this question?
especially calculating (a) and (c) -(the transition matrix)
NCD system:
Probability of making one claim in a given year is 0.1
Level 0- 0% discount
Level1 - 20% discount
Level 2 - 50% discount
The rules for moving between these levels are:
Following a year with one claim, move back two levels,or move to 0 from level 1 or remain at 0
If the insurer didn't have an accident last year but had one the year before, he moves back one level ore remains at 0
If the insurer didn't have an accident the last two years he moves to the next higher level, or remains at 2
Xn - denotes the level of the policyholder in year n
a)calculate:
P(X3=1|X1=1,X2=0)
P(X3=1|X1=0,X2=0)
b)explain why Xn isn't a Markov chain
Expanding the transition matrix:
01 paying full premium and had an accident last year
02 paying full premium and last accident was two years ago
c)Write down the transition matrix of this chain. Is it irreducible?
d)Find the average number of years the insurer moves to level 2, known that now he is paying full premium after last year he had an accident.
e)The cost of a full premium is 5000.Find the average premium the insurer is paying for one year.
f)Knowing the insurer is at level 2, find how the number of years until he first reaches level 0 is distributed.
Can someone help me solve this question?
especially calculating (a) and (c) -(the transition matrix)
NCD system:
Probability of making one claim in a given year is 0.1
Level 0- 0% discount
Level1 - 20% discount
Level 2 - 50% discount
The rules for moving between these levels are:
Following a year with one claim, move back two levels,or move to 0 from level 1 or remain at 0
If the insurer didn't have an accident last year but had one the year before, he moves back one level ore remains at 0
If the insurer didn't have an accident the last two years he moves to the next higher level, or remains at 2
Xn - denotes the level of the policyholder in year n
a)calculate:
P(X3=1|X1=1,X2=0)
P(X3=1|X1=0,X2=0)
b)explain why Xn isn't a Markov chain
Expanding the transition matrix:
01 paying full premium and had an accident last year
02 paying full premium and last accident was two years ago
c)Write down the transition matrix of this chain. Is it irreducible?
d)Find the average number of years the insurer moves to level 2, known that now he is paying full premium after last year he had an accident.
e)The cost of a full premium is 5000.Find the average premium the insurer is paying for one year.
f)Knowing the insurer is at level 2, find how the number of years until he first reaches level 0 is distributed.