In most of Europe and Asia annual automobile insurance is determined by the bonus malus system.Each policyholder is given a number (state) and the policy premium is determined as a function of this state.A policy holder's state changes from year to year in response to the number of claims made by the policy holder.Suppose the number of daims made by a particular policyholder in any given year, is a Poisson random variable with parameter A.Let. s;(k) be the next state of a policyholder who was in state i in the previous year and who made k claims in that year.The following table is a simplified Bonus-Malus system having 4 states.Next state ifAnnualStatePremiumO claims1 claim |2 claims 3 or more claims1200124225013443400244446003444For A =2A. Find the mean time to retum to state 1 (if you start in state 1):drestime(round to 2 decimals)B. Find the expected annual premium for a random person after it has been with the insurance company for a while:decimals)(round to 2

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s made by a particular policyholo

Database System Concepts

7th Edition

ISBN:9780078022159

Author:Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan

Publisher:Abraham Silberschatz Professor, Henry F. Korth, S. Sudarshan

Chapter1: Introduction

Section: Chapter Questions

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Concept explainers

Types of Security Policy

An information security policy is a formal, high-level statement or plan that embraces an organization's general beliefs, objectives, goals, and acceptable procedures for information security. It defines a set of rules, procedures, and policies designed to ensure that all end users and networks within an organization have IT security and data protection security.

Question

In most of Europe and Asia annual automobile insurance is determined by the bonus malus system.
Each policyholder is given a number (state) and the policy premium is determined as a function of this state.
A policy holder's state changes from year to year in response to the number of claims made by the policy holder.
Suppose the number of daims made by a particular policyholder in any given year, is a Poisson random variable with parameter A.
Let. s;(k) be the next state of a policyholder who was in state i in the previous year and who made k claims in that year.
The following table is a simplified Bonus-Malus system having 4 states.
Next state if
Annual
State
Premium
O claims
1 claim |2 claims 3 or more claims
1
200
1
2
4
2
250
1
3
4
4
3
400
2
4
4
4
4
600
3
4
4
4
For A =2
A. Find the mean time to retum to state 1 (if you start in state 1):
drestime
(round to 2 decimals)
B. Find the expected annual premium for a random person after it has been with the insurance company for a while:
decimals)
(round to 2

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