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
Problem 1PE
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Transcribed Image Text: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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