A no-claims discount model has four states and associated 1-step transition probabilities as shown in Figure 10.2.

Question:

A no-claims discount model has four states and associated 1-step transition probabilities as shown in Figure 10.2. Calculate the probability that a policyholder initially in State 1 will be in State 3 after 5 years. 0.5 0.5 2 0.6 3 0.7 0.4 0.3 0.2 Figure 10.2 No-claims discount model and transition probabilities for