Determine whether there is a long-term, stable distribution of the 1000 policyholders in
Example 10.37.

Example 10.37

An insurance company has 1000 policyholders distributed over the three states of the no-claims discount process with transition matrix given by Eq. (10.34). The initial distribution is,

• 100 in State 1

• 600 in State 2

• 300 in State 3

Determine the distribution of policyholders 4 years later.

Transcribed Image Text:

P = 0.1 0.9 0 0.1 0 0.9 0 0.1 0.9 (10.34)