No claims discount system
= No claims discount system
A policyholder's future insurance premiums depend on a finite discount level, updated according to whether a claim is submitted in each year. With <independent> yearly accidents and repair costs, and a claim decision depending only on the current level and cost, the level is a <Discrete-time Markov chain>. Accident <probability> and submitted-claim <probability> differ when the policyholder pays small repair costs without claiming.