Actuarial Notes

Exam MAS-I Practice Question 16

Study guide: Exam MAS-I

Each month, a workers compensation claimant is Totally disabled (state 1), on Modified duty (state 2) or Returned to full work (state 3). State 3 is absorbing. The monthly transition matrix is

P = \begin{array}{c|ccc} & 1 & 2 & 3 \\ \hline 1 & 0.5 & 0.3 & 0.2 \\ 2 & 0.2 & 0.4 & 0.4 \\ 3 & 0 & 0 & 1 \end{array}

The claimant is Totally disabled this month. Calculate the expected number of months, counting this month, that the claimant spends in states 1 and 2 before returning to full work. Give your answer to two decimal places.

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