Chapter 0 - Intro to health & care Flashcards
Key features of short-term products
- They are short-term (usually a year)
- There can be multiple claims
- Claim amounts are generally unknown and can be volatile
- There can be delays in reporting and settling claims
- They may be sold to individuals or on a group basis
Key features of Long-term products
- They are long-term
- Cover usually ceases on claim
- The claim amount may be known with certainty
- They are used for protection against ill-health or death, and savings
- They may be sold to individuals or on a group basis
Types of underwriting
- Full medical underwriting
- Any pre-existing conditions will be excluded
- Moratorium underwriting
- Instead of medical underwriting at the time of application, the insurer states the cover will not cover any medical conditions that existed during a pre-specified period prior to the policy commencing - Medical history disregard
- There are no exclusions for pre-existing conditions - No worse terms
- The new insurer agrees to cover at least as comprehensive as the policyholder’s current policy, with no additional underwriting conditions - Continued personal medical exclusion
- The new insurer promises only to carry forward such cover for medical conditions as existed under the previous insurance policy
Mutuality (+ disadvantages)
- A pool fund is created and premiums are paid into the fund
- the premiums paid are based on the risk presented by the policyholder at the time of taking out the contract
- Claims are paid out of the pooled funds in accordance with the policyholder agreement
- The assessment of risk in determining premiums may result in individuals being excluded from obtaining health insurance cover either because the risk is too great for insurers to accept, or premiums are too high for the individual to afford.
- the terms in the policy contract also limit the benefits
Solidarity and community rating
- it is similar to mutuality in that they both involve the concept of sharing losses
- the main differences are that:
– premiums are not based on risk, but rather the ability to pay or set equally
– losses are paid according to need
The general commercial and economic environment
- This stage sets the overall scene so that the actuary is fully aware of the environment he is going to operate in
- Some understanding of the environment in which health and care insurers operate is crucial to understand the risks and potential problems
Professionalism
It is the way in which an actuary carries out the work and presents the advice resulting from the use skills acquired.
An actuary must:
- Take responsibility for his decisions
- Act with integrity
- Develop a trusting relationship with the client
- Recognise that the there may be opposing views and that it might be valid
- Achieve and demonstrate competence on his specialised skill
Without-profits contracts
- How are benefits determined
- What happens if experience is better than expected
- Benefits (and premiums) are fixed at outset
- If experience is better than expected, the insurer benefits from the profits
With-Profits contracts
- Sharing of profits and hence the risks
- Typical to have some guaranteed benefits and some discretionary benefits
Unit-linked
- What happens to the premiums
- How is the P/H share determined
- Paying policyholder premiums into pooled investment funds
- The P/H share of the fund is represented by units
What does it mean if the fund is protected
- How are benefits paid?
- How does an insurer ensure it has sufficient funds to pay these benefits
What does it mean if the fund is not protected
- All benefits will be paid from the non-unit fund
- The unit fund will be returned to the P/H as a lump sum
- In order to pay these benefits, the risk charge taken from the unit fund each month must be set at a sufficiently high level to cover this
- The unit fund would initially be used to pay the benefits
- Once the unit fund is exhausted, then the non-unit fund would be used
- This would apply if the contract was being used for protection. ie against LTC costs
