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F1 > Chapter 1 - PMI and other health-related > Flashcards

Chapter 1 - PMI and other health-related Flashcards

1
Q

Product design

A

Needs to consider:

  1. Needs of customers
  2. Roles of various stakeholders
  3. Cover provided and premium rates
  4. Risks involved in providing the health insurance and how the product and insurer processes can be structured to manage this risk
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2
Q

South African minimum benefits

A
  • emergency medical treatment
  • 270 PMB medical conditions and their treatments, classified into 15 broad categories
  • diagnosis and treatment of 25 chronic conditions
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3
Q

Medical savings account

A

Day-to-day medical expenses like medication, GP and specialist consultations are self-funded by policyholders through a medical savings account.

More comprehensive cover options will cover certain day-to-day medical expenses above an annual threshold as part of the risk benefit

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4
Q

General exclusions

A
  • alcohol and drug abuse
  • infertility
  • frail care
  • self-inflicted injuries
  • cosmetic surgery
  • experimental treatment
  • war risks
  • material violation of law
  • search and rescue
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5
Q

How can insurers manage claims costs?

A

Prevent over-claiming by:

  1. limitations and exclusions on benefits where the likelihood of moral hazard is high
  2. co-payments and levies
  3. medical savings
  4. approved provider networks
  5. preventative medicine and wellness programmes
  6. introducing managed care systems
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6
Q

How can approved provider networks help manage claims costs?

A
  1. Negotiating fees and service standards
  2. Treatment protocols
  3. Prior authorisation
  4. Employ own health professionals
  5. Regularly review utilisation
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7
Q

Related PMI products

A
  1. Major medical expenses
  2. Health cash plans
  3. Dental plans
  4. Optical plans
  5. Waiting list plans
  6. Health benefits in travel insurance policies
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8
Q

Major medical expenses

A
  • lump sum when policyholder undergoes surgery

- lump sum should cover in-patient costs with a balance for incidentals and recuperation expenses

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9
Q

Health cash plans

A
  • defined-benefit, defined-premium
  • specified payouts dependent on certain healthcare-related events
  • e.g. hospital cash plan and gap cover
  • benefits may be limited to a certain percentage of hospital bill
  • typically community-rated and waiting period usually applies

These include:

  • hospitalisation
  • gap cover
  • dental
  • optical
  • physiotherapy
  • maternity
  • recuperation
  • hearing aids
  • consultation

Reduces risk of anti-selection as cash benefit is generally small relative to the full cost of indemnity

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10
Q

Hospital cash plan

A
  • defined-benefit, defined-premium
  • fixed rand amount per day spent in hospital
  • usually paid from first or second day spent in hospital but only if the insured is hospitalised for a minimum number of days
  • not renewable annually - extends over lifetime until death or maximum age (usually 75) is reached
  • have option to escalate benefits
  • in SA, provided by insurers
  • individual risk rating is allowed because it is not meant to indemnify policyholders
  • limited underwriting
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11
Q

How hospital cash plans reduce anti-selection

A
  • fixed benefit per day rather than reimbursement

- waiting periods

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12
Q

Dental plans

A

The two principal methods are:

  1. Capitation basis - insurer and dentist agree a sum per mouth per annum
  2. Indemnity basis

Insured cover for:

  • emergency treatments (insurer)
  • treatments under normal circumstances (dentist)
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13
Q

Waiting list plans

A
  • provides standard medical insurance benefits where public health service is not in a position to provide treatment within a specified period.
  • this approach meets the customer need where the desire to buy insurance is to avoid waiting for treatment
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14
Q

Health benefits in travel insurance policies

A
  • covers emergency medical expenses when insured is away from home country
  • medical evacuation and repatriation are also covered
  • benefits limited to a maximum amount per trip and policyholders are able to select the benefit that is appropriate to them
  • hazardous activities and pre-existing medical conditions are usually excluded
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15
Q

Personal accident

A
  • short-term renewable
  • lump sum benefit to compensate for bodily injury as a result of an accident
  • usually have rider benefits for children (smaller benefit)

Often includes:
- accidental death and total permanent disability

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16
Q

Accidental death and TPD

A
  • must have been caused by an accident
  • difficult to determine if disability is permanent - use waiting period
  • definition of disability considers the severity of the condition and the extent of disablement
  • the cost of TPD will depend on definition of disability used
17
Q

Definitions of disability

A
  1. Occupation-based
  2. Related to ADLs
  3. Any occupation
18
Q

Occupation-based

A

This could relate to the inability of the life insured to perform:

  • their own occupation
  • all occupations to which suited by education, training or experience
  • any occupation
19
Q

ADLs

A

Inability to perform a number of normal everyday tasks. Typically include:

  • feeding
  • dressing
  • toileting
  • washing
  • mobility
  • transferring

Advantages

  • can be applied to a wider range of lives
  • only one definition throughout the term of the policy
  • less subjective
20
Q

Other definitions based on ADLs

A
  1. Activities of daily work
  2. Personal capability assessments
  3. Functional assessment tests

Includes skills like dexterity, mobility & communication

21
Q

What criteria should exposure measures meet?

A
  1. good measure of the amount of risk, allowing for expected frequency of claim and expected severity of claim
  2. it should be practical i.e. measure should be objectively measurable and should be easily obtainable, verifiable and not open to manipulation

For personal accident, the true measure of exposure is usually person-year because cover is normally defined in relation to the level of cover required by one person

22
Q

Personal accident - claim characteristics

A
  • reported and settled quickly (although sometimes subject to dispute)
  • defined in cover and can be very large
  • claims cost is known so settlement delays are reduced
  • incidence of event is usually clear so reducing reporting delays
  • claim frequency tends to be stable
23
Q

Risk factors & rating factor

A

Risk factor: Characteristics of the insured event that are known or suspected to influence claim costs

Rating factor: Factor that is actually used to determine premium. Often proxies to risk factors.

Occupation main rating factor

F1 (33 decks)

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