Chapter 20: Group Pricing

Question 1

What are the special features of Group Pricing?

Answer 1

FIF WB

Free cover limit
Information limited for insurer
Flexible benefits
Workforce changes
Broker control

Question 2

What is the aim of a free cover limit?

Answer 2

1. Reduce the cost of underwriting to the insurer (cost saving)
2. Avoid inconvenience to the client (most members are not underwritten given that cover is compulsory)

Question 3

What factors need to be considered when deciding on the FCL?

Answer 3

ABCC RS

Anti-selection likelihood
Benefits offered
Costs of underwriting
Competitors practices
Regulatory restrictions
Size of employer & industry of employer

Question 4

What does the broker control in a group risk setting?

Answer 4

1. Influences the data & information available
2. Lowers insurers influence on employer attitude to risk/safety

The insurer must ensure that information is accurate and that they are receiving the same level of info as its competitors

Question 5

What are the RM tools for limited insured information?

Answer 5

1. Deposit premium to be paid upfront
   Retrospective adjustment premium at the end of the period of cover

Question 6

What is the procedure for calculating the book rate

Answer 6

1. Collect the relevant data
2. Split data into homogenous risk cells
3. adjustments for trends in claims

Question 7

What are some rating factors for group business?

Answer 7

Industry
Location
Size of group
Employers attitude to health