Chapter 6-7: Product Design & SH interest

Question 1

List the different stakeholders

Answer 1

• Customers
• Insurers
• Other internal parties (actuaries, underwriters, IT)
• Regulators
• Distributors
• Actuarial profession

Question 2

What are the interest of the customer

Answer 2

NCPGSCE

Needs met
Cash provided
Peace of mind
Guaranteed vs reviewable prem
Simplicity and clarity
Customer acceptability
Employer as a stakeholder

Question 3

What needs are met by a HC product?

Answer 3

 Finance medical treatment bills
 Finance cost of living
 Finance cost of care in old age
 Insure against inability to meet financial liabilities–Provide lump sum to repay loans
 Finance recuperation needs ( personal support, counselling, advice)

Question 4

Providing cash

Answer 4

 Most HC products provide cash
 Cash give PH a choice! {On level + use of benefit}
 Cash can be used to finance recuperation needs.
 Indemnity ensures the benefit is specific to insured event—PH wont use benefit on other needs
 Cheaper prices from providers if insurer negotiates for indemnity

Question 5

How do you control risk for PMI?

Answer 5

Pre-authorisation
Hospital networks (agree and monitor prices)

Question 6

How do you control risk for CI

Answer 6

 Underwriting & claims control (Protect against anti-selection + non-disclosure)
 Survival period imposed on stand alone policies
 Reserve adequacy for late notified claims
 PRE managed—in light of new diseases & market changes
 Policy wording (Careful)
 Large margins + reinsurers help due to scarce data

Question 7

What are the characteristics of micro insurance?

Answer 7

• Insurance for low income earners
• Focus on affordability and emphasis on basic needs
• Peace of mind is key for such
• Key for the developing work

Question 8

What needs are met by CI?

Answer 8

 Income source
 Repay loans
 Finance medical treatment
 Finance lifestyle change
 Finance recuperation post illness + prem for other product

Tiered benefits
 More comprehensive + fair
 Meets needs more

Key person cover
 Business partners but CI on each others lives benefit funds buyout of the stake in partnership.

Question 9

What are the insurers interests?

Answer 9

AMPLE DIRECT FACTORS

1. Customer acceptability
2. Competitiveness of product
3. Pricing
4. Underwriting methodology
5. Distribution
6. Regulation
7. Premium & benefit change
8. Profitability & ROC
9. Guarantee costs
10. Cross subsidies
11. Systems capabilities
12. Culture
13. HAF
14. Financing costs
15. Conflict between factors