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Actuarial Risk Management > Chapter 7: Health Insurance products > Flashcards

Chapter 7: Health Insurance products Flashcards

1
Q

What does healthcare legislation cover

A
  • Provision of healthcare - should be provided
  • Nature of the provision of the healthcare - how should be provided
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2
Q

Indemnity cover

A

Provides benefits related to the loss incurred on the occurence of a health event - may be medical expense or another financial protection

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3
Q

State benefit cover

A
  • The policy document defines the benefit that is payable on the occurenece of a health event, regardless of the actual loss incurred.
  • The state will specify the rand amount to give everyone who experiences a specific health event, it doesn’t take into account how much one was earning before the health event.
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4
Q

Key features of short term health insurance contracts

A
  • Usually single year and renewavle
  • Can have multiple claims
  • Claim amounts unknown and volatile
  • May be a delay in reporting and settling claims.
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5
Q

Key features of a long term health insurance contract

A
  • Long term
  • Usually one claim
  • Claim amount sometimes known with certainty
  • Used to cover illness or death due to illness
  • Group cover usually 2 years and renewable
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6
Q

What type of underwriting does long-term health insurance usually make use of

A

Medical underwriting

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7
Q

Name the types of underwriting that short term health insurance usually makes use of

A
  • Medical underwriting
  • Moratorium underwriting
  • Medical history disregard
  • No worse terms
  • Continued Personal Medical Exclusion
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8
Q

Explain the following type of medical underwriting:
* Medical underwriting
* Moratorium underwriting
* Medical history disregard
* No worse terms
* Continued Personal Medical Exclusion

A

Any pre-existing conditions are excluded in the medical cover

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9
Q

Explain the following type of medical underwriting:
* Medical underwriting
* Moratorium underwriting
* Medical history disregard
* No worse terms
* Continued Personal Medical Exclusion

A

Not cover medical conditions that existed in a prespecified period

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10
Q

Explain the following type of medical underwriting:
* Medical underwriting
* Moratorium underwriting
* Medical history disregard
* No worse terms
* Continued Personal Medical Exclusion

A

No exclusions of pre-existing conditions - likely for group cover

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11
Q

Explain the following type of medical underwriting:
* Medical underwriting
* Moratorium underwriting
* Medical history disregard
* No worse terms
* Continued Personal Medical Exclusion

A

The insurer agrees to cover what was covered in the last policy, with no additional underwriting

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12
Q

Explain the following type of medical underwriting:
* Medical underwriting
* Moratorium underwriting
* Medical history disregard
* No worse terms
* Continued Personal Medical Exclusion

A
  • The new insurer promises only to carry forward such cover for medical conditions as existed under the previous insurance policy
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13
Q

Name the main types of healthcare insurance products

A
  • Private medical insurance
  • Critical illness
  • Long-term care
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14
Q

Explain the following type of healthcare products:
* Private medical insurance
* Critical illness
* Long-term care

A

Covers expenses or access to healthcare benefits

Medical aid

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15
Q

Use to meet customers’ needs of private medical insurance

A

Provide all forms pf insurance on an indemnity basis if no state insurance exists:
- Medical attention without waiting
- Higher standard of accomodation
- Doctor of choice
- local (or private) hospital

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16
Q

Explain the following type of healthcare products:
* Private medical insurance
* Critical illness
* Long-term care

A

Paid on diagnosis with a specified list of conditions:
* Perceived as serious
* Each cover is defined clearly
* There is enough data for pricing

17
Q

Use to meet customers’ needs of critical illness cover

A
  • Source of income if illness causes inability to work
  • Reapying mortage or laon
  • Medical costs
  • Use to buy out partnership
  • Assist with change in lifestyle
  • Provide for recuperation after illness
18
Q

Key requirements for a group scheme for critical illness

A
  • Definition of who is eligible to join
  • Benefits clearly defined (size, definition of valid claim, term)
19
Q

Explain the following type of healthcare products:
* Private medical insurance
* Critical illness
* Long-term care

A

Provide for custodial care where the policyholder has diminishing capacity, usually measured with reference to the activities of daily living

20
Q

Use to meet customers’ needs of long term care cover

A

Financial protection if a person is unable to look after themselves

21
Q

List some examples of activities of daily living

A
  • Washing
  • Dressing
  • Feeding
  • Toileting
  • Mobility
  • Transferring
22
Q

Examples of cash benefits

A
  • Major medical expenses
  • Hospital cash plans
  • Medical shortfall cover
  • Personal accident
23
Q

Mutuality

A

A pooled fund is created and premiums are paid into the fund by policyholders
* Premium per policyholder is determined by the underwriting process.
* Losses are paid per an agreement with each policyholder

24
Q

Solidarity

A

A pooled fund is created and premiums are paid into the fund by policyholders
* Premium per policyholder is determined based on affordability.
* Losses are paid according to need.

25
Q

Use of reinsurance in short term health care

A
  • Protection against large claims
  • Need to take on larger and more risk with capital constraints
  • Reduce impact of accumulations of risks and catastrophes
26
Q

Use of reinsurance in long term healthcare

A
  • Cope with claim payout fluctuations
  • Need to finance new business claim
  • Need to obtain technical assistance and data for new contracts
27
Q

What should the investment strategy for healthcare products consider in terms of liabilities

A
  • Nature
  • Currency
  • Term
  • Level of uncertainty
28
Q

Who provides cover for healthcare products ?

A
  • State
  • Subsidised healthcare
  • Mutual organisations
  • Insurance companies
29
Q

What are the key risks in health insurance

A
  • Claim frequency, benefit amount, volatility and settlement delays
  • Accumulation of risk, catastrophes, and a large number of large claims
  • Investment risks
  • Expenses being higher than expected
  • Poor persistency
  • Poor plan mix
  • Underwriting risk
  • Credit risk
  • Operational risk
  • Availability of claims data
30
Q

Reimbursement mechanisms

A
  • fee-for-service
  • Negotiated fee-for-service
  • Global fee
  • Capitation

Actuarial Risk Management (38 decks)

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