Disability Income Insurance: Evaluation of Results Flashcards
1
Q
Types of disability income claim experience studies (2)
A
- Actual to expected morbidity - this is the most preferable method of examining DI experience but often not enough data.
- Loss ratio - due to limited amount of data, most studies are based on claims ratios.
2
Q
Morbidity consist of (for A to E) (2)
A
- Rate of disability - the number of disabled lives per 1,000 lives exposed
- Rate of recovery - measures the length of disability. The number of disabled lives that will recover at different points in time per 1,000 disabled lives.
3
Q
Loss Ratio used in A to E (2)
A
- Cash claims ratio - claims dollars paid out divided by earned premium
- Incurred claims ratio (preferred) = (claims + active life reserve + clm rsv)/(earned premiums)
4
Q
Parameters to consider is a disability income claims or persistency study (16)
A
These parameters have an impact on claims cost (morbidity):
- Occupation class
- Occupation
- Policy form - study by policy form needed to determine whether pricing assumptions were correct for new forms
- Extra benefits
- Age
- Duration - due to wear off of UW selection, LR will be higher on older blocks than newer blocks
- Elimination period
- Benefit period
- Indemnity (benefit amount)
- Income
- Geography
- Agent and agency
- Sex - higher morbidity for women up to age 50ish
- Mode of premium payment - annual generates more favorable experiences
- Smoking status
- Combinations of the above parameters