LTC claim example

Question 1

LTC claim example

Answer 1

In general, the issue with these practices is that while actuarial assumptions, such as continuance tables, are created from completed historical data, they are being applied to incomplete current data which can result in biased calculations.

Understated Reserves
-delay in updated services
-concluded claims more up to date than surviving claims
-removing terminated claims before final expenses submitted

Impact on Reserves (over or under)
-claimant info (region, type of provider, health status of spouse
-closing office (delay in claim processing)
-new computer system

Question 2

LTC continuance - data sources and considerations

Answer 2

data sources:
-NAIC has not specified a table for STAT use
-often use company experience if credible; consider credibility
-SOA publishes NH tables and private LTC plan reports
–experience for specific companies often varies widely from population studies

considerations:
-may use published industry data or own block; consider if industry data is applicable to your block
-different tables may be used for: reserving, experience analysis, management reporting
-continuance probabilities may vary by factors: age, gender, benefit period
-regularly compare actual experience to assumptions
-claim termination rates for most companies decline over time