Valuation of Group Life and Health Policy Liabilities Flashcards

1
Q

Challenges in valuations for group life and health business (8)

A
  1. ) Group insurance encompasses different LOBs with different features
  2. ) There is a wide variety of benefits and financial arrangements
  3. ) For groups beyond a certain size, contracts are usually customized and contain side agreements
  4. ) Record keeping and admin practices for 3rd party admin don’t always meet actuary’s need
  5. ) Statutory experience refund reserves may not equal the group’s surplus due to a diff in valuation bases.
  6. ) Wide variety of benefit types, contract provisions, and rating practices
  7. ) Group contracts are traditionally short-term, but some liab may be long term
  8. ) There are often data issues
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Considerations in assessing trends in disability termination rates (6)

A
  1. ) Changes in mix of disabilities by cause, by severity, or by geographical region
  2. ) Changes in level of benefits provided
  3. ) Changes in claim admin practices
  4. ) Economic cycles
  5. ) Material changes in inflation or benefit indexation
  6. ) Changes in gov plan def of disability (impact offsets)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Common types of reinsurance for group life and health business (3)

A
  1. ) Coinsurance - insurer cedes a portion of the business to one or more reinsurer. Each reinsurer holds the policy liab on its portion of the business.
  2. ) Modified coinsurance - insurer cedes portion of liabilites to other insurers, but retains the assets backing the policy liabilities (as an amount owing to reinurers)
  3. ) Excess of risk reinsurance - coverage amounts above the insurer’s retention limit is ceded to a reinsurer who holds the policy liabilities related to the coverage.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Pricing risk

A

Results as premiums reflect incorrect incidence rate assumption and claims reflect currently expected incidence rates

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Longer period of rate guarantee results in greater exposure to what type of risks? (2)

A
  1. ) Pricing risk

2. ) Interest rate risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Interest rate risk

A

Results is interest rates declined which makes the current benefits greater than premium.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly