Sn 206-00 Variation In Claim Costs By Duration In Small Grp Medical Ins.

Front 1

Watch for the words “Newly underwritten _____ insurance” in the exam question. That’s a hint that you need the Durational Slope model (this SN) or the CAST model (TSA 34) or one of the others in SN 209.

Back 1

none

Front 2

Reasons why Incurred Claims Increase By Duration:

Back 2

 Underwriting wear-off
 Antiselective lapses
 insureds delay care until familiar with the claims process
 disabled ph’s still covered by old cpy.

Front 3

Reasons why Paid Claims Increase by Duration:

Back 3

 The above, and:
 claims not submitted until after elimination period
 2nd, 3rd, etc. year paid claims include more incurral years

Front 4

GOAL OF THIS STUDY:

Back 4

To find out how the shape of the durational claim cost curve varies by
 UW method
 Size of group
 pre-existing-condition exclusion period

Front 5

METHOD USED IN THIS STUDY

Back 5

Collecting data:
 wait until claims are complete
 ignore cells with not enough data (common in later durations, since lapses are high)
 Plans studied must have similar:
 deductibles
 plan type
 no reinsurance
 underwriting (within each UW category)
 no procedure changes during the experience period
Adjustments to data:
 Normalize data using adjustment factors to remove the effect of differences due to:
 plan design
 Geog Area
 Demographics
 Inflation / trend
 review data for reasonability.

Calculation Method
(See numerical examples in chapter notes)

Front 6

RESULTS OF STUDY

Back 6

see notes