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Health insurance

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Language:  English
In this eBook, equivalence premiums for health insurance contracts are obtained through multi-state modelling supported by a discussion of conventional health insurance products, stop loss insurance.
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This eBook provides approaches to multi-state and multi-decrement modelling of health insurance contracts followed by estimation of premiums based on the equivalence principle. Sickness insurance is analysed via the collective risk model. We describe conventional health insurance products (e.g., critical illness and income protection), life cycle of a health insurance claim, stop loss insurance, deductibles and policy limits, forms of anti-selection and moral hazard.

About the authors

Drs. Dick Harryvan has a graduate degree in business economics. He is an entrepreneurial executive with extensive experience in setting up life and direct retail banking green-fields including ING Direct the world’s largest direct bank which grew to 24 million customers. Being pragmatic, customer centric, focused and keeping things simple are keys to success and are reflected in this Art of Insurance series.
Dr. Abdul Rahman holds graduate degrees in mathematics and financial economics and won the best teacher award by MBA students for 12 consecutive years at the Telfer School of Management. He has published in prestigious academic journals, held university positions as Full Professor and Associate Dean and consulted for global financial institutions in banking, insurance and asset management .

  1. About the Authors
  2. Preface
  3. Setting the Stage: The Three-Party Intermediation Model 
    1. Introduction 
    2. Three-Party Intermediation Model for Health Insurance 
    3. Conventional Health Insurance Products 
    4. Life Cycle of a Health Insurance Claim 
  4. Policy Coverage Modifications, Anti-Selection and Moral Hazard 
    1. Introduction
    2. Fixed Amount Deductible 
    3. Franchise Deductible 
    4. Proportional Co-Insurance (Factor = α%) 
    5. Policy Limits 
    6. Stop Loss Insurance (Self-Funded Group Health Insurance) 
    7. Anti-Selection Risk 
  5. Health Insurance: Similar to Life Techniques (Part I) 
    1. Introduction 
    2. Directed Graphs 
    3. Transition Probabilities 
    4. Calculation of Transition Probabilities (Discrete Time Model)
    5. Premiums for Health Insurance (Based on Multi-State Models and Equivalence Principle) 
  6. Health Insurance: Similar to Life Techniques (Part II)
    1. Introduction
    2. Multi-Decrement Life Table
    3. Transition Probabilities in Multi-Decrement Models
    4. Estimating Net Premiums Based on the Equivalence Principle
  7. Health Insurance: Not Similar to Life Techniques
    1. Introduction
    2. Sickness Insurance Benefit Functions
    3. Modeling Sickness Insurance
    4. Collective Risk Model
  8. References

About the Authors

Dick H. Harryvan

Abdul H. Rahman