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System Communication

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Title: System Communication Author: Imad Kh. Malhas Last modified by: Sameer Gammoh Created Date: 5/11/2001 7:41:49 AM Document presentation format – PowerPoint PPT presentation

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Date added: 17 October 2019
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Title: System Communication


1
Welcome
Cogent ME International Insurance Reinsurance
Brokers
2
Medical Insurance Product Development, Pricing
and Reinsurance Presented by Sameer Gammoh
3
Agenda
  • Introduction
  • Product Development Benefit Design
  • Pricing Feasibility
  • Experience Pricing
  • Outstanding IBNR
  • The Role of TPAs
  • Reinsurance

4
Introduction
  • Causes Behind Health Insurance Losses
  • Importance of Maths in Health Insurance
  • Data Recording and Classification
  • Continuance Monitoring

5
Causes of Loss
  • Inability to Identify Legitimate Insured Members
  • Fraudulent claims Insured members abuse
  • No control mainly in out-patient claims
  • Inability to Control Extensive Procedures by HCPs
  • Health Care Providers abuse of benefits
  • No control mainly in out-patient claims
  • Growth Limitation
  • Personnel needed
  • Huge number of claims consistency
  • No Accurate Recording of Data
  • Inaccurate utilization rate by incident , type of
    illness and procedures
  • Inaccurate premiums that arent driven according
    to benefit design
  • Improper underwriting which isnt based on
    accumulation of know-how

6
Importance of Maths
  • Mathematical Modeling and Prototyping Based on
    Market Info Provides Better Understanding of
    Medex Insurance Business in any Market.
  • Statistical Data Related To
  • Average Cost Per In Patient Visit
  • Average Cost Per Out Patient Visit
  • Average Length Of Stay in Hospital
  • Average Cost Per Night
  • Average Utilization PPPA for In Patient
  • Average Utilization PPPA for Out Patient
  • Exposed Population in a Specific Underwriting Year

7
Importance of Maths
  • In Preparation to Calculate
  • Average B/C PPPA for In Patient
  • Average B/C PPPA for Out Patient
  • Average B/C PPPA for Each Benefit Type
  • Testing the Reliability of the Collected Data
  • Testing the Reliability of the Mathematical Model
    Based on The Collected Data.

8
Agenda
  • Introduction
  • Product Development Benefit Design
  • Pricing Feasibility
  • Experience Pricing
  • Outstanding IBNR
  • The Role of TPAs
  • Reinsurance

9
Benefit Design
  • In Patient Benefits
  • Out Patient Benefits
  • Maternity Benefit
  • Dental Benefit
  • Optical Benefit
  • Others
  • Repatriation
  • Assistance
  • Evacuation
  • Travel and accommodation
  • Long Term Care

10
Considerations
  • Limits
  • Coverage Limits
  • Covered cases
  • Excluded cases
  • Frequency Limits
  • In-Patient
  • Out-Patient
  • Other Limits
  • Financial Limits
  • Maximum limits
  • Deductibles
  • Co-insurance

11
Considerations
  • Coverage Duration
  • Short term
  • Annual
  • Long term
  • Age, Gender and other Risk Factors
  • Pre-Existing Conditions
  • Eligibility Conditions
  • Dependency Type
  • Nationality
  • Contributions

12
Agenda
  • Introduction
  • Product Development Benefit Design
  • Pricing Feasibility
  • Experience Pricing
  • Outstanding IBNR
  • The Role of TPAs
  • Reinsurance

13
Pricing Feasibility
  • Data Availability
  • Underwriting Info
  • Global Related to the employer
  • Specific Related to insured member
  • Past Claims Profile and Experience
  • Guessing Game
  • Compared to Similar Situations
  • Market Trend
  • Special Deviation Margins
  • The rule of Thumb

14
Pricing Feasibility
  • Pure Premium ( NRP )
  • Expected Actual Cost of Claims According to
    Benefit
  • Contingency Margins
  • Inflation
  • Gross Premium
  • Pure Premium
  • Other Loadings
  • Profit
  • Commission
  • Other overhead expenses
  • TPA fees
  • Stamps duty and Taxes

15
Expected Cost Calculation
  • Utilization Rate According to Benefit Type
  • In Patient
  • Out Patient
  • Dental Optical ..
  • Average Cost per Incident According to Benefit
    Type
  • In Patient
  • Out Patient
  • Dental Optical ..
  • Exposed Insured Population By
  • Class of Coverage
  • Age
  • Sex
  • Benefit Type

16
Utilization Rate Calculation
  • In Patient
  • For a Specific Insurance year (No. of
    Admissions)
  • Exposed Population According to Age , Sex and
    Class of Cover
  • Length of Stay per Admission
  • According to In Patient Type of Benefit
  • Utilization No. of Cases/ Exposed Population
  • Out Patient
  • For a Specific Insurance Year (No. of visits)
  • Exposed Population According to Age , Sex and
    Class of Cover
  • According to Out Patient Type of Benefit
  • Utilization No. of Visits/ Exposed Population

17
Average Cost Per Incident Calculation
  • In Patient
  • For a Specific Insurance Year (No. of Hosp
    Admissions)
  • For a Specific Insurance Year (Total In Patient
    Costs)
  • Average Cost per Case
  • Average Cost per Hospitalization Night
  • According to In Patient Type of Benefit
  • Out Patient
  • For a Specific Insurance Year (No. of Visits)
  • For a Specific Insurance Year (Total Out Patient
    Costs)
  • Average Cost per Visit
  • According to Out Patient Type of Benefit

18
Exposed Population Calculation
  • Total Insured Members
  • Total Members At Inception
  • Added Members During the Insurance Year
  • Deleted Members During the Insurance Year
  • According to Actual Transaction Date (Enrollment
    date)
  • Calculate Total Number of Insurance Days
  • Calculate Total Insured Members That Were Exposed
    to Insurance for 365 Days
  • At Any given Moment During the Insurance Year
  • Extrapolated for 12 Month (365 days)

19
Agenda
  • Introduction
  • Product Development Benefit Design
  • Pricing Feasibility
  • Experience Pricing
  • Outstanding IBNR
  • The Role of TPAs
  • Reinsurance

20
Experience Rating (Pricing)
  • Historical Data Needed
  • Min. 2 to 3 Years Claims Statistics According to
    Type of Benefit, Age, Sex and Dependency Type
  • The Exposed Population Corresponding to Claims
    Statistics for Each Insurance Year
  • Coverage Specifications Corresponding to Claims
    Statistics for Each Insurance Year (Any Coverage
    Change Must be Accommodated and Accounted for)

21
Experience Rating (Pricing)
  • Calculate the Following
  • B/C Burring Cost by Benefit Type per Insured
    Member (Age Group, Sex Dependency)
  • In Patient
  • B/C PPP ((Exposed population Utilization
    Rate)(Average Cost per Visit))/Exposed
    Population
  • Out Patient
  • B/C PPP ((Exposed population Utilization
    Rate)(Average Cost per Visit))/Exposed
    Population
  • All other Benefits The same

22
Experience Rating (Pricing)
  • Calculate the following
  • Extrapolate a 12 months B/C out of the historical
    data available
  • In Patient
  • B/C PPPA (B/C PPP /Period in study in days)
    365
  • Out Patient
  • B/C PPPA (B/C PPP/Period in study in days) 365
  • All Other Benefits The same

23
Experience Rating (Pricing)
  • Calculate the Following
  • Load for Deviation
  • Normally 5 to 10
  • 3 Years experience 5
  • 2 Years experience 7.5
  • 1 Year experience 10

24
Experience Rating (Pricing)
  • Calculate the Following
  • Load for Inflation
  • 2 Inflation loadings ( Value Frequency )
  • Value Inflation According to the changes in
    price lists, however in some country price lists
    are fixed by different bodies and dose not change
    often.
  • Frequency Inflation More health awareness
    increases frequency of claims therefore a of
    increased health awareness must be added .

25
Agenda
  • Introduction
  • Product Development Benefit Design
  • Pricing Feasibility
  • Experience Pricing
  • Outstanding IBNR
  • The Role of TPAs
  • Reinsurance

26
Outstanding IBNR
  • Definition
  • Outstanding Losses Are the Claims That are
    Received and Notified for But not Yet Paid
  • Actual counting of claims.
  • Actual amounting of claimed values (conservative)
  • Actual amounting of estimated adjudicated payable
    value
  • Outstanding Total value of claims under process

27
Outstanding IBNR
  • Definition
  • IBNR Stands for (Incurred But Not Reported) The
    Claims that Took Place but not Yet Notified for
    Nor Paid.
  • Depends on the (TAT) Turn Around Time for a claim
    from the moment it incurred until its reported,
    booked, accounted for and paid. (PMS) Performance
    Measurement System for claims.
  • Depends on the (ACPD) Average Claims Per Day
    (Adjudicated Value)
  • IBNR TAT ACPD

28
Agenda
  • Introduction
  • Product Development Benefit Design
  • Pricing Feasibility
  • Experience Pricing
  • Outstanding IBNR
  • The Role of TPAs
  • Reinsurance

29
Situation No TPA
Covered
Covers
Insureds
Reinsurers
Is insured
Pays
Visits
RI Broker
Insures
Pays
Healthcare Providers
Insurers
30
Insurance Companys Problems
  • High cost of Health Care
  • Insured Members and Providers Abuse of Benefits
  • Processing Claims are After the Fact
  • Insured Members Providers are Unhappy
  • Cost of in-House Administration
  • Waste in Time and Material
  • Lack of Specialized Technology, Expertise

31
Reinsurers Problems
  • Unavailable Statistical Info
  • No Accurate Recording of Vital Data
  • Reporting Delay
  • Inability to Propose Corrections on Time
  • Higher Involvement Higher Admin Costs
  • Files Open for Tremendous Period of Time
  • Ends up With Very Low Margin / Losses
  • Departing From Market and Use Capacity in Other
    Markets

32
Insured Company (Employer) Problems
  • Unsatisfied Employee
  • Drop in Productivity
  • Giving Advance on Salaries
  • Management Waste of Time (Solving Insurance
    Problems )
  • Changing Insurance Companies Seeking Better
    Product.
  • Unavailable Important Personnel Statistics

33
Insured Members Problems
  • Need Pre-Authorization Forms
  • - Weekends and Holidays
  • Need to fill out Paper Claims
  • Limited Healthcare Provider Network
  • Might Pay and Later Claim
  • Lack of Vital Medical History In Emergencies
  • Lack of a Common Medical Record
  • Vague Exclusions (Poor Satisfaction)

34
Healthcare Providers Problems
  • Delays in Payment
  • Reimbursement Losses Due to
  • Fraud
  • Vagueness of Coverage
  • Handling Different Polices and Plans
  • Identifying Legitimate Insured Members

35
Situation With TPA
Reinsurers
3rd Party Admin.
Insureds
RI Broker
Insurers
Healthcare Providers
36
Ideal -TPA Concept
Payers
Insurance Policy
Medical Record
Adjudicate
Network Agreement
Management Agreement
37
Ideal Communication System
Internet
38
Agenda
  • Introduction
  • Product Development Benefit Design
  • Pricing Feasibility
  • Experience Pricing
  • Outstanding IBNR
  • The Role of TPAs
  • Reinsurance

39
Medex Reinsurance Types
Facultative
Treaty
Proportional
Non-Proportional
Non-Proportional
Proportional
Q.S
X.L
Q.S
X.L
Surplus
Stop Loss
Surplus
Stop Loss
Spec. Agg.
Spec. Agg.
40
When And Why
  • Proportional
  • 1- Small Portfolio
  • 2- High Volatility
  • 3- Individual Business
  • 4- Small Groups
  • 5- Lack/Poor Experience
  • 6- Transfer of Know-how
  • 7- Untested Pricing Structure
  • 8- Untested Claims Handling
  • 9- Developing Stage
  • Non-Proportional
  • 1- Huge Portfolio
  • 2- Low Volatility
  • 3- Homogenous Portfolio
  • 4- Long Experience
  • 5- Acquired the Needed Know-how
  • 6- Reliable Pricing Structure
  • 7- Reliable Claims Handling System
  • 8- Maturity Stage

41
The Role of a Good Broker
  • Understanding of the Business and Acquiring the
    Needed know-how
  • Becoming a Consultant to the Client Rather Than
    Placing the Business Only
  • Working With all Concerned Parties (The Client,
    The TPA and The Underwriter)
  • Simply Acting More that a P.O. Box Between the
    Client and the Underwriter
  • Being Able to Deliver on Time
  • A Good Brokers Job Starts After the Signing of a
    Reinsurance Contract

42
QA
43
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