Page 171 - Ebook health insurance IC27

Sashi Publications

Important Points to Remember

 Data is the backbone for pricing in the insurance industry.
 The concept of insurance is based on law of large numbers and unless there is an

accurate data this average cannot be calculated and ultimately it would be difficult
to calculate the probability of losses.
 Policy design, business performance monitoring, product pricing, financial reporting,
asset liability management, are all dependent on historical data.
 Data is required not only for actuarial purposes for pricing the product but also in
the organisation to measure the efficiency of the operation.
 Claims data helps to calculate probability of future losses.
 Data also helps to understand which types of policies customers demand the most
and the policies which customers do not like.
 All departments of insurance companies require suitable data
 The TPAs must periodically submit claims data to IRDA.
 Data are utilised by the policymakers to make decisions

Importance of data for health insurance

Importance for insurance companies

For management Make informed decisions

Take corrective actions relating to

l Product design

l Pricing

l Business plans

l Marketing strategy

l Product removal

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