Page 182 - Ebook health insurance IC27

The Insurance Times

 analysis of movement of policy such as renewal, cancellation
 asset liability modeling
 analysis of modeling customer behavior such as fraud, renewal

Actuarial science is a blend of four subject's statistics, mathematics, finance
and economics.

Subject Utility

Statistics Estimate future likely experience based on past data

Economics Understand the impact of macroeconomic factors on
the assumption such as long-term interest rate

Finance and mathematics Help in understanding the corporate governance
structure and the financial securities available in the
market

Fundamentals of pricing

 Pricing is the most important factor in the insurance business.
 Unless the price is fixed correctly the whole cycle of insurance may break down.
 Right pricing helps the insurance company to make suitable profit after meeting all

the expenses and claims.
 The past claim analysis is an important tool to assess whether the products are

priced correctly or not. The various rating factors must be considered thoroughly to
find the areas where the products are under or over priced.

What factors apart from technical, affects pricing

 Price of competitive products

186 Guide for Health Insurance