Page 183 - Ebook health insurance IC27

Sashi Publications

 Smooth progression of premium with age, sum assured
 Cross subsidy of other products
 Comparison of other products of same company
 Premium guarantee
 Other profitable products sold to the customer
 Relationship with client/chances of other business

Claim Reserving

 The insurance company sells a product during the whole year. At the end of the
financial year many policy may not have expired and may continue in next year.

 The insurance company must earmark reserve for payment of claims against the
premium received.

 Similarly at the end of financial year some claims which have already been occurred
may not have been reported to the insurance company known as Incurred But Not
Reported Claims(IBNR). The companies must also set out suitable reserves on the
basis of previous experience to cover these losses.

 Claim reserving is an important part since the insurance companies will have to fulfill
all its future liabilities.

 The claim management department must set asidethe reserve for theclaim themoment
it is reported.

 This claim reserving is done for each and every claim on case to case basis.
 Actuary plays an important role in claim reserving and uses the reporting delay

pattern and claim settlement pattern to estimate these numbers.

Website : www.bimabazaar.com, PH: 033 22184184/40078428 187