Page 190 - Ebook health insurance IC27

The Insurance Times

(c) Age Distribution - The number of people covered in different age bands for
both group and individual policies. This analysis is used to study the percentage
share of each of the categories for each policy year and to understand the customer
profile changes from year to year in different age bands. This analysis helps in
understanding the demographics of the people covered, and hence the risk profile.

(d) Group Size Distribution - Group size is an important indicator of risk. In the
underwriting perspective, small groups represent riskier business while large groups
represent less risk. This analysis can show the number of people covered and the
premium for different group sizes for both group and individual policies.

It is used to study the average premium (per person) and the percentage share of
number of people for the corresponding categories in proportion to the total number
of people. This analysis illustrates the premium per person for different groups,
which help in understanding the change in claims cost from year to year and will
help facilitate monitoring the individual and the groups.

(e) Claims Probability Distribution - The distributions of number of claims paid
and the corresponding claim amount paid for different paid ranges. This is used to
study the percentage of total claim amount paid for each claim range, in proportion
to the total paid claim amount.

This helps to calculate the expected frequency and average amount of claim in
different claim ranges , and even the expected amount per claim. This analysis is
very important to understand the probability of claims of various sizes. The Actuary
then can develop the expected cost of claims for various sizes of covers. Then this
can form the basis of rate calculation of policies.

194 Guide for Health Insurance