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PREMIUM INDEXING IN LIFELONG HEALTH INSURANCE

Authors: Vercruysse, Ward; Dhaene, Jan; Denuit, Michel; Pitacco, E.; Antonio, Katrien;

PREMIUM INDEXING IN LIFELONG HEALTH INSURANCE

Abstract

For lifelong health insurance covers, medical inflation not incorporated in the level premiums determined at policy issue requires an appropriate increase of these premiums and/or the corresponding reserves during the term of the contract. In this paper, we investigate appropriate premium indexing mechanisms, based on a given medical inflation index. First, we consider a general relation between benefit, premium and reserve increases, which can be used on a yearly basis to restore the actuarial equivalence that is broken due to observed medical inflation over the past year. Next, we consider an individual premium indexing mechanism, depending on the age at policy issue, which makes the relative premium increases above the observed medical inflation more stable over time. Finally, we consider an aggregate premium indexing mechanism for a portfolio of new entrants, where the relative premium increase above the observed inflation is independent of age-at-entry, introducing intergenerational solidarity.

Countries
Netherlands, Belgium, Italy, Italy
Related Organizations
Keywords

330, Medical expense insurance, Lifelong contract, Medical inflation index, Reserve.

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
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