Page 49 - MEDICAL AND HEALTH INSURANCE

MEDICAL AND HEALTH INSURANCE

b) Community rated - whereby the group experience will be pooled with

other groups within the community and the insurer will charge a fixed rate

for all members within the community depending on the community

experience.

2.4.2 FULLY INSURED

Individual and corporate bodies can minimise their financial loss arising

out of illness, sickness, disease or injury resulting in hospitalisation
treatment, by transferring the risk to the insurer through the purchase of

an individual or group PMI policy.

In this insured funding arrangement, the Insurer bears the risk of

unexpected high claims during the period of insurance, of which the
premium has been fixed upfront and will not be affected by the high

claims. The Insured is not exposed to the variability of high and low claims

experience and they can budget their expenses and their cash flow.

This fully insured program is subject to the product or plan offered by the

insurer and subject to the insurance policy terms and conditions and

exclusion of the limits of cover purchased. This means there may be less
flexibility in terms of plan design or coverage and subject to negotiation

with the insurer.

2.4.3 RISK SHARING

Some Insureds may wish to share in the Insurer's profit if the claim is low,

which is termed as a 'good claims experience refund'. There is incentive for

the Insured to maintain a healthy life and to have claims control, ensuring
that the risk is profitable. This is generally applicable for group PMI

policies.

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