Page 56 - MEDICAL AND HEALTH INSURANCE

MEDICAL AND HEALTH INSURANCE

Premium of an insurance policy is made up of two main elements, namely:

a) The risk premium, which is the part intended to pay for the

anticipated claim of a policy

b) The expense loading, which must provide for:

 Acquisition and maintenance expenses

 A margin of profit

 Contingency or security against statistical fluctuations

 Taxation and regulatory costs, etc.

Premiums are calculated based on the pricing analysis of various factors
affecting the outcome of the product. In general, if more is paid out on

claims for a particular risk pool, then the premium will be priced higher for

that particular product. The following sections list out some of the pricing

factors.

OCCUPATION AS A RATING FACTOR

Underwriters are concerned with any type of occupation that can increase
the likelihood of an illness, sickness or injury. Insurers have classified

occupational risk according to the type of perils they represent, i.e. as

accident perils or illness perils. Accident perils include the likely exposure

to the use of dangerous machinery, the handling of heavy objects and the
risk of falling, and so on. Illness perils include the exposure to pollution,

chemical, poison, extreme working conditions, and so on.

The following list is an example of risk classification based on occupational

hazards. Classification based on occupation:

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