Page 59 - MEDICAL AND HEALTH INSURANCE

MEDICAL AND HEALTH INSURANCE

than males. So, the cost of rating for females is generally higher than

males in providing health insurance cover. However, in today's product the

rate is generally levelled off, with a single rate applicable for both females

and males, for ease marketing.

Generally, as people grow older, there is more likelihood of getting sick
and mortality and morbidity rate increases with age. The length of stay in

hospital also increases to recuperate from any injury.

The insurer will price differently for different age groups and will normally

use a variety of age-bands in pricing. The age-band pricing may differ from
insurer to insurer but generally it is between the five to ten years band.

The insurer may increase or decrease the standard premium as in the

following example.

All products or schemes will have a minimum entry age and coverage up to

a maximum age. Some insurers will place a ceiling age of entry, for

example, renewal only from age 60 and coverage up to age 80 is allowed.

EXPERIENCE RATED

Experience rating is generally applicable to group policies to determine the
group rate to be charged. This is the process of using the previous years'

claim experience of the group and analysing the trend projected to

determine the group rate. The other two contributory factors used are the
group size and the type of coverage. The frequency of the claim and

average per claim are determined in the analysis and with projected

medical inflation, the future cost of expected claims to be paid can be

determined.

The insurer will have an administrative charge of the cost of providing

cover and this has to be accounted for in the premium computation
together with a margin of expected profit.

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