What are the different sources of data?
- Reinsurance data
- Internal data
- Industry data
- Population data
- Rate table software
- Trade magazine
- Overseas data
- Actuarial consultants data
Why might external data not be relevant?
Differences in:
- Approach to underwriting and acceptance
- Policy conditions
- Claims management
- Distribution method and channels
- Target market
Population data
- definitions might be subjective and double counting is an issue
- Might be out-of date
- Might be in an inappropriate format
- Should be credible
- Might not be relevant but can improve by splitting into socio-economic groups, regions and age blocks
- insured lives should be healthier as they were underwritten and accepted for cover
- but having an insurance policy may lead to moral hazard + anti-selection may be present
- The circumstances of the onset and continuation of a sickness or incapacity are unlikely to coincide exactly with the definition of a ‘claim’ under the insurance policy
Reinsurance data
- The reinsurer should make the data as relevant as possible
- Further adjustments may be needed to allow for the company’s specific underwriting and claims management practices.
- The credibility will vary, but it should be more credible than own data.
- The reinsurer is most likely to provide data in return for a share of the business.
Market data
Insured lives data
* Should be more relevant than population data as it is based on local experience of insured lives.
* It may not be relevant to individual insurers and by the time it is published, it may be out-of-date.
* It should be credible.
Returns to the insurance supervisor (regular reports and data submissions that insurance companies are required to provide to the regulatory authority )
* Likely to be accurate, but it may be hard to extract useful information.
* More likely to be used as an overall check of other data sources.
Overseas data
- May choose to use broad based population ratios to assess the higher or lower likely claims experience locally relative to that inherent in the database available.
- This may not be particularly relevant (due to differing cultures, State healthcare provision, legislation and regulation, market practices, target markets etc.)
- It may be credible.
Actuarial consultants data
This is similar to reinsurers’ data, however the consultants are likely to have less of an interest in the risk and would normally charge a fee for their services.
Trade magazines
- Trade magazines, national and global, will often be a source of statistics to assist in the risk projection process.
- These may also be useful for checking final results.
Rate table software
- In some territories, for individual business, there may be companies that issue software comparing market premium rates for similar products of a given class.
- This may be useful in gathering initial data, or checking final premium rates.
What data can be used to get average claim costs?
Require local expertise to determine
Ask medical doctors in market
Costs might be available from
Hospital reports or research reports
Need to allow for changes in treatment or diagnostic techniques
Allow for changes in providers, countries and state intervention level
