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http://beta.aalf.org/wiki/index.php?title=User:BriggsBarnett902&action=history Revision history for this page on the wiki en MediaWiki 1.13.3 Mon, 02 Nov 2026 00:46:04 GMT http://beta.aalf.org/wiki/index.php?title=User:BriggsBarnett902&diff=67158&oldid=prev <p>New page: [http://www.alternativerisksolutionsllc.net stop loss medical insurance] - If you are a small business owner or operator and wish to get an explanation of the way premiums are priced for t...</p> <p><b>New page</b></p><div>[http://www.alternativerisksolutionsllc.net stop loss medical insurance] - If you are a small business owner or operator and wish to get an explanation of the way premiums are priced for that company, then please continue reading. There are basically two ways these premiums may be calculated.<br /> <br /> Group Insurance Pricing<br /> <br /> The pricing (rate making) process in group insurance is essentially the same as pricing in other industries. The insurance company must generate enough revenue to pay the cost of its claims and expenses and give rise to the surplus of the company. It differs for the reason that the price of a group insurance method is initially determined on the basis of expected future events and may even also be subject to experience rating so that the final price to the contract holder can be determined only after the coverage period ends. Group insurance pricing contain two steps.<br /> <br /> (1) The resolution of a unit price, known as rate or premium rate for each and every unit of benefit (e.g., $1,000.00 of insurance coverage, $1 of daily hospital benefit, or $1 of monthly income disability benefit)<br /> <br /> (2) The resolution of the total price or premium that will be paid by the contract holder for all of the coverage purchased.<br /> The way of group insurance rate making differs based on whether manual rating or experience rating is used. In the case of manual rating, the premium minute rates are determined independently of a particular groups claim experience. When experience rating is utilized, the past claims connection with a group is considered in determining future premiums for that group and/or adjusting past premiums after a coverage period has ended. As in all rate making, the main objective for all types of group insurance policies are to develop premium rates which can be adequate, reasonable, and equitable.<br /> <br /> Manual Rating<br /> <br /> [http://www.alternativerisksolutionsllc.net san francisco] - Within the manual rating process, premium rates are established for broad classes of group insurance business. Manual rating can be used with small groups which is why no credible individual loss experience is available. This lack of credibility exist since the size of the group is definately that it is impossible to ascertain whether the experience is a result of random chance or is truly reflective of the risk exposure. Manual rating can also be used to establish the initial premiums for larger groups which can be subject to experience rating, particularly if a group is being written for the first time. In all but the largest groups, experience rating is used to combine manual rates and the actual experience of certain group to determine the final premium. The relative weights depend on the credibility from the groups own experience. Manual premium rates (also referred to as tabular rates) are quoted in a company's rate manual. As outlined above earlier, these manual rates are placed on a specific group insurance case to be able to determine the average premium rate for your case that will then be multiplied by the number of benefit units to secure a premium for the group. The rating process involves the determination of the net premium rate, the amount necessary to fulfill the cost of expected claims. For any given classification, this can be calculated by multiplying the probability (frequency) of your claim occurring from the expected amount (severity) of the claim.<br /> <br /> The second step up the development of manual premium rates may be the adjustment of the net premium rates for expenses, a risk charge, and a contribution to profit or surplus. The term retention, frequently used in connection with group insurance, usually is understood to be the excess of premiums over claim payments and dividends. It contains charges for (1) the stop-loss coverage, (2) expenses, (3) a risk charge, and (4) a contribution to the insurer's surplus. The sum of these changes usually is reduced by the interest credited to particular reserves (e.g., the claim reserve and then any contingency reserves) the insurer holds to cover future claims under the group contract. For big groups, a formula is normally applied that is in line with the insurers average claim experience. The formula varies from the size of a group as well as the type of coverage involved. Insurance providers that write a large volume of any given kind of group insurance depend on their own experience in determining the regularity and severity of future claims. Where the benefit is a fixed sum, as with life insurance, the expected claim is the amount of insurance. For many group health benefits, the expected claim is a variable that depends on such factors as the expected length of disability, the expected time period of a hospital confinement, or the expected amount of reimbursable expenses. Companies that do not have enough past data for reliable future projections may use industry wide sources. The main source for such U.S. industry wide data is the Society of Actuaries. Insurers also needs to consider whether to establish a single manual rate level or develop select or substandard rate classifications on objective standards associated with risk characteristics with the group such as occupation and type of industry. These standards are largely in addition to the groups past experience.<br /> <br /> The adjustment from the net premium rate to supply reasonable equity is complex. Some factors for example premium taxes and commissions vary with the premium charge. Simultaneously, the premium tax rates are not affected by how big the group, whereas commission rates decrease because the size of a group increases. Claim expenses often vary with the number, not the dimensions of claims. Allocating indirect expenses is usually a difficult process out of the box the determination of the danger charge. Community-rating systems, developed originally by Blue Cross Blue Shield, are often defined to limit the demographic as well as other risk factors being recognized. They typically ignore most or every one of the factors necessary for rate equity and may be as simple as one rate applicable to people with families. There is little actuarial rationale for charging all groups exactly the same rate regardless of the expected morbidity. Community rating may be mandated in some jurisdictions. This will make it a matter of public policy rather than an actuarial pricing question.<br /> <br /> Experience Rating<br /> <br /> [http://www.alternativerisksolutionsllc.net bay area] - Experience rating is the procedure whereby a contract holder is offered the financial benefit or held financially accountable for its past claims experience of insurance-rating calculations. Probably the major reason for using experience rating is competition. Charging identical rates for all groups regardless of their experience would lead to adverse selection with employers with good experience seeking out insurance companies that offered lower rates, or they would turn to self funding as a way to reduce cost. The insurance company that did not consider claims experience would, therefore, have only the poor risk. This is why Blue Cross Blue Shield had to abandon community rating for group insurance cases over a certain size. The starting point for prospective experience rating may be the past claim experience to get a group. The incurred claims to get a given period include those claims which were paid and those in process of being paid. In evaluating the amount of incurred claims, provision is generally made for catastrophic claim pooling. Both individual and aggregate stop-loss limits are established in which exceptionally large claims (above these limits) aren't charged to the group's experience. The &quot;excess&quot; areas of claims are pooled for all groups and an average charge is included in the pricing process. The approach would be to give weight for the individual groups own experience for the extent that it is credible. In determining the claims charge, a credibility factor, usually in line with the size of the group (determined by the number of insured lives insured) and the type of coverage involved, is utilized. This factor can vary from zero to one depending on the actuarial estimates of experience credibility and other considerations such as the adequacy of the contingency reserve developed by the group.<br /> <br /> In effect, the claims charge can be a weighted average of (1) the incurred claims at the mercy of experience rating and (2) the expected claims, with the incurred claims being assigned a weight equal to the credibility factor and the expected claims being used on a weight equal to one without the credibility factor. The incurred claims susceptible to experience rating want consideration of any stop-loss provisions. Where the credibility factor is a, the incurred claims subject to experience rating will be the same as the claims charge. In such cases, the expected claims underlying the mark rates will not be considered. Thus, when companies insure a small grouping of substantial size, experience rating reflects the claim levels resulting from that group's own unique risk characteristics. It has become common practice to offer to the group the financial benefit of good experience and hold them financially in charge of bad experience at the end of each policy period. When experience happens to be better than was expected in prospective rating assumptions, the surplus can either be accumulated within an account called a premium stabilization reserve, claim fluctuation reserve, or contingency reserve or even the excess can simply be refunded. The refund is either termed as a dividend (mutual company) or an experience rating refund (stock company).<br /> <br /> The internet result of the experience rating process is usually called the contract holder account balance, representing the final balance caused by the individual contract holder. As pointed out above earlier this balance or perhaps a portion of the balance can be refunded to the contract holder. The adequacy of the group's premium stabilization reserve influences dividend or rate adjustment decisions.</div> Thu, 26 Apr 2012 10:06:32 GMT BriggsBarnett902 http://beta.aalf.org/wiki/index.php?title=User_talk:BriggsBarnett902