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Initial Selection and Cause of Disability for Individual Permanent Health Insurance

Published online by Cambridge University Press:  29 August 2014

María Cristina Gutiérrez-Delgado  and
Athol A. Korabinski
María Cristina Gutiérrez-Delgado*
Affiliation:
Department of Actuarial Mathematics and Statistics, Heriot-Watt University
Athol A. Korabinski*
Affiliation:
Department of Actuarial Mathematics and Statistics, Heriot-Watt University
*
Department of Actuarial Mathematics and Statistics, Heriot-Watt University, Edinburgh EH 14 4AS, United Kingdom, E-mails: [email protected], [email protected]
Department of Actuarial Mathematics and Statistics, Heriot-Watt University, Edinburgh EH 14 4AS, United Kingdom, E-mails: [email protected], [email protected]
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Abstract

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We investigate the influence of initial selection (the impact of underwriting during the early years of a policy's life) on individual Permanent Health Insurance claim inceptions. In Gutiérrez-Delgado (1999) a decreasing trend was found. In this paper we include the effect of cause of disability and fit a generalized linear model in order to gain a greater understanding of the phenomenon. Both effects, policy duration and cause of disability, are found to have a significant effect on the number of claims. We describe their influence using factors that collect the information available through the fitted model. Results from both factors suggest that the grouping of diseases selected for the research helps to explain partially our earlier results. In addition there is some evidence of moral hazard in mental disorders and musculoskeletal diseases which also contributes to the understanding of the negative trend found.

Keywords

Permanent Health InsuranceDisability Income InsuranceIncome Protection InsuranceClaim InceptionsInitial SelectionCause of DisabilityGeneralized Linear ModelsMoral Hazard
Type
Workshop
Information
ASTIN Bulletin: The Journal of the IAA , Volume 30 , Issue 2 , November 2000 , pp. 369 - 389
Copyright
Copyright © International Actuarial Association 2000

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