Session: 07

General Reinsurance

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Summary

For estimating reserve for medical stop-loss insurance, a usual conventional tabular method is not appropriate since the information about excess claims in this business are not available immediately. This is because of the nature of the excess claims occurrences. The excess claims are not just the first hand claims in usual insurance practice, but in order to occur an excess claim, it has to exceed the limits of specific coverage for an individual claim as well as of aggregate coverage for an employer group. Thus, medical stop-loss claims occur over a long span, about 24 months for specific coverage and 36 months for aggregate coverage, for a business underwritten in a calendar year. Thus, there is a need to develop an appropriate methodology to establish reasonable reserves for paying the claims that would be reported after the contract period and for preparing financial statements periodically.

This paper provides a practical and sound methodology for the estimation of reserves using appropriate set loss ratios and monitoring such ratios to reflect the actual loss ratios, as the experience develops over the period. The theory, application, and results noted in this paper are useful, not only to estimate appropriate reserves periodically, but useful to develop the competitive pricing and effective underwriting guidelines.

AUL C736
One American Square
P.O. Box 368
Indinapolis, IN 46206-0368

ACTUARIAL EXPERIENCE:
American United Life Insurance Company, Indianapolis, IN, Assistant Actuary, August 2000 - Present. 

Responsible for the actuarial functions of the medical stop loss business, including reserving, rating, and financial statements.

Blue Cross Blue Shield of Utica-Watertown, NY, Assistant Actuary, February 2000 - August 2000. 

Experience in Managed Health Care Industry: Report on Quarterly Incurred Claims by Type of Medical Services for HMO products; Report on Claims Expenses YTD March 2000 by Rate-type and Contract Category; Report on PMPM-Outpatient Claims by Hospitals; Analysis of Loss Ratio by product-type, natural markets, and Employer size category; Analysis of Outpatient Claims by type of medical services - in terms of PMPM claims, number of claims, and average cost per claim; Analysis of PMPM outpatient claims-cost by diagnosis code/type; and several other related studies.

A. S. D. Consulting Services, Mansfield, Ohio, Consultant, 6-91 to February, 2000 (A - Actuarial, S - Statistical, and D - Demographic) Participated in the Valuation Task Force (1997-99) of the American Academy of Actuaries, for the 'The Unified Valuation System,' to the Life and Health Actuarial Task Force of the National Association of Insurance Commissioners.

Presented the findings of the paper, "Insurance Insolvencies: Causes and Preventive Strategies" in two sessions 'Life Assurance: Avoiding Insolvency' and 'Life Assurance: Accounting and Regulation' at the 26th International Congress of Actuaries, Birmingham, England, U.K., June 7-12, 1998.

Prepared initial exhibits for the Actuarial Study project of the Ohio State Alternative Bonding System for the Reclamation of Mined Land (in collaboration with Milliman and Robertson, Inc.).

Designed and developed a large actuarial spreadsheet, and compiled the premium and loss data for major lines of Property & Casualty (P & C) insurance business, from Annual Statements. Computed fiscal year loss ratios and actuarial loss ratios for the analysis of differences between these two ratios (1988-1990) for Demotech, Inc., an actuarial consulting firm, Columbus, Ohio. 

Worked with William M. Mercer, Inc., an actuarial consulting firm, on a project which involved spreadsheet analysis of individual risk experience for employers insured by the State Insurance Fund of the State of Ohio; transferred the workers compensation data (5000 records: uneven fields) from ASCII files to Lotus 1-2-3 worksheets. 

Bidding and/or working on projects independently, and on projects or subcontracts with consulting firms. 

Submitted actuarial/analytical study bids for Request for Proposals (RFPs): 
1. Ohio State temporary Disability (Leave) Benefits Fund 
2. Ohio State Self-insured Automobile Liability program 
3. Geo-demographic Market Segmentation Study for Internal Revenue Services 
4. Society of Actuaries Research/Studies Projects: 
    (a) Health Risk Adjustment Research Project 
    (b) Evaluation of Public Financial Guarantee programs 
5. Evaluation of Medicaid program: HMO in Montgomery County, Ohio 

Insurance Department, State of North Dakota, Bismarck, Actuary, 4/1990 - 4/1991; Responsible for actuarial reviews of rate filings; analysis of credit life, and of credit accident and health insurance experience, in conjunction with prima facie premiums.

Completed the actuarial reviews of 15 rate (loss cost) filings, concerning requests for changes in premium, received from the insurance companies.

Analyzed the experience of credit life, credit accident, and health insurance, in conjunction with prima facie premiums and losses in the State of North Dakota. The findings of the analysis were presented by Mr. Pomeroy (then NAIC President and then Insurance Commissioner), in his testimony to the Executive Committee on Credit Insurance's public hearing on November 9,1990, Washington, D.C. Prepared a report on the Property and Casualty (P & C) Rate Making Procedure. 

The Shelby Insurance Company, Shelby, Ohio, Actuarial Analyst, 7/1987 - 1/1990. Responsible for personal lines (auto and home) rate reviews; gained experience in using total as well as basic limit approaches for auto rate reviews, including territorial rate changes by coverage; Developed a worksheet for the valuation of discounted reserve for indemnity benefits.

Designed and computed the increases limit factors for rate making of commercial auto liability, for several states (7/1987-11/1987).

Completed accurately actuarial rate (indication) reports (reviews): 35 actuarial exhibits for two personal auto rate reviews and one homeowner's rate review per month (1988-1990). These rate indication reviews include computation of: current amount factors for premium projection, current cost factors for loss projection, rate level adjustment factors, credibility factors, excess catastrophe loss factor, investment earnings on unearned premium and loss reserves, loss ratios, rate level changes, loss costs, loss development factors, unallocated loss adjustment factors, trend factors, and earned premium on current rate level.

Accepted and implemented three (out of four) cost saving ideas (contributed by me) for the Activity Value Analysis Program for the reduction of the Company's expenses, related to the actuarial rate (making) review methods (1989).

Maintained rate-impact-monitoring system for major lines of property and casualty insurance business (1989-1990). 

ANALYTICAL EXPERIENCE:
Extensive experience in analyzing socioeconomic, demographic, and actuarial data and prepared research papers and reports.

COMPUTER SKILLS:
Proficient in spreadsheet analysis (Lotus 1-2-3, MS-Excel), and dBase IV. Familiar with MS-Word and Access, Basic and FORTRAN programming, Program Logic, DOS/Windows/Utilities. COBOL, and NetWare (LAN).

EDUCATION:
A.S.A. Associate of the Society of Actuaries (SOA), Schaumburg, IL, 1994 
M. S. Actuarial Science, University of Nebraska, Lincoln, Nebraska, 1986 
M. A. Demography, Georgetown University, Washington, D.C. 1983 
M. S. Statistics, Gujarat University, Ahmedabad, India, 1969 
B. S. Mathematics, Gujarat University, Ahmedabad, 1965 (stood top in the class/College) 

PROFESSIONAL MEMBESHIPS:
Society of Actuaries (SOA), Schaumburg, Illinois, 1994 
American Academy of Actuaries (AAA), Washington, D.C., 1994 
International Actuarial Association (IAA), Ottawa, Canada, 1997 
International Union for the Scientific Study of Population, Liege, Belgium, 1978 

PROFESSIONAL ENRICHMENT: 
Business Management, Computer Technology, and Interpersonal Communication Associate Degree with honors in Technical Studies: Business Administration and Computer Information Systems, North Central State College (previously known as North Central Technical College), Mansfield, Ohio, 1999. 
Completed 151 credit hours with GPA 3.8+ (on a 4.0 scale).

HONORS / AWARDS:
National Dean's List 
Dean's list for five quarters 
Phi Theta Kappa Society member

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