SOA真题November2001Course8I

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COURSE 8: November 2001 -1- STOP
Health and Managed Care
Morning Session
November 2001- Course 8M
Society of Actuaries
**BEGINNING OF EXAMINATION**
MORNING SESSION
Questions 1 – 6 pertain to the Case Study
1. (6 points) You have been provided the claims department statistics for Wonderful Life as
shown in Tables MM – 5a and MM – 5b.
(a) Explain why keeping claims inventory records is important for Wonderful Life.
(b) Assess the strengths and weaknesses of Wonderful Life’s claim status reports.
(c) Describe potential e-commerce functions and technologies that Wonderful Life
might implement to increase claims processing efficiency.
(d) Describe critical factors for the successful implementation of an e-commerce
strategy.
COURSE 8: November 2001 -2- STOP
Health and Managed Care
Morning Session
Questions 1 – 6 pertain to the Case Study
2. (8 points) You were recently hired as the financial actuary for Wonderful Life. Your first
project with the company involves a 3-year financial forecast.
In addition to information in the case study, you are given the following:
Annual Claims Trend = 15.4%
Monthly Claims Trend = 1.2%
July Seasonal Factor = .90
Seasonal Normalization Factor = 1.000
Projected Premium for January 2001 = $165,000,000
Projected Members for January 2001 = 980,000
Assumed Loss Ratio = .78
(a) Discuss phases of a sound financial management process.
(b) Describe methods commonly used to project claims costs and the conditions
under which each method may be appropriate.
(c) Calculate the Per Member Per Month (PMPM) claims cost for January 2001
under each of the four commonly used methods.
(d) Recommend one of the four methods for Wonderful Life to develop their
financial forecasts. Justify your recommendation.
COURSE 8: November 2001 -3- STOP
Health and Managed Care
Morning Session
Questions 1 – 6 pertain to the Case Study
3. (13 points) You are a group underwriter for Wonderful Life in the Major Medical
Division. You have obtained the following data for Groups 2 and 3 in addition to the
information already included in Table MM – 2 and MM – 3:
Additional Data for Experience Period July 1, 1999 through June 30, 2000
Annual Exposure
Total EEs
Total Claims
Group 2 120 $216,000
Group 3 225 $518,000
Total claims have not been reduced for large claims greater than $50,000.
(a) Describe various methods of pooling claims experience data that could be used in
developing experience rates.
(b) Discuss considerations involved in determining the credibility of a group’s
experience in the rate setting process.
(c) Calculate the composite renewal premium rate per employee for each of Group 2
and Group 3 using only the data in the case study. Show your work.
(d) Recalculate the composite renewal premium rate for each of Group 2 and Group 3
using a multi-year approach. Use the additional claims data provided above and
assume an equal weighting for each year of data. Show your work.
(e) Describe other considerations applicable when underwriting a particular employer
group that could affect the accuracy of your rate calculations.
COURSE 8: November 2001 -4- STOP
Health and Managed Care
Morning Session
Questions 1 – 6 pertain to the Case Study
4. (7 points) You are the Valuation Actuary for the Major Medical Division of Wonderful
Life.
(a) Describe common methods you might apply to estimate medical claim reserves.
(b) Calculate the outstanding liability as of December 31, 2000, for hospital claims
incurred from October 2000 through December 2000. Assume the claims
payment pattern for hospital claims incurred in January 1998 is representative of
future payment patterns. Show your work.
(c) Calculate the portion of the above outstanding liability expected to be paid by
March 31, 2001. Use the same assumptions as in (b) above. Show your work.
5. (6 points) For the past few years, Wonderful Life has seen its claim expenses grow at a
faster rate than its premium revenue, leading to a decreasing operating margin. In this
competitive environment, measuring claim cost trends and forecasting future trends in the
health insurance industry is crucial to accurate pricing.
You have been asked by the President of Wonderful Life to provide additional
information on medical expense trend to help him understand the situation.
(a) Define trend, its use, and its components.
(b) Discuss various techniques which can be used to analyze trend and common
problems encountered in trend analysis.
(c) Calculate the component of total trend attributable to deductible leveraging given
that total projected 2001 medical trend is 12%. Assume that the mix of business
by plan in Table MM – 3 and base manual claim rate in Table MM – 2a are
representative of all of Wonderful Life’s major medical business and are not
expected to change. Show your work.
COURSE 8: November 2001 -5- STOP
Health and Managed Care
Morning Session
Questions 1 – 6 pertain to the Case Study
6. (5 points) The Chief Operations Officer at Wonderful Life has returned from a seminar
where she attended a session on C-2, Insurance Risk. She is concerned about the impact
risk-based capital can have on growth. As the Chief Actuary at Wonderful Life you have
been asked to discuss these issues with the COO.
(a) Discuss characteristics used to determine the level of required surplus for
insurance risk
(i) for insurance companies in general, and
(ii) specifically for the four primary business divisions of Wonderful Life
(b) Discuss the relationships among growth, profit, and required surplus for C-2
Insurance Risk.
COURSE 8: November 2001 -6- STOP
Health and Managed Care
Morning Session