Manual Premium Table [Archive]

chica

10-28-2001, 08:04 PM

This could be totally off the mark, and it might not make sense, but I believe the with manual premium table you look up the premium and then adjust it for group characteristics. With the manual claim table, though, you look up the expected claim, make adjustments and then divide by the amount insured to derive the premium... Is that what you were thinking? What I can't tell you, though, is if it even makes a difference!

Phil

10-28-2001, 08:22 PM

(this is a repost from earlier in this forum)

Manual premium tables are tables of Gross Premium rates, fully loaded for expenses, risk margins, and profits.
However, the expenses and margins included are just benchmarks, and the manual table has to be "adjusted" to reflect higher or lower expenses (etc.) characteristic of the particular product being insured.

Manual Claim tables are tables of NET premium rates, just the part of the premium required to cover benefits. No loading is included in them, unlike in the Manual Premium tables.

The required net premium depends on the mortality inherent in the product; therefore "adjustments" must be made to the manual claim table before it can be safely used.
Then, and only then, does the company add on its expenses and desired profits. (This step is *not* considered adjustments; it is considered loading. At this point you now have a manual premium table.

Now, you may be wondering, how can a manual premium table be developed without first starting from a manual claim table? I.e. how can you create a table of benchmark gross premiums without first knowing what the net premiums are? The answer is, you can't. The book seems to imply that you can, butthe book is wrong. The book should have introduced manual claim tables before talking about manual premium tables.

In the end, both methods (after adjustments) end up with the same Gross Premium rates to be charged.