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  #1  
Old 03-21-2013, 02:07 PM
waltergriebenow waltergriebenow is offline
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Default How should we reserve for cancer product?

Dear friends,
I have a question about reserves for a cancer product. When a patient is positively diagnosed cancer,
a) Should we reserve the expected cost of the cancer that may span several years? i.e. a case reserve
b) Or should we only reserve for the short term treatment, weeks or months, and consider the subsequent treatments as part of IBNER (not enough reserved)?
c) Or should we reserve for the short term treatment and have IBNR only for bills that are pending to be received corresponding to already received treatment?

Or else.... ????

Is it correct in a cancer only product to consider all bills as part of one and only claim, or we could consider several claims each with its own accident date? This question is key.

Thanks,
Walter (Peru - S.America)
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  #2  
Old 03-21-2013, 02:23 PM
Dr T Non-Fan Dr T Non-Fan is offline
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Default

Definitely pick one and do it that way forever.

How are premiums paid? Monthly guaranteed renewable? One pay, good forever (requiring an active life reserve, which would then require a case reserve)?

You will probably have to structure your IBNR Claim Liability a specific way as well.
I recommend:
1. Incurred But Not Reported: you have no idea of these claims, though they have been incurred before your valuation date;
2. Reported But Not Processed: you know of these claims (case reserves, in a way), but might not know the exact amount eventually paid.
3. Processed But Not Paid: you know of these claims (case reserves, in a way), and you know the exact amount that will be eventually paid.
For these segmentations, you will need reported date, process date, and paid date for all claims, so your triangles can be created.

Your last question depends solely on the language in the insurance policy. If it states something like, "If you are diagnosed with cancer, then all cancer-related treatments will be covered," then that sounds to me like diagnosis date = incurred date, and all treatments will have that incurred date even if they occur on several dates to come. Whether your claims processor inputs the incurred date as such is a different story.

Remissions will be a bit of a hassle to predict.
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Old 03-22-2013, 03:38 PM
waltergriebenow waltergriebenow is offline
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Thanks for the reply. Policy covers one year and premiums are generally paid in 4 to 10 coupons with some interest for > 4 coupons.

The policy language does not clearly state guaranteed renewable, in fact it says that the insured has to accept the new conditions and terms of the policy. However, the new law of health insurance that will apply from May 2013 states the insured has the right to renew under the same conditions and benefits except for an increase in premium.

Doubt: is option c) valid in the USA? I read about continuation tables as a way to reserve for cancer but never found one of those tables.

Thanks a lot,
Walter
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