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  #1  
Old 04-23-2018, 06:13 PM
greatWest greatWest is offline
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Default Statutory (GAAP) Reserve for Health Insurance Products

I've heard of Statutory and GAAP Reserve for life insurance products, and know that Statutory reserve is more conservative than GAAP reserve for life insurance products. But I've never heard of Statutory and GAAP Reserve for HEALTH insurance products. I know there is a monthly claim reserve for HEALTH insurance products.

Do actuaries use specific tables (and software, such as GGY AXIS) to calculate the so-called Statutory and GAAP Reserve for HEALTH insurance products?

For life insurance, I know that due to life insurance is long term, there are interest rate and motility table involved in the reserve calculations, and different interest rates and motility tables will give you different reserves, such as the Statutory and GAAP Reserves.

However, for health insurance, there is no interest rate involved due to health insurance is short-term insurance, and there is no motility tables or morbidity table involved in the reserve calculations. Instead health actuaries use the Completion Factors to calculate the claim reserves, based on the company's own recent claim experience.

So I get confused when people talk about Statutory and GAAP Reserve for HEALTH insurance products, and cannot stopping wondering what they are and how to calculate them.

Thanks everyone in advance for any inputs!

Last edited by greatWest; 04-23-2018 at 09:39 PM..
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Old 04-23-2018, 06:39 PM
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Carol Marler
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You need to be a bit more specific about what KIND of health products.
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Old 04-23-2018, 07:46 PM
Dr T Non-Fan Dr T Non-Fan is offline
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Basic Health Insurance doesn't have too much in "reserves" (ASOP definition) in that the term "reserve" is reserved (heh-heh) for claims incurred in the future . They are more concerned with "Claim Liabilities" which are claims that have already been incurred, but no one knows about, or IBNOKA. Kidding! IBNR, or Liability for "Incurred But Not Reported."

Specific products may have a claim reserve. LTC, LTD, and some issue-age products in which the premium is "loaded" with consideration for future claims in order to justify a lower loss ratio in the short-term without breaking minimum loss ratio regulations in some states.

Back to IBNR: there may be a difference in statutory versus GAAP. I do not know the details of these differences.
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Old 04-23-2018, 09:10 PM
greatWest greatWest is offline
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Quote:
Originally Posted by JMO View Post
You need to be a bit more specific about what KIND of health products.
Thanks Carol.

Medicare Supplement products.

So how many types of reserve are there?
say, claim reserve, GAAP reserve and Statutory reserve?
What is the relationship between those reserves?
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Old 04-23-2018, 09:49 PM
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Quote:
Originally Posted by greatWest View Post
Thanks Carol.

Medicare Supplement products.

So how many types of reserve are there?
say, claim reserve, GAAP reserve and Statutory reserve?
What is the relationship between those reserves?
For that kind of health insurance all you have is claim reserves and IBNR, like DTNF told you.

GAAP and Statutory reserves come into play when the premiums are guaranteed for several years. That means, typically, "death insurance" more usually known as life insurance. Annuities are a whole different kettle of fish.

Are you a student? What exams have you taken?
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Old 04-23-2018, 09:49 PM
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Quote:
Originally Posted by greatWest View Post
Thanks Carol.

Medicare Supplement products.

So how many types of reserve are there?
say, claim reserve, GAAP reserve and Statutory reserve?
What is the relationship between those reserves?
For that kind of health insurance all you have is claim reserves and IBNR, like DTNF told you.

GAAP and Statutory reserves come into play when the premiums are guaranteed for several years. That means, typically, "death insurance" more usually known as life insurance. Annuities are a whole different kettle of fish.

Are you a student? What exams have you taken?
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Pluto is no longer a planet and I am no longer an actuary. Please take my opinions as non-actuarial.


My latest favorite quotes, updated Apr 5, 2018.

Spoiler:
I should keep these four permanently.
Quote:
Originally Posted by rekrap View Post
JMO is right
Quote:
Originally Posted by campbell View Post
I agree with JMO.
Quote:
Originally Posted by Westley View Post
And def agree w/ JMO.
Quote:
Originally Posted by MG View Post
This. And everything else JMO wrote.
And this all purpose permanent quote:
Quote:
Originally Posted by Dr T Non-Fan View Post
Yup, it is always someone else's fault.
MORE:
All purpose response for careers forum:
Quote:
Originally Posted by DoctorNo View Post
Depends upon the employer and the situation.
Quote:
Originally Posted by Sredni Vashtar View Post
I feel like ERM is 90% buzzwords, and that the underlying agenda is to make sure at least one of your Corporate Officers is not dumb.
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  #7  
Old 04-23-2018, 10:56 PM
greatWest greatWest is offline
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Quote:
Originally Posted by JMO View Post
For that kind of health insurance all you have is claim reserves and IBNR, like DTNF told you.

GAAP and Statutory reserves come into play when the premiums are guaranteed for several years. That means, typically, "death insurance" more usually known as life insurance. Annuities are a whole different kettle of fish.

Are you a student? What exams have you taken?
I am not a student, but just never heard of this weird animal - guaranteed premiums for several years. Actually premiums are not guaranteed at all, each year there is an increase on premium. However, there is still GAAP and Statutory reserves come into play. So I am guessing that there are some other reasons other than you mentioned when the premiums are guaranteed for several years.

Thanks Carol!
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  #8  
Old 04-24-2018, 06:14 PM
greatWest greatWest is offline
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Default It looks like that statutory reserve has something to do with the Tabular Reserves

Statutory reserve = UP reserve + Tabular reserve ?
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  #9  
Old 04-24-2018, 06:47 PM
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Quote:
Originally Posted by greatWest View Post
Statutory reserve = UP reserve + Tabular reserve ?
Do you know what tabular reserve is? Do you know how out of date this definition is for UL and currently-sold term products?
I am no expert on health plans, but I am pretty sure there is no table of reserves for Medicare supplement coverages.
__________________
Carol Marler, "Just My Opinion"

Pluto is no longer a planet and I am no longer an actuary. Please take my opinions as non-actuarial.


My latest favorite quotes, updated Apr 5, 2018.

Spoiler:
I should keep these four permanently.
Quote:
Originally Posted by rekrap View Post
JMO is right
Quote:
Originally Posted by campbell View Post
I agree with JMO.
Quote:
Originally Posted by Westley View Post
And def agree w/ JMO.
Quote:
Originally Posted by MG View Post
This. And everything else JMO wrote.
And this all purpose permanent quote:
Quote:
Originally Posted by Dr T Non-Fan View Post
Yup, it is always someone else's fault.
MORE:
All purpose response for careers forum:
Quote:
Originally Posted by DoctorNo View Post
Depends upon the employer and the situation.
Quote:
Originally Posted by Sredni Vashtar View Post
I feel like ERM is 90% buzzwords, and that the underlying agenda is to make sure at least one of your Corporate Officers is not dumb.
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  #10  
Old 04-25-2018, 12:09 AM
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Discussions about GAAP and Statutory typically reflect the different accounting basis IMHO.
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