actuariesindia.org ACET ST Health & Care Insurance Question Paper : Institute Of Actuaries Of India
Name of the Organisation : Institute Of Actuaries Of India
Degree : Actuarial Common Entrance Test – ACET
Subject : ST1 – Health and Care Insurance
Year : 2016
Document Type : Previous Years’ Question Papers
Website : https://actuariesindia.org/
Download Model/Sample Question Paper :
ST1 : https://www.pdfquestion.in/uploads/13268-ST1QP.pdf
ST2 : https://www.pdfquestion.in/uploads/13268-ST2QP.pdf
ST4 : https://www.pdfquestion.in/uploads/13268-ST4QP.pdf
ST5 : https://www.pdfquestion.in/uploads/13268-ST5QP.pdf
ST6 : https://www.pdfquestion.in/uploads/13268-ST6QP.pdf
ST7 : https://www.pdfquestion.in/uploads/13268-ST7QP.pdf
ST8 : https://www.pdfquestion.in/uploads/13268-ST8QP.pdf
ACET ST Health and Care Insurance Question Paper :
Time allowed : Three hours (14.45* – 18.00 Hrs)
Total Marks : 100
Instructions To The Candidates :
1. Please read the instructions on the front page of answer booklet and instructions to examiners sent along with hall ticket carefully and follow without exception
Related : Institute Of Actuaries Of India ACET Actuarial Risk Management Question Paper : www.pdfquestion.in/13265.html
2. * You have 15 minutes at the start of the examination in which you are required to read the questions. You are strongly encouraged to use this time for reading only, but notes may be made. You then have three hours to complete the paper.
3. You must not start writing your answers in the answer sheet until instructed to do so by the supervisor.
4. The answers are not expected to be any country or jurisdiction specific. However, if Examples/illustrations are required for any answer, the country or jurisdiction from which they are drawn should be mentioned.
5. Attempt all questions, beginning your answer to each question on a separate sheet.
6. Mark allocations are shown in brackets.
7. Please check if you have received complete Question Paper and no page is missing. If so, kindly get new set of Question Paper from the Invigilator.
Q. 1) A health insurer offers both long term individual and yearly renewable group income protection products.
i) Outline the key purposes of underwriting (4)
ii) Suggest possible rating factors for these products. (3)
The insurer has identified that its cost of operations with respect to these products has increased significantly over recent years.
iii) Suggest possible reasons for this. (12)
In order to reduce costs, the insurer is proposing to simplify the underwriting at the time of proposal from ‘full medical underwriting’ to a ‘close-ended Short Medical Questionnaire (SMQ) (that is, the questions will require a ‘Yes’ or ‘No’ response) based underwriting’ for the individual product and no individual member level underwriting for the group product.
iv) Discuss the likely impact of the proposed changes to the underwriting on the morbidity experience of the products. (6) [25]
Q. 2) A leading health insurer has been writing substantial amounts of yearly renewable individual Private Medical Insurance (PMI) business for the past 8 years. The product offers guaranteed renewability for life of the policyholder.
i) Outline the reasons why the persistency experience of the product should be monitored regularly. (4)
The insurer’s market share for the PMI business has fallen sharply in the last year due to cuts in premium rates by competitors. Hence, the insurer has decided to review the premium rates for its PMI product.
ii) Describe all the steps that would be involved in the review. (18)
Profit testing using the lowest premium rates offered by one of the competitors implies a significant reduction in the insurer’s profitability
iii) Suggest with reasons possible measures that the insurer could undertake to improve its market share without compromising on profitability. (6) [28]
Q. 3) You are the valuation actuary of a health insurance company. A member of the Board of Directors of the company has commented that the solvency capital locks in funds in an unproductive manner and therefore the company should not provide for any additional capital when provisions for policy liabilities have already been made in the form of reserves.
Discuss the reasons for companies holding solvency capital and its interaction with the mathematical reserves.
Q. 4) A large and well established life insurance company has decided to make a foray into health insurance by first launching an innovative hospital cash product. The product is an individual long term product with guaranteed renewability for life and premium rates remain level and reviewable every five years. It pays out a cash benefit, for a continuous period of hospitalization, of X per day for the first week of hospitalization, 2X per day for the second week, 3X per day for the third week and so on. The maximum number of weeks for which the benefit is payable is 12 weeks in any given policy year and 52 weeks for the life time. The policyholder can choose X from INR 1,000 to INR 5,000 in multiples of INR 1,000.
i) Briefly explain the various types of reinsurance arrangement that can be considered for the product. (7)
ii) Discuss the various aspects that the company has to consider in order to determine the type and level of reinsurance for the product. (7) [14]
Q. 5) You are the appointed actuary of a health insurance company which has been selling a long term critical illness indemnity product for the past 5 years. The product reimburses the actual expenses incurred for treatment of critical illnesses listed in the product, subject to a maximum of the sum assured. The premium rates are guaranteed for three years. No other insurance company in the market is currently selling this type of product. The insurance regulator requires a review and submission of all health products for fresh approval every five years after launch.
i) Outline the aspects that the regulator would expect you to have examined before submission for fresh approval after five years. (7)
The Chief Claims Officer of the company has proposed that the maximum amount payable should be linked to the severity of the illness and so should be different for different critical illnesses covered. ii)
Comment on the proposal. (4) [11]