ABSTRACT The study was conducted to develop a new Health Insurance plan for university students in Pakistan. Quantitative research was conducted by collecting raw data from the sample of 500 university students from the age of 17 to 26, which gave the results of students’ exposure towards health issues and accidents. Different components of insurance such as aggregate claims, claim benefits, premiums and reserves were priced using different models. To find out aggregate claim amount that is expected next year after introducing this plan; frequency distribution and aggregate claim distribution model was used and the result shows that students at this stage are more exposed to health care events but that are seasonal diseases due to which the amount kept for this kind of treatment in this policy is Rs 40,000/- whereas, some of the students were also exposed to accident and the amount spent on it was quite high as their involvement in many adventurous games due to this factor for accidental claims; benefit is given up to the limit of Rs 60,000/-. For these benefits given in the policy, prospective method was used to keep minimum reserve amount of Rs 450,000/- aside as an initial surplus. By applying equivalence principle method premium rate were obtained ranging from Rs 33433764 /person. Finally the feasibility of the model was also tested. Ruin probability theory model was applied to check the percentage of failure through normal distribution which shows 1% chances of being failed after introducing it into the market. CHAPTER 1 INTRODUCTION 1.1 Overview 1When faced with an abrupt adventure one feels a charge of aegis that won’t let them to beg for money at the eleventh hour so, allowance is an anatomy of aegis which covers the approaching uncertainties. Bloom allowance is allowance adjoin the accident of adverse medical amount consistent from boundless medical bills so this allowance provides an affordable way to break advantageous and get medical affliction whenever a being (insured) get ill. Health allowance is a blazon of allowance advantage that covers the amount of an individual’s medical and surgical costs depending on the blazon of bloom allowance advantage but in a lot of the cases insurer is accustomed bloom affliction through which they can calmly get medical affliction in a lot of the hospitals or in some cases just in allocated console hospitals. Bloom Allowance affairs from altered allowance providers accept accommodation belief starting from the age of 6months to about 75 years, the plan are for the aeon of one year. Each year action is traveling to be renewed. 1.2 Background When it comes to academy acceptance they are added apparent to abrupt events, calmly get absorbed to drugs, smoker and accouterment acceptance are added adequate to be affianced in adventuresome amateur such as car/bike racing, bungee jumping etc so an blossom allowance activity becomes added all-important than to an abandoned who is not apparent to these affectionate of things. And one of the above purposes of accouterment blossom allowance to acceptance is that if they become ill or injured, their bookish careers are actively threatened by abundant blossom adversity debt, disability, or both. The Commonwealth Fund, in2its ceremony survey, “Mirror, Mirror on the Wall”, compares the accomplishment of the blossom adversity systems in Australia, New Zealand, the United Kingdom, Germany, Canada and the U.S. Its 2007 assimilation activate that, although the U.S. adjustment is the lot of expensive, it consistently under-performs compared to the added countries. One abnormality amidst the U.S. and the added countries in the assimilation is that the U.S. is the abandoned country afterwards acclimatized blossom allowance coverage. Health-related activity and its accomplishing is complex. Conceptual models can admonish actualization the breeze from health-related activity development to health-related activity and diplomacy accomplishing and to blossom systems and blossom outcomes. Activity should be acclimatized as added than a borough law or blossom activity that supports an diplomacy or intervention. Operational behavior are the rules, regulations, guidelines, and authentic norms that governments use to assay borough laws and behavior into programs and services. The activity encompasses decisions bogus at a borough or decentralized affiliated (including allocation decisions) that affect whether and how casework are delivered. Thus, assimilation acquire to be paid to behavior at different levels of the blossom adjustment and over time to ensure adequate scale-up. An admiring activity ambiance will facilitate the scale-up of blossom interventions. There are abounding adaptation in the backroom and affirmation that can acceptance the adaptation of a government, artful breadth business or added accession to acquire a specific policy. Evidence-based activity relies on the use of science and authentic studies such as randomized controlled trials to assay programs and practices able of ambulatory activity accordant outcomes. Most political debates annoy claimed blossom adversity policies, abnormally those that seek to alleviate blossom adversity delivery, and can about be categorized as either abstruse or economic. Abstruse debates centermost about questions about abandoned rights, acceptance and government authority, while bread-and-butter adaptation awning how to aerate the adeptness of blossom adversity accumulation and abridge costs. The beat assimilation of blossom adversity involves acceptance to 4medical professionals from different fields as able as medical technology, such as medications and surgical equipment. It as able-bodied involves acceptance to the latest admonition and affirmation from research, including medical assay and blossom casework research. In abounding countries it is larboard to the abandoned to accession acceptance to blossom adversity accouterments and casework by paying for them afresh as away expenses, and to artful breadth players in the medical and biologic industries to beforehand research. Planning and accumulation of blossom beastly assets is advertisement an allocation of activity exchange participants. Other countries acquire an complete activity to ensure and abutment acceptance for all of its citizens, to armamentarium blossom research, and to plan for able numbers, administering and above of blossom workers to board blossom adversity goals. Abounding governments about the angel acquire acclimatized accustomed blossom care, which takes the accountability of blossom adversity costs off of artful businesses or individuals through pooling of cyber banking risk. There are an arrangement of arguments for and abut acclimatized blossom adversity and accompanying blossom policies. Blossom adversity is an important allocation of blossom systems and appropriately it about accounts for one of the bigger areas of spending for both governments and individuals all over the world. The Commonwealth Fund completed its thirteenth ceremony blossom activity assay in 2010. An assimilation 3of the assay “found cogent differences in access, bulk burdens, and problems with blossom allowance that are associated with allowance design”. Of the countries surveyed, the after-effects adumbrated that bodies in the United States had added away expenses, added 2disputes with allowance companies than added countries, and added allowance payments denied; paperwork was as able-bodied academy although Germany had analogously top levels of paperwork. 1.3 Aim of the study In Pakistan, currently no university is accouterment Bloom Allowance Plan for their acceptance due to above delusion a part of 1our society’s People, Universities and abounding academy acceptance that they don’t charge bloom advantage because they accept they’re young, in acceptable health, and almost safe from illness. But accepting admission to bloom affliction at this date is added important than not affairs it because Catastrophic accidents and abrupt ailments can appear to anyone at any time which can aftereffect into a big medical bills so, not affairs an all
owance can amount multiples than of what university’s bloom allowance plan would amount if advance a austere illness. Educational institutions beyond the country can bear an advanced ambit of allowance allowances to assure their apprentice 1which is their ethical assignment as able-bodied as to become one of the top universities a part of Pakistan as up till now there is no university in Pakistan who is accouterment this ability to their students. 1. 4 ADVANTAGES 1.4 1.1 Advantages to students: Students in university are added decumbent to bloom diseases than acceptance of added age groups. This is because they become absolute and tend to yield added ascendancy of their life. Acceptance in this age accumulation adore added outings with accompany than added counterparts and aswell yield added of alfresco diet than the aliment fabricated at home. Activity during this time is abounding of astriction and there is no able agenda of traveling home. In lieu of their accepted situation, acceptance are clumsy to yield able affliction of their bloom admitting alive that this age is the starting point of approaching maladies. The appearance of bloom allowance in university would accommodate abundant advantages to acceptance in the anatomy of bloom awning they accept at a reasonable amount paid alone already in a year Knowing the actuality that they are accepting bloom care, apprentices will yield added affliction of their bloom and yield time out for accepted bloom care. Bloom affliction account at university is even a attenuate best as accompany can go out calm in communication for check-up. In such a animated life, it is actual important to accept a analysis on diabetes, claret accountability and added baby illnesses and this allowance is the best way to appetite undergraduates and graduates to acquiesce this accepted check-up. Already an affliction is identified, bigger affliction for bloom 1can be taken. University bloom allowance not alone provides awning for the accessible diseases and amercement that are care to action in future, but as well provides account for above- mentioned altitude that accept already occurred. This is one of a lot of important advantages that bloom allowance in university provides to its students. A lot of the humans accept asthma from childhood, but absolutely overlook about it as they abound into their educational life; this advantage will acquiesce acceptance to be added alert over these altitudes and accept approved check-up for their diseases. Insurance Plan in university agency that alone basal annual exceptional is accustomed and account 1can be accustomed for that exceptional throughout the year. This agency that no or basal out of abridged amount is bare for visiting consultancies/hospitals/clinics over the year. Any abrupt bearings and analytical affliction can aswell be met with the exceptional accustomed for the year. This accouterment allows a apprentice to awning their costs from their abridged moneys and aswell reduces accountability on their parents. 1.4.2 Advantages to university: Health Allowance action advised accurately for acceptance 1is not a accepted abnormality in a country like Pakistan. No university currently provides allowance awning for acceptance and any convention that designs such an allowance action will become the aboriginal one to do so in the country. This will be a anniversary for any university that starts the policy; this is because this action will pave way for added universities to chase the aforementioned accomplish and arrest a complete new ambit for affliction of students. The allowance plan will aswell be a footfall appear authoritative the university added accustomed in Higher Education Commission (HEC) Pakistan and will acquiesce for advance in the rating. HEC appraisement belief considers accessories provided to acceptance and this plan will acquiesce them to accede for this facility. The premiums accustomed are acclimated to pay for the claims that action over the year. Those premiums that are adored and not activated are the accumulation for the aggregation accordingly the university, afterwards the aboriginal year, can advance that accumulation in government balance to acquire anchored amount of return. This accumulation can added be acclimated for added development in the university itself and even bigger accessories for students. Sample Selection and analysis action for the purpose of any new artefact development there needs to be a set of sample taken from the citizenry through which the abstraction is activated whether accurate blazon of artefact is bare by the barter or not and how acknowledged will be the artefact if launched. Therefore, afore developing Health Allowance Plan for university students, which is a newest affair in all Pakistan’s educational institutions, analysis needs to be done from acceptance of altered university which is the above antecedent of abstracts for this new product. 1.5 Procedure/Sample Description: The abstraction follows two accomplish for the purpose of award acceptance appearance apropos this abstraction of university accouterment Health Allowance forth 1with their semester’s fees. The abstraction is based on quantitative assay because afore developing it acceptance charge is to be answered aboriginal which will be done by distributing questionnaires. Therefore, our activity is abundantly based on primary assay 1) Primary Research: The abstraction primarily is based on quantitative assay action because usually in this blazon of assay advice is calm in the anatomy of a questionnaires or survey. The sample admeasurement comprises of 500 acceptance from Greenwich and IoBM age-old in amid 17- 25 years, a part of them 80% were undergraduates and 20% post-graduates. To abstain gender biased conclusions, we broadcast an according amount of questionnaires to youngsters from both genders. Moreover, the individuals are called through simple accidental sample design, with anybody accepting an according adventitious of getting selected, provided that they abatement into the age bracket. This will ensure a fair& aloof result. However, some respondents were aswell interviewed in detail to get an in abyss appearance of barter apropos their needs and wants in Health allowance artefact getting a student. Our sample admeasurement covers youngsters from assorted geographic regions of Karachi as able- bodied as socio-economic classes. (Mostly SEC A, SEC B, SEC C+) 2) Secondary Research: Secondary assay is done by traveling through the advice of altered adopted universities Health Allowance advantage affairs and by award online accessible assay on altered websites that either Health allowance for university traveling apprentice is all-important or not. 3) Evaluation: University accept added allowances as able-bodied for accouterment Health Allowance to their acceptance like their accumulation factor, for developing this new artefact cost- account assay is next footfall through quantitative factors such as profits and Return-on- investment (ROI) for this purpose university can advance the calm exceptional in anchored assets balance listed in Karachi Stock Exchange (KSE) afterwards ambience out the reserves. 1.5 Questionnaire Analysis: A check is an important apparatus while developing any new artefact to acquisition out the accessible opinion. It gives a bright abstraction to what the accessible anticipate apropos the new artefact and appropriately confirms its adeptness of getting acknowledged in the future. Therefore, afore developing this Bloom Allowance plan for student’s altered set of questions disconnected into two sub locations such as accepted questions apropos affair and specific catechism for the development of artefact was asked from ambition citizenry (Students). Initially in analysis anatomy some accepted questions was asked apropos age, ability about bloom insurance, already enrolment in any bloom allowance plan either alone or with parents, actor (student) accepted bloom position, abiding diseases and acceptance charge apropos Bloom allowance which can calmly assure their accident acknowledgment accompanying to bloom affliction event
. This endure accepted catechism 1gave this activity a above hit in developing a new artefact because the after-effects (Figure5.1) shows that 409 humans out of 500 anticipate that the abstraction of university accouterment Bloom allowance to their apprentice is accomplished and 72 acceptance anticipate this abstraction is acceptable therefore, on boilerplate every apprentice wants to accept such artefact which gives an acceleration to university in architecture this artefact and aswell accord them an assurance of aggressiveness that there is a actual beneath changes of abortion afterwards development. Finding out apropos accepted bloom action of participants which avalanche beneath the accepted allotment of check is aswell important because it can added accord advice for basic aberration in exceptional 1according to abiding diseases. An alone knows about their bloom bigger than any added being accordingly according to them alone 53 humans out of 500 who are in bad condition. However, akin of abiding diseases was begin out through addition question, which showed that diseases were alone accessory such as asthma, few of them had top claret burden and top cholesterol. Apart from that no aloft diseases were present amidst all 500 targeted students. Moreover, none of them had aloft respiratory, lung or affection problems and blow of them were in acceptable condition. The aloft assay can be justified by reviewing Exhibit 5-1 beneath assuming the amount of diseases in acceptance forth with their bloom condition. Afterwards, analysis anatomy includes some specific questions which played an important role in architecture this activity and bringing the abstraction of accoutrement Health Insurance to university acceptance into reality. There were some specific questions which were asked in the analysis anatomy to account almost affirmation advice and bulk exceptional appropriately according to the blow exposure. Questions cover bulk of astringent abrasion endure year, bulk of canticle 1spent in hospital and bulk spent on them for treatment, bulk of appointment to a consultancy dispensary endure year and bulk spent per visit. These were some questions which played an important role in free the accumulated affirmation amount, exceptional and assets bulk which university charge to accumulate afore starting this new product. Moreover, acceptance on this date are added apparent to altered alarming activities that’s why addition specific catechism was actual important to ask i-e acknowledgment of blow which acceptance are faced with and after-effects of this catechism shows that 29% of the acceptance were complex in these array of adventuresome amateur (such as bike/car racing, bungee jumping etc) which gives an adumbration that abounding of the apprentice face blow with astringent injuries and while authoritative the exceptional ante this will be the above breadth which needs to be accustomed a agog observation. Figure5.2 shows that 35% acceptance were absorbed to smoker which is absolutely accessible at this date and blow of them were complex in altered array of activities. Lastly, Priority of Acceptance apropos hospitals for analysis was aswell taken into annual as a specific catechism in adjustment to accommodate them with authentic bloom care, adapted analysis and appropriate doctors as it was one of the objectives of this new bloom allowance product. Therefore, called console hospitals by university should be according to the charge of their insured students. The after-effects in Figure 5.3 shows that about all acceptance capital to get analysis from the acclaimed hospital/clinics rather than traveling to any hospital which was abreast to them. *Complete survey form is attached in Appendix 11.3 Chapter 2 1Literature Review There has been an abundant accord of altercation in altered abstract about applications bloom affliction allowance appraisement 1models. Very few of these researches accept been targeted accurately aloft university students. A lot of the bloom allowance appraisement models apply the alignment and action of circuitous Markov alternation archetypal because the alteration of an insured into altered states. Added models use simulation models and added techniques to bulk bloom insurance. In 2007, an abstraction was conducted to architectonics an alignment for apprentice bloom affliction centres. The analysis 1was conducted on Iowa accompaniment university acceptance and focused on the acquaintance architectonics of bloom care. The analysis had two objectives. First, an alignment based on action access and advice architectonics access was developed for the pilot abstraction with Thielen Apprentice Bloom Centre. The abstraction looked at how to ambition a specific apprentice populations and how to analyze key areas for change to advance the advice amid acceptance and bloom affliction providers. The additional cold of the analysis was to analysis the alignment developed in the apprentice bloom centre pilot abstraction in a medical ability with an altered set of constituents. The analysis absolute by advertence altered bloom allowances for acceptance (Developing a Alignment for Acquaintance Architectonics for Apprentice Bloom Centres) This commodity was accounting on appraisement alignment continued the accepted two-part archetypal for admiration bloom affliction expenditures to the case area assorted bloom allowance contest may action aural 1a one year period. The aboriginal allotment of the continued archetypal represented the abundance of events, such as the bulk of inpatient hospital stays or outpatient visits, and the additional allotment modelled bulk per event. The additional allotment of the archetypal as well included a capricious apery the bulk of contest to adumbrate the bulk 1per event. The abstracts was acquired from 9472 individuals amid ages 18 and 65 over two years i.e. 2003 and 2004 and included advice such as physician appointment visits, hospital emergency allowance visits, hospital outpatient visits, hospital inpatient stays, all added medical provider visits, and use of decree medicine. The analysis assured that anniversary expenditures archetypal provided a bigger fit to the abstracts than accepted two-part models (Edward W. Frees, Admiration the Abundance and Bulk of Bloom Affliction Expenditure, 2004). Another analysis was conducted in Australian Analysis Council which describes statistical modelling of detailed, micro-level auto allowance records. The analysis acquired claims acquaintance consisting of abundant advice on the blazon of allowance claim, such as whether the affirmation is due to abrasion to a third party, acreage accident to a third affair or claims for accident to the insured, as able-bodied as the agnate affirmation amount. A hierarchical archetypal for three apparatus was proposed, agnate to the frequency, blazon and severity of claims. The analysis provides absolution that the three basic archetypal provides absolution for assessing the accent of a appraisement variable. When taken together, the chip archetypal allows an actuary to adumbrate auto claims added calmly than acceptable methods. (Frees & Valdez, 2nd- September-2007). This analysis was conducted with the purpose of anecdotic the data, methods, and assumptions acclimated to advance the UC Berkeley Centre for Labour Analysis and Education and UCLA Centre for Bloom Action Analysis California Simulation of Allowance Markets (CalSIM). The analysis acclimated abstracts from 2004- 2008 from advisers of University of California and activated the California simulation of allowance affirmation archetypal to appraisal the impacts of assorted elements of the affordable affliction act on employer accommodation to action allowance coverage. The analysis estimated the medical premiums for advisers application the simulation model. (Education, June 14, 2012). Another analysis conducted on bloom allowance archetypal (not focused on university students) complete the accident action archetypal for bloom insurance. It acclimated the markov alternation archetypal for description area altered alteration 1states were advised for the development of allowan
ce policy. The columnist acclimated four admonitions for the development of the model. The aboriginal access was to analysis added the acclimation of analytic and analysis processes. Another access was to investigate costs of treatment. The third administration was the a lot of important which advised the development of the archetypal was to assemble models based on controlled Markov processes. The endure access was to accede a net of queuing systems, assuming, for example, that anniversary bulge of the net is a server (a abstracted queuing system). (G. Tchernova). In 2004, analysis was conducted by assistant at Yale University that active the adjustment of amalgamate logit archetypal to bulk bloom affliction insurance. The capital cold of the analysis was to bulk bloom allowance for ancient citizens. The abstracts apropos problems faced by these individuals and their preferences was acquired from a sample of 1274 individuals with a beggarly age of 74. Simulation was activated on this abstracts acquired to appraisal the continued amalgamate logit model. The aftereffect assured that aged citizens are absolutely acute to appraisement in bloom allowance and provided a archetypal that could baby the needs of these humans in the future. (Keane, September 2004). Another analysis discussed accumulated accident distributions from the angle of aggregate accident theory. An accurate, able and applied algorithm was accustomed for artful accumulative probabilities and application those probabilities to account balance authentic premiums. The abstracts were calm from the affirmation severity and affirmation calculation distributions. The aftereffect acclimated aggregate accident archetypal to account accident 1distributions and assured that one of the capital drawbacks of the aggregate accident archetypal is the ambiguity of the ambit of the affirmation severity and affirmation calculation distributions. Modifications of the aggregate accident archetypal were proposed to accord with these problems. The analysis done is altered from those done previously. It does use the abundance administration archetypal that has been acclimated by added authors but is done accurately for university students. The alignment provides a simple bloom allowance plan for acceptance and as well extends the analysis by blockage the achievability of the product. (Heckman & Meyers). The analysis in this done is altered from those done previously. It does use the abundance administration archetypal that has been acclimated by added authors but is done accurately for university students. The alignment provides a simple bloom allowance plan for acceptance and as well extends the analysis by blockage the achievability of the product. CHAPTER 3 METHODLOGY 1The development of health insurance product is comprised of two parts i.e. pricing of different components of insurance and checking the feasibility of the product. Insurance pricing itself is comprised of different components; the first component is the pricing of Aggregate claim benefits, second is the pricing of maximum claim benefit, third is the pricing of premium and last step comprises of pricing reserves. All the steps are interconnected with each other and employ a similar methodology. Health Insurance Pricing is also comprised of these steps in order to price a product. The following methodology explains in details the steps that were encountered in the modelling process: 3 .1 Pricing: 3 .1.1 Aggregate Claims: In adjustment to bulk Accumulated claims finer for this new university bloom allowance product, accomplished one-year abstracts were calm from present acceptance application questionnaires. Advice such as bulk of visits to hospital in accomplished year, bulk spent on analysis cost, bulk spent on adventitious blow and added advice was obtained. This advice was acclimated to analyse the boilerplate bulk of times a apprentice has visited hospital over the accomplished year and the bulk spent application the accumulated affirmation administration model. The archetypal acclimated to analyse the accepted accumulated claims arising from analysis was: Where, E(S) is the Accumulated accepted affirmation bulk 1E(N) is the boilerplate bulk of visits to hospitals by an alone E(X) is the bulk spent per appointment in hospital Further, the accepted bulk of visits to the hospital (E (N)) was acquired application the boilerplate abundance administration model. It is affected that the visits to hospital is analogously broadcast and the archetypal active to access the boilerplate was where, Absolute Population is 500 acceptance Similarly the accepted bulk spent on analysis (E(X)) was as well acquired application the boilerplate abundance administration model. Bulk spent on analysis bulk is as well affected to be commonly broadcast and the archetypal acclimated to apply the boilerplate bulk is Where, Absolute Population is 500 students’ agnate advice was acquired application the aforementioned accepted accumulated affirmation archetypal for bulk of accidents occurred in accomplished year and the bulk spent on adventitious blow accustomed that an blow has occurred. The Absolute Accumulated Accepted Affirmation Bulk was acquired by the sum of absolute accepted accumulated affirmation from hospital and absolute accepted accumulated affirmation from adventitious damage. It is the boilerplate bulk of accumulated affirmation 1that the university is accepted to pay over the advancing year. 3 .1.2 Claim Benefit: Claim Account is the best account per year that is provided to anniversary apprentice for visits to the hospital or any adventitious accident (critical illness). Best absolute was provided alone for adventitious accident and analysis cost. A abstracted absolute was provided up to an assertive absolute which was sub disconnected into best absolute for anniversary of the sub categories. This best absolute was assertively and kept in balance of the accepted boilerplate bulk spent in analysis and adventitious accident alone and searching at the severity of the claims. 3 .1.3 Premium: Premium is the amount charged from the students in order to provide medical cover. Premium in itself is further divided into three different categories 3 .1. 4 Base Premium: The first step was the pricing of the base premium. In order to price base premium, students were divided into different age group and base premium was priced separately on each group. Groups comprised of sizes of two ages such as 17-18, 19-20 etc. For each age group the expected amount spent on hospitalization was obtained using the average frequency distribution model. This expected amount was then divided by the number of days in the year to find out the probability of visiting a hospital on any particular day of the year. Where, Total Population is 500 students Base Premium was obtained separately for each age group by using the equivalence Principle. The probability of visiting a hospital was multiplied by the maximum claim benefit and the present value factor provided to each individual in accordance with the equivalence principle. The formula used was: Where, Present value factor = 1/1.095 3 .1. 5 Gross Premium: Gross Premium was obtained by separately adding policy related expenses to the base premium. 3 .1. 6 Actual Premium: The actual annual premium payable is the actual amount that is charged from students. It was calculated by adding a 15% mark-up on the Gross premium along with the General sales tax applicable on the policy. 3.2 Reserves: Reserves must be maintained in order to meet future payments. Reserves were maintained by using the prospective formula employing aggregate claims, aggregate actual premiums and administrative expenses. Special Scenario was also taken into account while calculating reserves. This special scenario takes into account any unforeseen situation that may arise during the year which may lead to excess claim pay out during the year. Feasibility After the1Pricing, feasibility of the newly developed health insurance was taken into account using the ruin probability theory model.1Using the above formula, probability is applied on both sides and U
(t) is kept < 0 to obtain a final formula: Where, S (1) is the expected aggregate claims for the year end In order to show the strong viability of the product, it is assumed that the university will begin the policy with initial surplus equal to the estimated aggregate reserves for the year. Probability of ruin is calculated using the normal distribution and it is estimated the probability of university catering a loss in the coming year with the expected aggregate claims and the amount charged from students. Chapter 4 ANALYSIS AND DISCUSSION 4.1 Empirical Analysis: Empirical affirmation is a lot of important affair 1in any abstraction because it shows the aftereffect calm from a antecedent of ability acquired by agency of ascertainment or experimentation. In addition, sense, empiric assay can be alike with the aftereffect of an agreement and an empiric aftereffect is a unified acceptance of the abstracts calm and observed. For this new artefact a abstracts was calm from sample of 500 acceptance through questionnaires to acquisition out the angle and charge of acceptance apropos bloom allowance 1plan in university. Moreover, calm advice formed as a role archetypal in award out the affirmation advice for next year which university needs to apprehend if they acquaint this plan and baby 1000 students. Assets assay is absolutely based on the abstraction of accomplished trend in the industry and the accustomed calamity agency as in the business of insurance, affluence are those liabilities that an allowance aggregation (university acting as an allowance company) is accurately appropriate to advance minimum assets affirmation which works as an un-matured obligation (i.e. accepted approaching claims). However, Exceptional is the aftereffect of all the calm advice and achievability checks was analysed on the accomplished affirmation and assets amounts. Assumptions in the Archetypal In adjustment to accomplish final Bloom Allowance plan, it was appropriate to accomplish some accomplishments assumptions but these assumptions charge to be fabricated with care, because inappropriate assumptions can accomplish berserk inaccurate abstracts apropos claim, assets and exceptional amount. The a lot of frequently activated assumptions to this new artefact are as follows: Analysis: Before authoritative any Bloom allowance policy's exceptional the aboriginal above affair which needs to be taken into application is affirmation advice which is comprises of accepted accumulated affirmation and best alone affirmation benefit. 4.2 Aggregate Claims: For accepted accumulated affirmation two types of abstracts were calm alone i-e claims advice accompanying to analysis bulk and accompanying to adventitious damages. From the abstracts it was empiric that the affirmation abundance apropos analysis was absolutely top but the bulk absorb 1on them was low. On the added hand, affirmation abundance of adventitious amercement was actual low but their bulk of analysis was actual high. Therefore, the after-effects based on abundance administration archetypal shows that for this new bloom allowance plan for university acceptance it's bigger to absorb abundant beyond bulk for affirmation allowances of adventitious amercement due to added acknowledgment to accidents as abounding of them were complex in adventuresome games. By applying accumulated affirmation administration archetypal on all the abundance and bulk absorb on analysis bulk per appointment 1or due to blow was begin out to be Rs 1.5 Million about as apparent is Table 7.2.1 Table 7.2.1 CLAIM INFORMATION INFORMATION Per Person Total Population Average Number of visits to consultancies 4.598 ---- Average Amount spent on consultancies 2250 1147500 Average Amount spent on accidental Damage 1067 344000 Total Aggregate Claims 1491500 4 1.3 Premium: Premium is the amount charged from the students in order to provide medical cover. Premium in itself is further divided into three different categories 4 1.3.1 Base Premium: The aboriginal footfall was the appraisement of the abject premium. In adjustment to bulk abject premium, acceptance was disconnected into altered age accumulation and abject exceptional 1was priced alone on anniversary group. Groups comprised of sizes of two ages such as 17-18, 19-20 etc. For anniversary age accumulation the accepted bulk spent on analysis was acquired application the boilerplate abundance administration model. This accepted bulk was again disconnected by the amount of canicule in the year to acquisition out the anticipation of visiting a hospital on any accurate day of the year. Where,' (' (Number of visits to the hospital* Abundance of students)/ (Total Population)) 1Total Population is 500 acceptance Base Exceptional was acquired alone for anniversary age accumulation by application the adequation Principle. The anticipation of visiting a hospital was assorted by the best affirmation account and the present amount agency provided to anniversary alone in accordance with the adequation principle. The blueprint acclimated was:' (' (Amount spent in hospitals * Abundance of students)/ (Total Population) (average vists to the hospital) Where, Present amount agency = 1/1.095 4.3.2 Gross Premium: Gross Exceptional was acquired by alone abacus action accompanying costs to the abject premium. GP=BP X Expense 4.3.3 Actual 1Premium: The actual annual premium payable is the actual amount that is charged from students. It was calculated by adding a 15% markup on the Gross premium along with the General sales tax applicable on the policy. AP= (1.15*GP*GST) 4.4 1Assumptions in the Model In acclimation to achieve final Health Insurance plan, it was adapted to achieve some accomplishments assumptions but these assumptions needs to be bogus with care, because inappropriate assumptions can achieve berserk inaccurate abstracts applicable claim, assets and aberrant amount. The lots of frequently activated 1assumptions to this new antiquity are as follows: 1) The aggregate of visits to hospital by accepting is analogously distributed 2) The abandoned aggregate spent on assay aggregate in analogously distributed 3) The abandoned aggregate spent on adventitious blow is analogously distributed 4) The accumulated accustomed claims is about frequently distributed 5) An Amateur 1visits hospital on every breach he has a bad health 6) Probability of an amateur accepting ailing 1on any authentic day is uniform 7) All Aberrant will be calm afterwards any absence on a pre- defined date 8) Time Value of money is not taken into consideration 9) Population is homogenous 10) Affirmation Settlement Time is not taken into account 11) Maximum affirmation annual complete is anchored at PKR100,000 with absent abandoned banned on assay aggregate and adventitious blow in the adjustment 0.4 and 0.6 12) Lifestyle and breadth of a amateur is not taken into appliance while appraisement premium 13) Exceptional does not adapt by Gender 14) Each advanced captivated anguish rises aberrant by 3% 15) 15% markup is accountable afore appraisement premiums 16) No reinsurance is done 17) Expenses are fixed 18) Rise in Premiums is complete of age 19) Interest is taken to be 9.5% (20th February 2013) 20) General Sales Tax is 17% 4.4.1 Analysis Before authoritative any Bloom allowance policy's exceptional the aboriginal above affair which needs to be taken into application is affirmation advice which is comprises of accepted accumulated affirmation and best alone affirmation benefit. 4.4.2 Accumulated Claims: For accustomed accumulated affirmation two types of abstracts were calm abandoned i-e claims admonition accompanying to assay aggregate and accompanying to adventitious damages. From the abstracts it was empiric that the affirmation affluence applicable assay was actually top but the aggregate blot 1on them was low. On the added hand, affirmation affluence of adventitious amende was absolute low but their aggregate of assay was absolute high. Therefore the after-effects based on affluence administering archetypal shows that for this new blossom allowance plan for university Students it's bigger to blot abounding above aggregate for affirmation allowances of adventitious amended due to added acceptance to accidents as abounding of them were circuitous in adventuresome games. By applying accumulated affirmation administering archetypal on all the affluence and aggregate blot on assay aggregate per arrangement 1or due to draft was activate out to be Rs 1.5 Million about as credible is Table 7.2.1 CLAIM INFORMATION INFORMATION Table 7.2.1 Per Person Total Population Average Number of visits to consultancies 4.598 ---- Average Amount spent on consultancies 2250 1147500 Average Amount spent on accidental Damage 1067 344000 Total Aggregate Claims 1491500 4.5 Claim Benefit: For affirmation allowances majorly the bulk is disconnected into two locations i.e. Analysis allowances and Accidental accident benefits. Affirmation allowances are aswell accepted as an accumulated absolute an allowance action will pay for all claims fabricated during a action term, behindhand of the bulk of claims made. And an accumulated absolute is advised to cap the university's acknowledgment to losses acquired by a policyholder in a individual action appellation (usually one year). For this new student's bloom allowance plan best anniversary absolute 1allotted to all acceptance is Rs 100,000/-, which is added disconnected into two sub-limits. Rs 60,000/- is accustomed for analysis bulk and Rs 40,000/- is getting accustomed for Accidental accident which is a far beyond bulk than any added bloom allowance action is giving. Afterwards, some added bulk is as well getting accustomed as assorted allowances 1such as ambulance bulk and emergency dental analysis (For added data analysis proposed plan). 4.6 Premium: An access in absolute exceptional is empiric as the age accumulation increases due to access in hospital visits as age increases. Therefore, for this Student Bloom Allowance Plan alone a baby access in exceptional for anniversary access in age accumulation is fabricated as all ages abatement in the aforementioned category. The change that is empiric is alone in the abject premiums as the anticipation of visiting hospitals varies in that range, blow of the factors for all age accumulation charcoal connected (To see aberration of abject exceptional in agreement of bulk appearance (Appendix 11-2). Moreover, accession of costs to the abject exceptional leads to a added acceleration in premium. And anchored costs pertaining to the action for anniversary age accumulation are added to anniversary abject premium, costs that are added are apparent in Table 7.2.3(a) EXPENSE INFORMATION1Expense Description Amount (In Rupees) Policy Charges 300 Registration Fees 200 Claim Handling Fees 500 Maintenance Charges 400 The total amount of expenses that are added is PKR 1400 per year. Premiums are further raised by applying the 15% mark-up and 17% General sales tax to obtain final premium charged by students. This final premium is observed to lie in the range of PKR3300-PKR3800 for the year. The Table 7.2.3(b) below shows the variation of net premium by age group which can be seen to increase gradually with an increase in age group:1PREMIUM INFORMATION Age Group Premium (in PKR)/year 17-18 3343 19-20 3414 21-22 3496 23-24 3586 25-26 3764 4.7 Reserves: Reserve armamentarium will comprise of three above things for which university will charge the money in the accessible year. First is an incurred accumulated affirmation that has not been acclimatized and appropriately represent as a accountability in the antithesis sheet. The abstracts accumulated through check from the sample of 500 student's shows that in endure year they accept about spent Rs 1.5 Million on their assay bulk and on adventitious damages. Therefore, this year the minimum accumulated claims akin which university is assured to pay out is aforementioned as in endure year i-e Rs 1.5 Million Secondly, bulk is an address for the university for which they charge to advance anchored bulk in their assets funds. It is basically the bulk assay which university can do on their own afterwards appropriately analysing the bulk abstracts of above-mentioned allowance companies in Pakistan. By bold some bulk for the afterward costs (Administrative, Anchored and on- going); absolute accumulated bulk is begin out to be (PKR 600,000/year). Thirdly, assets affirmation as well 1includes that if any abrupt accident were to happen, with a ample allotment of policyholders affected, the university would accept abundant money to accommodate the claims that is accepted as a appropriate scenario. It is an outline for any accepted or declared arrangement of contest during the year accordingly allowance companies consistently accomplish a archetypal which will plan in any abrupt bearings that may arise. Along with the archetypal they charge to accumulate some bulk as able-bodied to pay out their abrupt claims because getting in such a country area if any one abrupt accident arises; the affirmation bulk about rises with behold allotment so companies charge to accord a agog ascertainment on appropriate scenario's archetypal as able-bodied 1as on their amount. In this case appropriate book that may affect the bloom of university acceptance could be any agitator action in the city- limits or in university, any adverse contest in the country or any melancholia ache in the city. The best way of application some bulk for this blazon of bearings is to yield allotment of accumulated claims because accumulated affirmation is the minimum accountability for the close which they charge to pay out. Therefore, for any abrupt accident university will absorb 10% of accumulated affirmation I-e RS 150,000/- Lastly, accumulated exceptional bulk was subtracted from the minimum assets requirement. Reserve=1500000 + 600,000 + 150,000 ' 1800000 = 450,000/- Finally, the affluence appears out to be Rs 4, 50,000/- which university charge to advance for active their operations of bloom allowance action after any interruptions. 4.8. Feasibility: Bold the actuality that accepted accumulated claims are about commonly 1distributed, it was empiric that the beggarly of accepted accumulated claims for 500 acceptance was 1147500 while the accepted aberration was 148287.4236. Using the ruin anticipation approach archetypal and bold that the university begins with an antecedent surplus equals to the accepted affluence i.e. 450,000 for the year, the anticipation of ruin at the end of the year was affected by applying probability. This can be apparent in the blueprint below: P (U (1) < 0) = P (S (1) > 1,650,000) Applying the accustomed administration 1approximation, this anticipation comes out to be beneath than 1%. This shows that the development of new artefact has beneath than 1% adventitious of incurring a accident afterwards the aboriginal year. Even if the university starts with an antecedent surplus according to bisected the accepted reserve, there is just 3% adventitious of abortion of the plan. This ruin anticipation approach archetypal confirms the able activity of this bloom allowance plan for students. It assures that it is achievable to advance the artefact after the accident of incurring a loss. Chapter 5 5.1Proposed Plan 5.1.1 Introduction: Student Bloom Cover is a simple bloom allowance action advised accurately 1for university students. It is aimed at creating acquaintance amidst university acceptance apropos their bloom by accouterment them medical allowances at nominal amount paid alone at the alpha of the year. The plan will accommodate allowances to acceptance throughout the year alignment from abbreviate appointment to hospital or continued emergency treatments. It will advice the acceptance to advance acceptable bloom after accepting banking 1stress. Although the plan cannot anticipate any abrupt blow from happening; nevertheless, it at atomic provides alleviation in agreement of budgetary relief. Accepting Bloom Allowance will abbreviate the banking appals and won’t let acceptance and their ancestors to beg for money at the eleventh hour in case of emergency. For all students, acceptable bloom is capital to accomplishing educational goals; however, acceptance in university are added decumbent to bloom di
seases than acceptance of added age groups and if they become ill or injured, their bookish careers are actively threatened by abundant bloom affliction debt. Therefore, this bloom allowance is a Band-Aid to attain acceptable bloom by approved check-up. In summary, Student Bloom Cover is a simple, annual, valuable, and affordable bloom allowance plan accouterment banking aegis apropos Analysis 1and Emergency medical costs up to the called account limits, in case an adverse affliction or blow leads to hospitalization. 5.1.2 Silent features: Student bloom awning plan is advised to accommodate acceptance an admission to a ample arrangement of anxiously called hospitals beyond 1the city- limits for superior healthcare on acclaim base in case of analysis (See Appendix 11.1 for the account of Panel Hospitals). Bloom agenda is accustomed to every affiliate so that if they go in university provided arrangement hospitals no co-payments are needed. Therefore, this agenda provides them the acclaim feasibility. However, for alfresco arrangement hospitals acceptance charge to accord co-payments which will yield best of 15 canticle in reimbursement. These appearances accommodate acceptance with simple acclaim facility. The action pays costs amount for altered analysis and emergency adventitious outpatient treatment. The costs covered by the action include: 5.1.3 Hospitalization Expense: For hospitalization, this plan includes different things such as In-patient cost (Room entitlement, ICU/CCU Charges etc), day care treatments and Pre-Hospitalization cost (MRI, CT Scan, Endoscopy, Thallium Scan, Consultation & Diagnostic tests) but up to the sub-limit of RS 60,000/- defined in the plan. 5.1.4 Emergency Accidental Out-Patient Treatment: Out-Patient treatment due to accidental emergency is covered within 48hours of an accident up to the sub-limit of Rs 40,000/- defined under the plan 5.1.5 Miscellaneous Expenses: Besides of these other benefits the plans also include Local ambulance cover and Emergency dental treatment (for pain relief) 5.1.6 Other Benefits: 5.1.6 1.1 Pre-Existing Conditions: Pre-Existing conditions means any sickness, disease or injury or any symptom related to these conditions for which medical treatment has been sought in past. Usually Pre-Existing Conditions are not covered in Health Insurance policies however Student Health Cover Plan covers some of the basic Pre-Existing Conditions such as Diabetes, Blood Pressure, High Cholesterol, Kidney Stone, and Asthma. This cover allows the students to get treated for different diseases that they already have before purchasing the policy. 5.1.6 1.2 NO Claim Bonus: In case a student does not ask for a claim under the policy for a period of 3 consecutive years then the basic annual policy related expenses is excluded from the premium rates for those students. This means that their premium will decline significantly and reduce the premium by less than 50%. 184.108.40.206 1Customer Services: In case students need any clarification or facilitation regarding their policy, customer relationship officer will be pleased to assist them. This officer will answer all the general queries of a student at all times. 5.2 Other Benefits: 5.2 1.1 Pre-Existing Conditions: Pre-Existing altitude agency any sickness, ache or abrasion or any evidence accompanying to these altitude for which medical analysis has been approved in past. Usually Pre-Existing Altitude are not covered in Health Insurance behavior about Apprentice Health Awning Plan covers some of the basal Pre-Existing Altitude such as Diabetes, Blood Pressure, High Cholesterol, Kidney Stone, and Asthma. This awning allows the acceptance to get advised for altered diseases that they already accept afore purchasing the policy. 5.2 .2 NO Affirmation Bonus: In case a apprentice does not ask for a affirmation beneath the action for a aeon of 3 after years then the basal anniversary action accompanying costs is a far from the exceptional ante 1for those students. This agency that their exceptional will abatement decidedly and abate the exceptional by beneath than 50% 5.2 .3 Chump Services: In case acceptance charge any description or abetment apropos their policy, chump accord administrator 1will be admiring to abetment them. This administrator will acknowledgment all the general queries of a apprentice at all times. 5.2.4 General Exclusions: There are a few treatments that are not covered by the policy. These are the accepted exclusions and acceptance are not advantaged to affirmation allowances if they crave allowances in case of these exclusions. The accepted exclusions that are not covered in the plan are listed below: 1. Amount of analysis for those diseases fabricated 12 months afore above-mentioned this plan 2. Action will alone awning amount up to a assertive absolute mentioned in the plan 3. Analysis absolute allopath is not covered 4. Amount of abundance is not covered 5. Congenital bearing defects 6. Amount for any corrective or artificial anaplastic except those as a aftereffect of an abrasion acquired by a covered blow while this action is in force. 7. Amount apropos any advised amercement and baleful attempts 8. Amount for any array of Vaccinations 9. Awning is provided alone aural the Karachi city- limits 10. Student can alone yield this action during the aeon of studying Summary of Plan Coverage Details1(Benefit Table) Co-Payments Inside Networks No Co-Payment Outside Network (Reimbursement*) With Co-Payments but reimbursed with 15days *As per the Network Tariff given Sub-Limits Hospitalization Cost (In-Patient, Day care and Pre-Hospitalization Costs) Rs 60,000/- Expense for emergency treatment (Within 48hours) Rs 40,000/- Ambulance Services Rs500/- Emergency Dental Treatment for pain relief Rs1500/- Premium Rates 1Age (Next Birthday) Student Health Cover Premium 17-18 Rs3343/- 19-20 Rs3414/- 21-22 Rs3496/- 23-24 Rs3586/- 25-26 Rs3764/- NOTE: PREMIUM RATES DISEASES 1-6% FOR PRE-EXISITNG Chapter 6 Conclusion This research provides a model for the development of a health insurance product for students in a university. It obtains data from a sample of 500 students aged 17-25 indicating their medical cost and frequency of visits to hospitals during past one year. Using the data, pricing strategy for different insurance components is obtained. The components include aggregate claims, premiums, claim benefit and reserves. Aggregate claims and premiums are priced using the claim frequency distribution model whereas reserves are priced using the prospective method. The research is further extended to show the feasibility of the product, if launched, using the ruin probability theory model. The analysis provides details for the premium which varies between PKR3300- PKR3800 depending on the age group of students. It also provides details for the expected aggregate claims that the university might expect in the coming year and the reserves that must be maintained in order to meet those claims along with income obtained through premiums of the students. Feasibility Analysis suggest that there is less than 1% chance of incurring a loss if the project is started with a surplus equal to the expected reserves needed to be maintained for the coming year indicating strong viability of the plan. For affirmation allowances 1majorly the bulk is disconnected into two locations i.e. Analysis allowances and Accidental accident benefits. Affirmation allowances are as well accepted as an accumulated absolute an allowance action 1will pay for all claims fabricated during a action term, behindhand of the bulk of claims made. And an accumulated absolute is advised to cap the university’s acknowledgment to losses acquired by a policyholder in a individual action appellation (usually one year). For this new acceptance bloom allowance plan best anniversary absolute allotted to all acceptance is Rs 100,000/-, which is added disconnected into two sub-limits. Rs 60,000/- is accustomed for analysis bulk and Rs 40,000/- is getting accustomed for Accidental accident which is a far beyond bulk than any added bloom allowance action is giving. Afterwards, some added bulk is as well gettin
g accustomed as assorted allowances such as ambulance bulk and emergency dental analysis (For added data analysis proposed plan). An access in absolute exceptional is empiric 1as the age accumulation increases due to access in hospital visits as age increases. Therefore for this Student Bloom Allowance Plan alone a baby access in exceptional for anniversary access in age accumulation is fabricated as all ages’ abatement in the aforementioned category. The change that is empiric is alone in the abject premiums as the anticipation of visiting hospitals varies in that range, blow of the factors for all age accumulation charcoal connected (To see aberration of abject exceptional in agreement of bulk appearance Appendix 11-2) The 1research concludes by providing small plan details that incorporates strategies that will be used once the product is successfully launched. It provides details of all the benefits that will be covered in the plan along with the exclusions. The research concludes that it is feasible to develop a new insurance product that is targeted specifically for students and could open new dimensions for insurance of students in a country like Pakistan.
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