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In this episode, I and my good friend Hobson Carroll, who is a world-class actuary, talk about the specific deductible. We dig into setting the deductible - what types of deductibles we can utilize to mitigate risks and price them appropriately.
As Hobson notes, for a lot of people in today's world, the specific seems to be the most important thing, because everyone realizes that individuals have large claims, and we don't want $2 million claims hitting the budget of the employer self-insured plan.
But if you go back to earlier times when claims didn't get so big and stop-loss insurance for self-insured plans was just sort of starting out - it existed in one form or another before that, but it was generally had different names. In reality, in the early days, it was referred to as individual excess risk insurance. And of course, the aggregate protection was known as the aggregate excess risk insurance, excess risk being the term used to describe what happens to the claims over a certain amount.
Stay tuned as we delve into specifics of the specific deductible.
Key Points of Discussion:
Everyone realizes that individuals have large claims (1:23)
Why employers use risk mitigation tools (3:23)
Buying an individual stop-loss policy (4:07)
Bifurcating claims into two mutually exclusive and complementary sets (5:04)
Of actuarial tables and manuals (7:04)
The self-insured plan is this big pot… (10:38)
How much to raise the specific deductible to offset the trend increase (18:07)
A fully insured product: When they talk about a trend increase… (18:54)
It all depends on the sizes of the group, deductible, and premium (24:59)
The re-insurers know the tricks (28:21)
Setting the aggregate attachment point (32:13)
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