New Aspects of Product Risk Measurement and Management in the U.S. Life and Health Insurance Industries


Book Description

Product risk is important to firms' enterprise risk management. This dissertation focuses on product risk in the U.S. life insurance and health insurance industries. In particular, we add new dimensions to the measurement of product risk for these industries, and we explore how these industries manage product risk in a context of other enterprise risks. In this dissertation, we identify new product risks, propose new measures, and study the management of these risks. In the life insurance industry, we identify a new type of product risk, the guarantee risk, caused by variable annuities with guaranteed living benefits (VAGLB). We propose a value-at-risk type measure inspired by the risk-based capital C3 Phase II to quantify the guarantee risk. In the health insurance industry, where the degree of uncertainty varies for different types of health insurance policies, we develop four exposure-based risk measures to capture health insurers' product risks. Then we study how life and health insurers manage product risks (and asset risks) by using capital in the context of other risks and appropriate controls. We add to the literature in the life insurance industry by examining the relationship between capital and risks when the guarantee risk is accounted for. In the health insurance industry, to our knowledge, no similar research on the relationship between capital and risks has been conducted. In view of the current topicality of health insurance, our research therefore adds a timely contribution to the understanding of health insurer risk management in an era of health care reform. Capital structure theories, transaction cost economics, and insurers' risk-taking behaviors provide the theoretical foundation for our research. As to methodology, we implement standard capital structure models for the life and health insurance industries using data from the National Association of Insurance Commissioners (NAIC) annual filings of life/health insurers and health insurers. Simultaneous equations modeling is used to model life and health insurers' enterprise risk management. And the estimation is conducted by the generalized estimation equations (GEE). We find that both U.S. life/health insurers and health insurers prudently build up capital as they experience more product risk and asset risk controlling for the other enterprise risks. We also find that life/health insurers may be using derivatives as a partial substitute for capital when managing new product risk caused by VAGLB, the guarantee risk.




Changes in the Life Insurance Industry: Efficiency, Technology and Risk Management


Book Description

Major challenges for life insurance companies have been posed by an unprecedented wave of mergers and acquisitions in the insurance industry and the emergence of non-traditional competitors such as banks, mutual fund companies and investment advisory firms. This is the first book to analyze the determinants of firm performance in the life insurance industry by identifying the `best practices' employed by leading insurers to succeed in this dynamic business environment. The book draws upon data from insurer financial statements as well as upon an extensive survey of life insurer management practices and strategic choices in distribution systems, information technology, mergers and acquisitions, human resources and financial strategies. Generic strategies such as cost leadership, customer focus, and product differentiation are analyzed as well as strategic practices specific to the insurance industry. Best practices are identified by measuring the economic efficiency of insurers and by comparing firms across the industry. Both cost and revenue efficiency are measured relative to best practice efficient frontiers consisting of the industry's dominant life insurance firms. Economies of scale and the effects of mergers and acquisitions on efficiency are also analyzed. Financial strategies are examined with specific reference to pricing policy, valuation of assets and liabilities, and the current state of firm-level risk management systems. The benchmarks established are the result of extensive fieldwork that identifies key financial risks and methodologies to both measure and manage them at the firm level. The results discussed in the book indicate that firm performance is significantly correlated with management practices and strategic choices. Thus, life insurers can improve profitability by adopting optimal combinations of strategies. The book contains important new material on the effects of strategic choices in product distribution systems, information technology, mergers and acquisitions, human resources, and financial risk management policies. In the area of efficiency, the methodology provides a new approach for identifying peer groups of insurers and measuring the performance of individual insurers relative to their peer group. On the topics of risk and pricing, new insights are offered relative to current methodologies and in regard to areas where improvement is clearly warranted. The book concludes with an analysis of the future opportunities and challenges in the life insurance industry facing managers, and the strategic options available to them to cope with these changes.




Risk Management and Product Design for Insurance Companies


Book Description

Explains the management issues surrounding enterprise risk management, capital, product development, and product design for life insurance and annuities.




The Economics, Regulation, and Systemic Risk of Insurance Markets


Book Description

Despite the importance of insurance in enabling individual and collective social, economic, and financial activities, discussions about the macroeconomic role and risks of insurance markets are surprisingly limited. This book brings together academics, regulators, and industry experts to provide a multifaceted array of research and perspectives on insurance, its role and functioning, and the potential systemic risk it could create. The first part discusses the macroeconomic role of insurance and how insurance is different from banking and general finance. Understanding the differences between the balance sheets of insurers and other financial intermediaries is essential for understanding the potential differences in risk nature and optimal regulation. The second part of the book focuses on the risks managed by the insurance sector and the potential for systemic risk. The chapters discuss the risks both on the asset and liability sides of insurers' balance sheets. The third part of the book covers the impact of regulation on insurance companies. Existing regulation is often complex and has a large impact on insurance companies' decision-making and functioning. The chapters also illustrate the unintended consequences of various forms of regulation. The book concludes with a summary of a survey that has been conducted in collaboration with McKinsey, where insurance executives have been asked about the risks and regulation in the insurance sector. The survey provides guidance for future research on insurance markets.




Private Health Insurance


Book Description




Plunkett's Insurance Industry Almanac 2006: The Only Complete Reference to the Insurance and Risk Management Indu


Book Description

This carefully-researched book (which includes a database of leading companies on CD-ROM) is a complete insurance market research and business intelligence tool-- everything you need to know about the business of insurance and risk management.




Plunkett's Insurance Industry Almanac


Book Description

Covers the business of insurance and risk management, and is a tool for market research, strategic planning, competetive intelligence or employment searches. This book contains trends, statistical tables and an industry glossary. It also provides profiles of more than 300 of the world's leading insurance companies.




Benefit-Risk Assessment Methods in Medical Product Development


Book Description

Guides You on the Development and Implementation of B–R Evaluations Benefit–Risk Assessment Methods in Medical Product Development: Bridging Qualitative and Quantitative Assessments provides general guidance and case studies to aid practitioners in selecting specific benefit–risk (B–R) frameworks and quantitative methods. Leading experts from industry, regulatory agencies, and academia present practical examples, lessons learned, and best practices that illustrate how to conduct structured B–R assessment in clinical development and regulatory submission. The first section of the book discusses the role of B–R assessments in medicine development and regulation, the need for both a common B–R framework and patient input into B–R decisions, and future directions. The second section focuses on legislative and regulatory policy initiatives as well as decisions made at the U.S. FDA’s Center for Devices and Radiological Health. The third section examines key elements of B–R evaluations in a product’s life cycle, such as uncertainty evaluation and quantification, quantifying patient B–R trade-off preferences, ways to identify subgroups with the best B–R profiles, and data sources used to assist B–R assessment. The fourth section equips practitioners with tools to conduct B–R evaluations, including assessment methodologies, a quantitative joint modeling and joint evaluation framework, and several visualization tools. The final section presents a rich collection of case studies. With top specialists sharing their in-depth knowledge, thought-provoking considerations, and practical advice, this book offers comprehensive coverage of B–R evaluation methods, tools, and case studies. It gives practitioners a much-needed toolkit to develop and conduct their own B–R evaluations.




The Healthcare Answer Book


Book Description

The Healthcare Answer Book provides detailed solutions to 323 of the top challenges faced by healthcare executives today.You''ll get recommended software and tools, staff ratios, program structures, ROI measurement and results for various programs, protecting patient privacy and security in a number of scenarios -- answered by some of the nation''s leading healthcare experts to help you plan, evaluate, manage and improve your organization?s healthcare initiatives.Compiled from a series of live audio conferences in which these industry experts answered questions from the field, this report delves into a variety of topics, including cost containment, disease management, e-Health initiatives, HIPAA security and privacy, healthcare industry trends and workplace wellness.Indexed by topic and by keyword, this guide will become your indispensable research assistant for questions that challenge you and your staff each day. You''ll get the answers you need to such questions as:Cost Containment * What type of software tools are you using for predictive modeling? * Which predictive modeling tools are best for the ROI calculation? * What level of payment or financial risk is needed to change provider behavior? * What is the range of pay-for-performance paybacks and how often are they calculated? * What is the best ROI methodology on P4P programs that you have evaluated and how does it work? * Are tiered networks feasible in smaller markets?Industry Trends * Do you have a recommended reading level for translated written materials for preventative services in either low socio-economic status populations or for children? Also, is there a web site or written reference indicating how to do that? * In this era of consumer-driven healthcare, what quality-related information helps consumers make informed choices about health plans or providers?eHealth Initiatives * What screening requirements do you use for telemedicine patients? Do you evaluate factors outside disease severity? * Can you describe the kind of investment needed to implement e-health tools, how quickly you can achieve an ROI, and what kind of ROIs you can expect? * What criteria are payors and physicians using to determine whether or not an e-visit is billable? Are there clear-cut guidelines? * What lessons have you learned through your personal health record rollout process? What advice can you share with other organizations as they implement their own PHRs?HIPAA Security and Privacy * What are the biggest challenges to offering single sign-on? * How do you secure e-health physician-patient communication?Disease Management * How do strategies for asthma disease management differ for community-based health programs that target the under-served? * What is your staff-to-patient ratio in your depression management program? * How effective are physician-specific report cards in getting physicians in practice with the guidelines? * Is there any other type of literature that would support the effectiveness as well? * What is an accurate assessment of a member?s readiness to change, and how do you create interventions that are applicable to each member?s stage of readiness? * How are the health coaches trained, and what kind of training gets them geared up to work with patients? * What is the average amount of time a health coach spends per call per participant?The Healthcare Answer Book is also available on CD-ROM with keyword searching capability.Table of Contents * About This Document * Cost Containment o Predictive Modeling o Pay for Performance o Predictive Modeling in Pay for Performance o Predictive Modeling for Asthma & Pre-Natal o Reducing Trend & Spend o Tiered Networks * Industry Trends o Cultural Competency o Physician Engagement o Health Plan Quality Improvement o URAC Standards for Consumer Education and Support o The Patient?s Home: The New Healthcare Hub * e-Health Initiatives o Web Technology in CDHC o e-Visits o Moving from High-Tech to High-Touch o The Role of e-Health Initiatives o Personal Health Records & Electronic Medical Records * Disease Management o Asthma o Obesity o Depression o Behavior Modification o Resistant Patients o Health Coaches o Health Coach Training o Pre- and Post-Natal Care o The Role of Primary Care Physicians o Healthcare Toolkits * Workplace Wellness o HRAs o Incentives for Healthy Lifestyles o A Team Approach to Wellness * HIPAA Security and Privacy o HIPAA Security Compliance o HIPAA Security Auditing, Audit Trails & Audit Logs o HIPAA Security Risk Assessment * About the Experts * Glossary * For More Information * Index