Modern Actuarial Theory and Practice, Second Edition

by Booth; Philip

• ISBN13: 9781584883685
• ISBN10: 1584883685
• eBook ISBN(s): 9781420057300
• Edition: 2nd
• Format: Hardcover
• Copyright: 2004-12-28
• Publisher: Chapman & Hall/
• More Book Details

Summary

In the years since the publication of the first edition of this best-selling text, the incorporation of ideas and theories from the rapidly growing field of financial economics has precipitated considerable development of thinking in the actuarial profession. Modern Actuarial Theory and Practice, Second Edition integrates those changes and presents an up-to-date, comprehensive overview of UK and international actuarial theory, practice and modeling. It describes all of the traditional areas of actuarial activity, but in a manner that highlights the fundamental principles of actuarial theory and practice as well as their economic, financial, and statistical foundations.

Table of Contents

Part I: Investment
The Widening Scope of Actuarial Theory and Practice	3	(20)
Introduction	3	(2)
Financial Intermediaries: Their Role in Resolving the ``Constitutional Weakness''	5	(1)
Functional Approach to the Analysis of Intermediaries	6	(2)
Intermediating Functions of Banks	8	(1)
Intermediating Functions of Insurers	9	(1)
Intermediating Functions of Unit Trusts and Mutual Funds	9	(1)
Banks, Insurance Companies and Pension Funds: Fundamental Similarities and Differences	10	(1)
Bank Loans, Credit Risk and Insurance	11	(2)
The Evolving Relationship Banking and Insurance	13	(3)
Some Examples of the Evolving Product Links between Banks and Non-banks	16	(3)
Conclusion	19	(4)
References	20	(3)
Investments and Valuation	23	(42)
Introduction	23	(1)
Cash Instruments	23	(2)
General Characteristics	23	(1)
Specific Cash Instruments and Valuation Issues	24	(1)
Risk Characteristics	25	(1)
General Characteristics of Conventional Bonds	25	(9)
Government Bonds	26	(1)
Corporate Bonds	27	(1)
Bond Valuation	27	(2)
Economic Analysis	29	(4)
Risk Characteristics	33	(1)
General Characteristics of Index-Linked Bonds	34	(7)
Index-Linked Bond Valuation	35	(1)
Economic Analysis	36	(1)
Risk Characteristics	37	(1)
Estimating Market Expectations of Inflation Using Market Information	38	(3)
General Characteristics of Foreign Currency Bonds	41	(2)
Valuation	41	(1)
Economic Analysis	41	(1)
Risk Characteristics	42	(1)
General Characteristics of Equity Investment	43	(6)
Equity Valuation	44	(3)
Economic Analysis	47	(1)
Risk Analysis	48	(1)
Real-Estate Investment	49	(5)
Valuation	50	(2)
Economic Analysis	52	(1)
Risk Analysis	53	(1)
International Equity Investment	54	(2)
International Equity Valuation	54	(1)
Economic Analysis	54	(1)
Risk Analysis	55	(1)
Derivatives	56	(9)
General Characteristics	56	(2)
Valuation	58	(2)
Risk Characteristics	60	(1)
References	61	(4)
General Principles of Asset Allocation	65	(62)
Introduction	65	(1)
Investment Risk	66	(8)
Matching Asset and Liability Characteristics	66	(2)
Matching Asset and Liability Terms	68	(1)
Matching by Currency	68	(1)
Diversification	69	(1)
Short-Term Volatility Risk	70	(2)
Risk of Long-Term Underperformance	72	(1)
Equity Volatility in the Short Term and the Long Term	73	(1)
Default Risk	74	(1)
Prospective Returns	74	(15)
Relationship between Risk and Return	74	(2)
Returns from Bonds and Cash Instruments	76	(5)
Returns from Equity and Real-Estate Investments	81	(1)
Prospective Rates of Return and Investment Decision-Making	82	(1)
The Real Yield Gap	83	(2)
Relative Value of Index-Linked and Conventional Bonds	85	(2)
The Yield Gap	87	(2)
Comparing Other Investment Categories	89	(1)
Institutional and Governmental Influences and Constraints	89	(4)
Marketability, Liquidity, and Transaction Costs	89	(1)
Legal Constraints	90	(1)
Taxation	91	(1)
Policyholder Preferences	92	(1)
The Use of Derivative Instruments	92	(1)
Asset Allocation Principles Applied to Pension Funds	93	(10)
Mechanism for Taking Investment Decisions	93	(1)
Liability and Other Financial Considerations	93	(6)
Legislation and Taxation Considerations	99	(1)
Expected Investment Returns	100	(1)
Size of Fund	101	(1)
Marketability and Liquidity	101	(1)
Summary of Considerations	102	(1)
International Differences	102	(1)
Life Insurance Companies	103	(9)
Liability Considerations	104	(2)
Options and Guarantees	106	(1)
Free Reserves	107	(1)
Expected Returns	107	(1)
Legislation	108	(1)
Professional Guidance to the Actuary	109	(1)
Taxation	110	(1)
Marketability and Liquidity	110	(1)
Summary of Considerations	111	(1)
International Differences	112	(1)
Nonlife Insurance Companies	112	(6)
Liability Considerations	113	(1)
The Place of Equities, Real Estate and Index-Linked Government Bonds in a Nonlife Portfolio: The Role of the Solvency Margin	114	(2)
Foreign Currency Investment	116	(1)
Legislation	116	(1)
Taxation Considerations	117	(1)
Marketability and Liquidity	117	(1)
Expected Investment Returns	117	(1)
Summary of Considerations	118	(1)
Personal Investments	118	(5)
Unit Trusts and Investment Funds	118	(3)
Personal Pensions	121	(2)
Conclusion	123	(4)
References	123	(4)
Investment Risk	127	(16)
Introduction	127	(1)
Utility Theory and Risk Measures	127	(5)
Relating Utility Functions to Risk Aversion and the Risk Premium	130	(2)
Summary Risk Measures	132	(5)
Standard Deviation of Returns	132	(1)
Downside/Shortfall Risk Measures	133	(2)
Value at Risk	135	(1)
Practical Issues when Calculating VaR	136	(1)
Tail Loss	137	(1)
Combining Risk and Return Measures	137	(1)
Coherent Risk Measures	138	(1)
The Use of Shortfall Constraints	139	(1)
Conclusion	140	(3)
References	141	(2)
Portfolio Selection Techniques and Investment Modeling	143	(54)
Introduction	143	(1)
Immunization	143	(5)
Derivation of Conditions	143	(3)
Observations on the Theory of Immunization	146	(1)
The Usefulness of Immunization in Practice	147	(1)
Modern Portfolio Theory	148	(9)
Portfolio Diversification	148	(3)
Efficient Portfolios	151	(1)
Capital Market Line	152	(3)
The Capital Asset Pricing Model	155	(1)
Modern Portfolio Theory: Insights and Limitations	155	(2)
Extension of Portfolio Theory to Include Actuarial Liabilities	157	(7)
Portfolio Optimization in the Presence of Liabilities	157	(2)
Connections Between Redington and the Wise--Wilkie Approach	159	(1)
Generalization of Portfolio Optimization in the Presence of Liabilities	159	(3)
Portfolio Selection in an Asset/Liability Framework Using a Generalized Approach to Risk	162	(2)
Stochastic Investment Models	164	(14)
Economic Investment Models	165	(2)
Statistical Investment Models	167	(3)
Statistical Models with Shocks	170	(1)
The Wilkie Stochastic Investment Model	171	(7)
Asset Liability Modeling	178	(4)
Conclusion	182	(15)
Appendix A. The Wilkie Model: A Case Study	182	(10)
References	192	(5)
Part II: Life Insurance
Fundamental Features of Life Insurance	197	(22)
Introduction	197	(1)
Basic Contract Structures	198	(2)
Term, Term-Life or Temporary Assurance	198	(1)
Whole Life Assurance	198	(1)
Endowment Assurance	199	(1)
Annuity	199	(1)
Life Insurance Products	200	(3)
Product Distribution	201	(2)
Who Initiates the Sale?	203	(1)
Taxation of Long-Term Business	203	(1)
Supervision and Regulation	203	(4)
Solvency Regulation	204	(1)
Regulation of Selling Practices	204	(1)
Other Areas of Regulation	205	(1)
The Influence of Professional and Ethical Practice	205	(1)
Provision of Compensation	206	(1)
Life Office Ownership	207	(1)
Long-Term Insurance Risk Management	207	(12)
Personal Risk Management	207	(1)
Insurance Company Risk	208	(1)
Managing Insurance Risk: Risk Pooling	209	(3)
The Influence of Modern Product Designs on Life Insurance Company Risk	212	(5)
Managing the office	217	(1)
References	218	(1)
Nonparticipating Life Insurance	219	(34)
Conventional Nonparticipating Contracts	219	(12)
Operation of the Fund	219	(4)
Reserving and Profit Recognition: Realistic Basis	223	(6)
Reserving on the Premium Basis	229	(1)
Cash Values	230	(1)
Linked Accumulating Nonparticipating Contracts	231	(20)
Operation of the Fund	232	(8)
Reserving for Unit-Linked Business	240	(4)
Actuarial Funding	244	(4)
Unit-Linked Business with Level Initial Expense Charges	248	(2)
Discontinuance Terms for Unit-Linked Policies	250	(1)
Nonlinked Accumulating Nonparticipating Contracts	251	(2)
References	252	(1)
Participating Life Insurance	253	(28)
Different Distribution Methods	253	(6)
Contribution Method	254	(1)
Uniform Reversionary Bonus Method	255	(1)
Revalorization Methods	256	(2)
Accumulating with Profits	258	(1)
Profit Distribution Strategies	259	(3)
History	259	(1)
Profit Deferral	260	(1)
Profit Smoothing	260	(2)
Discontinuance Terms for With-Profits Policies	262	(1)
Overall Operation of a With-Profits Fund	263	(2)
Numerical Example	263	(2)
Determining Dividends or Bonus Rates	265	(8)
Contribution Method	265	(1)
Revalorization Methods	266	(1)
Reversionary Bonus Method	266	(4)
Accumulating With-Profits Method	270	(3)
Reserving for With-Profits: Earned Profit Reserves	273	(5)
Example: Reversionary Bonus Method	273	(3)
Example: Accumulating With-Profits Method	276	(2)
Distribution of Shareholders' Profits	278	(1)
A Comment on Meeting Consumer Needs	279	(2)
References	279	(2)
The Regulation of Solvency and its Effect on the Emergence of Profit	281	(22)
The Statutory Solvency Assessment	281	(4)
Statutory Reserving Requirements	282	(2)
Breaching the Supervisory Solvency Regulations	284	(1)
Dynamic Solvency Testing	285	(1)
The Valuation of the Liabilities	285	(5)
The Valuation Method	285	(4)
The Valuation Assumptions	289	(1)
The Effects of the Statutory Solvency Requirements on Life Office Operation	290	(13)
Non-Profit Business	290	(5)
Conventional With-Profits Business	295	(4)
Other Types of With-Profits Business	299	(1)
Unit-Linked Business	300	(1)
References	301	(2)
Life Office Risks and Risk Management	303	(36)
The Interested Parties	303	(2)
Policyholders' Interests	303	(2)
Shareholders' Interests	305	(1)
Regulators' Interests	305	(1)
The Nature of the Risks	305	(2)
Risk Control	307	(1)
Insurance Risk	308	(11)
Underwriting and Risk Classification	309	(4)
Financial Underwriting	313	(1)
Reinsurance	314	(5)
Business Risk	319	(20)
Expense Risk	320	(5)
Discontinuance Risk	325	(2)
New-Business (Valuation Strain) Risk	327	(5)
Other New Business Risks	332	(1)
Distribution Risk	333	(2)
Risks From Policyholder Options and Guarantees	335	(1)
Data Risks	335	(1)
Taxation Risk	336	(1)
References	337	(2)
The Actuarial Role in Life Office Management	339	(30)
Introduction	339	(1)
Product Pricing	340	(12)
The Control Cycle	340	(5)
Profit Testing	345	(1)
Whole-Office Pricing	346	(2)
The Model Office	348	(3)
Use of the Model Office in Pricing	351	(1)
Analysis of Surplus	352	(2)
Monitoring and Updating the Assumptions in the Control Cycle	354	(1)
Further Uses of Model Offices in Actuarial Management	355	(9)
To Assess Solvency	355	(3)
To Investigate Profit Distribution Policy	358	(2)
To Investigate Investment Policy	360	(1)
To Investigate Business Risks	360	(3)
To Estimate Reserves	363	(1)
To Estimate Risk-Based Capital	363	(1)
Choice of Stochastic Model	364	(1)
Modeling Risk	364	(5)
References	365	(4)
Part III: General Insurance
Introduction to General Insurance	369	(20)
Background	369	(3)
Exposure Measurement	370	(1)
The Evaluation and Identification of Factors Influencing the Degree of Risk	371	(1)
The Range of Events Giving Rise to a Liability under the Contract	371	(1)
Risks and Their Management	372	(3)
The Contract	375	(2)
Reinsurance: Insurance for Insurers	377	(1)
Management of General Insurance	378	(1)
Providers of Insurance	379	(4)
The Direct Market	380	(1)
London Market	381	(1)
Other Providers	382	(1)
The Insurance Broker	382	(1)
The Insurance Environment and the Provision of Capital	383	(2)
Conclusions	385	(4)
Appendix A	385	(2)
References	387	(2)
General Insurance Accounts	389	(14)
The Purpose of Accounts	389	(3)
The Accounting Framework	392	(7)
The Balance Sheet	393	(1)
The Revenue Account	394	(2)
The Profit and Loss Account	396	(1)
Some Key Analytical Statistics	397	(2)
Conclusions	399	(4)
Appendix A	400	(2)
References	402	(1)
Premium Rating	403	(46)
Introduction and Basic Ideas	403	(3)
Basic Premium Formula	406	(6)
Insurance Levies	408	(1)
Contingency Loading	409	(3)
Acquisition Costs	412	(1)
Estimating the Office Premium	412	(21)
The Risk Premium, and Approaches to Calculating the Expected Claims	412	(2)
Risk Factors and Rating Factors	414	(4)
Exposure Measurement and Analyzing Past Exposure	418	(3)
Statistical Modeling	421	(4)
Claims Data	425	(6)
Deriving Expected Claims	431	(2)
Measuring Expenses	433	(3)
Direct Expenses	435	(1)
Indirect Expenses	436	(1)
Experience Rating	436	(4)
Experience Rating by Claim Number	437	(1)
Experience Rating by Claim Cost	438	(2)
Business Planning	440	(4)
Monitoring Experience	442	(2)
Conclusions	444	(5)
Appendix A	444	(2)
Appendix B	446	(1)
References	447	(2)
Reinsurance	449	(42)
Introduction	449	(7)
Why Buy Reinsurance?	449	(3)
Some Background	452	(4)
Contractual Relationships: A Comparison of Co-Insurance and Reinsurance	456	(2)
Reinsurance Arrangements	458	(2)
Descriptions of Each Type of Reinsurance	460	(17)
Proportional Reinsurance	460	(3)
Nonproportional Reinsurance	463	(11)
Order of Application of Reinsurances	474	(3)
Practical Considerations of Reinsurance Program Design	477	(10)
Past Practice and the Structure of the Existing Program	478	(1)
Underwriting Guidelines, Maximum Line Sizes and Exposures and Changes in the Guidelines	478	(1)
Changes in the Basis on Which Cover Has Been Written	479	(1)
Expected Business Volumes and New Business Areas	479	(1)
The Availability of Reinsurance Cover, the Cost of Reinsurance, and the Market Cycle	479	(1)
Desire to Develop Relationships with Certain Reinsurers or Cedants and Reciprocation Opportunities	480	(1)
Operational and Financial Considerations	480	(1)
Relationships with the Reinsurance Broker	481	(1)
Changes in Management Structure	481	(1)
Alternatives to Reinsurance	482	(3)
Practical Issues in Managing the Reinsurance Asset	485	(2)
Conclusions	487	(4)
Appendix A	487	(2)
References	489	(2)
Reserving	491	(68)
Introduction	491	(1)
Reserves Carried	492	(17)
Reserves in Respect of Unexpired or Unearned Exposure	493	(5)
Contingent Reserves	498	(4)
Reserves in Respect of Earned Exposure	502	(5)
Reserving Exercise: The Basic Steps	507	(2)
Form of the Data	509	(7)
The Choice of Year of Origin or Claim Cohort	516	(4)
Reporting Period	516	(1)
Accident Period	517	(1)
Underwriting Period or Policy Period	518	(2)
Reserving Methods	520	(34)
The Basic Chain Ladder Method	520	(8)
Inflation-Adjusted Chain Ladder Method	528	(5)
Separation Technique	533	(3)
Average Cost per Claim	536	(4)
The Loss Ratio and Bornheutter--Ferguson Method	540	(2)
Operational Time Model	542	(2)
The Bootstrap Method	544	(3)
Distribution-Free Approach	547	(2)
Approaches to Reserving Using Formal Statistical Models	549	(4)
Summary of Reserve Calculations	553	(1)
Conclusions	554	(5)
References	554	(5)
Part IV: Pensions
Types of Pension Plan	559	(20)
Classification of Plans	559	(4)
Introduction	559	(1)
Single-Member Plans	560	(1)
Group Pension Plans	561	(1)
State Pension Plans	562	(1)
Defined-Benefit Plans	563	(6)
Benefit Formulae	563	(1)
Salary-Linked Benefits	563	(2)
Retirement Benefits	565	(1)
Death Benefits	566	(1)
Withdrawal Benefits	567	(1)
Pension Increases	567	(1)
Cash Benefits on Retirement	568	(1)
Member Contributions	568	(1)
State Pension Benefits	568	(1)
Defined Contribution Plans	569	(4)
Types of Contribution Formula	569	(1)
Money Purchase Principle	570	(2)
Member's Pension Choices	572	(1)
Hybrid Plans	573	(6)
Benefit Underpins	574	(1)
Cash-Balance Plans	574	(1)
With-Profits Fund	575	(1)
References	576	(3)
Actuarial Modeling of Defined-Benefit Plans	579	(56)
Cash-Flow Projections	579	(10)
A Simple Model Plan	579	(1)
Projection of Benefit Outgo	580	(2)
Cash-Flow Equation	582	(1)
Stationary Fund Equation	583	(2)
Example of Cash-Flow Calculations	585	(4)
Practical Value of Cash-Flow Projections	589	(1)
The Actuarial Valuation	589	(35)
Objectives of Actuarial Valuation	590	(1)
Valuation Assumptions	591	(1)
Valuation Formulae	592	(5)
Actuarial Funding Methods	597	(6)
Example Illustrating Different Funding Methods	603	(2)
Valuation of Assets	605	(7)
Example Illustrating Alternative Asset Valuation Methods	612	(4)
Analysis of Surplus	616	(4)
Example of Analysis of Surplus	620	(4)
Actuarial Benefit Calculations	624	(4)
Transfer Values	624	(2)
Voluntary Early Retirement	626	(1)
Commutation	627	(1)
Unfunded Plans	628	(7)
Pay-As-You-Go Principle	628	(1)
Dependency Ratio	629	(1)
Demographic Factors	630	(1)
Economic Factors	630	(1)
Methods of Cost Control	631	(1)
The Future of Unfunded Social Security Plans	632	(1)
References	632	(3)
Investment Strategies for Defined-Benefit Plans	635	(28)
Introduction	635	(1)
Characteristics of Different Assets	636	(2)
Equities	636	(1)
Government Bonds	636	(1)
Corporate Bonds	637	(1)
Real Estate and Related Assets	637	(1)
Cash	638	(1)
Objectives of Investment Strategy	638	(6)
Maximizing Expected Returns	638	(1)
Matching Liabilities	639	(3)
Portfolio Diversification	642	(1)
Liquidity	643	(1)
Stochastic Asset/Liability Modeling	644	(13)
Performance Measures	645	(1)
Modeling Tools	646	(4)
A Simple Example Based on Mean-Variance Analysis	650	(5)
Combining Funding and Investment Decisions	655	(2)
Practical Issues	657	(6)
Who Controls the Investment Policy?	657	(1)
Who Owns the Surplus?	658	(1)
Tax Considerations	658	(1)
Legal Constraints on Investment Policy	659	(2)
References	661	(2)
Individual Pension Choices	663	(32)
Introduction	663	(1)
Projection of Money-Purchase Benefits	664	(10)
Deterministic Projections	665	(4)
Examples of Deterministic Benefit Projections	669	(2)
Stochastic Projections	671	(1)
Example Illustrating Stochastic Benefit Projections	672	(2)
Annuity Choices for Pensioners	674	(8)
Whether and When to Buy an Annuity	674	(2)
Example Illustrating Calculation of Break-Even Return	676	(1)
Level or Increasing Annuity	677	(1)
Example Illustrating Calculation of Break-Even Lifespan	678	(1)
Stochastic Approaches	679	(2)
Example Illustrating Stochastic Approach	681	(1)
Utility-Maximization Models	682	(13)
Expected Utility Theory	682	(1)
Utility of Lifetime Consumption	683	(2)
Utility of Retirement Wealth	685	(1)
Example Based on Utility of Retirement Wealth	686	(5)
References	691	(4)
Part V: Health Insurance
An Introduction to Health Insurance	695	(10)
Background	695	(1)
Actuarial Control Cycle	695	(1)
Basic Contract Structures of Health Insurance Products	696	(1)
Income Protection Insurance	696	(1)
Critical Illness Insurance	697	(1)
Long-Term Care Insurance	697	(1)
Private Medical Insurance	697	(1)
Comparison between Life and Health Insurance	697	(1)
External Factors Affecting Health Insurance	698	(1)
Demography	698	(1)
Economic Climate	698	(1)
State Provision of Health Care and Services	699	(1)
Features of Health Insurance	699	(2)
Deferred Period	699	(1)
Guaranteed and Reviewable Premiums	700	(1)
Claims Management	700	(1)
Risks to the Insurer	701	(1)
Adverse Selection	701	(1)
Moral Hazard	701	(1)
Mismatch of Claim Definitions	702	(1)
Medical Advances	702	(1)
Reinsurance	702	(3)
References	703	(2)
Income Protection Insurance	705	(22)
Introduction	705	(1)
Changing Demography	706	(1)
Changing Attitude to Disability	706	(1)
The Nature of Disability	706	(1)
The Evolution of the Product	706	(2)
Product Design	708	(4)
Benefit Types	708	(1)
Definitions of Disability	709	(2)
Group Business	711	(1)
Underwriting	712	(1)
Pricing	712	(7)
Risk Factors	713	(1)
Data Sources	714	(1)
Trends	715	(1)
Guarantees	715	(1)
Variations	715	(1)
Pricing Methodology	716	(3)
Claims	719	(2)
Claims Management	719	(2)
Claims Data	721	(1)
Reserving	721	(2)
Reserves in Respect of Active Lives	722	(1)
Reserves in Respect of Claimants	722	(1)
Contingency Reserves	723	(1)
Conclusion	723	(4)
Appendix A: Inception Rate and Disabled Annuity Method	723	(1)
Appendix B: Manchester Unity Method	724	(1)
References	725	(2)
Critical Illness	727	(20)
Introduction	727	(1)
Product Structure	728	(2)
Acceleration Benefit	728	(1)
Stand-Alone Benefit	728	(1)
Other Types of Critical Illness Product	729	(1)
Policy Content	730	(3)
Conditions Covered	730	(1)
Defining the Conditions	731	(1)
Standardization of Policy Wording: The U.K. Example	732	(1)
Underwriting Critical Illness Policies	733	(1)
Pricing the Risk	734	(8)
Risk Factors	734	(2)
Data Sources and Difficulties	736	(2)
Trends	738	(1)
Guarantees	738	(1)
Variations in Claims Experience	738	(1)
Pricing Methodology	738	(4)
Claims	742	(1)
Claims Management	742	(1)
Causes of Claim	742	(1)
Reserving	742	(1)
Conclusion	743	(4)
Appendix A	744	(1)
References	745	(2)
Long-Term Care	747	(18)
Introduction	747	(1)
Funding Long-Term Care	748	(2)
Background	748	(1)
Brief International Overview of Long-Term Care Funding	748	(2)
Pre-Funded Long-Term Care Insurance Products	750	(8)
Claim Triggers	750	(1)
Stand-Alone Insurance Products	751	(1)
Long-Term Care Insurance as a Rider Benefit	752	(1)
Underwriting	752	(1)
Pricing the Risk	753	(3)
Sales and Marketing	756	(1)
Claims	756	(2)
Reserving	758	(1)
Alternatives to Pre-Funded Insurance Products	758	(3)
Noninstitutionalized Settings for Long-Term Care	758	(1)
Use of Equity in Property to Fund Long Term Care: The U.K. Example	759	(2)
Conclusion	761	(4)
References	762	(3)
Private Medical Insurance	765	(20)
Introduction	765	(1)
Product Design	766	(4)
General Design Principles	766	(1)
Private Medical Insurance Products: The U.K. Example	767	(3)
Group Business	770	(1)
Underwriting	771	(2)
Declared Medical History	772	(1)
Moratorium	772	(1)
Premium Loadings	772	(1)
Pricing	773	(6)
Data Sources	773	(1)
Pricing Methodology	774	(1)
Medical Expense Inflation	775	(2)
Risk Factors	777	(1)
Guarantees	778	(1)
No-Claims Discount	779	(1)
Claims	779	(2)
The Nature of the Claim	779	(1)
Claims Control	779	(1)
Claims Procedures	780	(1)
Reserving	781	(1)
Claims Reported but Not Settled	781	(1)
Claims Incurred but Not Reported	782	(1)
Unearned Premium Reserve	782	(1)
Unexpired Risk Reserve	782	(1)
Policy Specific Reserves	782	(1)
Conclusion	782	(3)
References	783	(2)
Index	785