How will improved forecasts of individual lifetimes affect underwriting?
The combined effects of underwriting and adverse selection among heterogeneous populations are considered, using a simple Markov model. I illustrate the possible extent of the costs of adverse selection; in all cases, above-average sums assured is the most significant factor.
MacDonald
A S
AS
Heriot-Watt University, Riccarton, Edinburgh, UK.
D000328:Adult; D017668:Age of Onset; D004608:Eligibility Determination; D030342:Genetic Diseases, Inborn / Q000191:economics / Q000235:genetics; D005820:Genetic Testing / Q000191:economics*; D017048:Health Care Costs; D006801:Humans; D007348:Insurance, Health / Q000191:economics*; D007352:Insurance, Life / Q000191:economics*; D008875:Middle Aged; D018803:Models, Economic; D012308:Risk Management; D012946:Social Welfare