Ch 1: PMI

Question 1

PMI Definition

Answer 1

• Usually indemnity based product that seeks to provide compensation for the cost of private medical treatment
• Short-term, usually reviewable annually. (Will not be re-underwritten)

Question 2

Managing claims cost of PMI (4)

Answer 2

• Limitations and exclusions on benefits (reduce liklihood of moral hazards like where designer spectacles are purchased through PMI)
• Co-payment and levies (PH pays fixed amount ot proportion of cost of healthcare services used)
• Medical savings accounts (self fund day-to-day expenses)
• Approved provider networks
  * Negotiated fees and service standards
  * Treatment protocols
  * Pre-authorisation
  * Employ own health professionals
  * Reviw uitilisation rates

Question 3

Related PMI products

Answer 3

• Medical gap cover
• Major medical expenses
• Hospital cash plans

Question 4

Exposure measure criteria

Answer 4

• Good measure of amount of risk, allowing for both expected frequency and severity of claim
• Practical - objectively measurebale and easily obtainable