CH:21 Mortality and morbidity

Question 1

How do providers identify the characteristics of the risk they underwrite and pool them into homogenous groups?

Answer 1

Rating factors

Question 2

What factors affect heterogeneity of mortality/morbidity rates?

Answer 2

• occupation
• nutrition
• housing
• climate/geography
• education
• genetics
• HIV

Question 3

What are the 5 forms of selection

Answer 3

• temporary initial selection
• class selection
• time selection
• adverse selection
• spurious selection

Question 4

Define temporary initial selection

Answer 4

where the level of risk diminishes or increases since the occurrence of the selection process (or discriminating event)

Question 5

Define class selection

Answer 5

where a select group is taken from a population consisting of a mixture of different types (classes) of individual with different characteristics

eg,
* individuals who have lived abroad may be exposed to tropical diseases
* more highly paid individuals have higher standard of living and experience lower mortality rates

Question 6

Define time selection

Answer 6

where a group is taken from a population of individuals from different calendar years

eg,
* a group of males aged 40-60 years old, whose mortlality is better than that of the proceeding cohort

Question 7

Define adverse selection (or anti-selection)

Answer 7

where the individual’s own choice influences the composition of a select group

Question 8

Define spurious selection

Answer 8

where the distorting effect of a confounding factor gives the false impression that one of the other forms of selection is present

eg, increasing the strictness of the underwriting of life insurance products will lead to a lighter mortality experience. This will give the false impression that mortality is improving at a quicker rate that it really is