Actuarial Applications of Hierarchical Modeling to Health Insurance Claims
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Date
October 22, 2015
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Abstract
This study demonstrates actuarial applications that can be performed on the
Health insurance claims in the country. To achieve this, data from the CPC
scheme in Accra of the NHIA in the year 2013 was employed for the study. this
consisted of facility type, number of claims submitted(in-patient and out-patient)
and amount submitted (in-patient,out-patient,drugs and services charges). A hierarchical
model allowing for frequency, claim type and severity amount to be
jointly modeled was used. Based on this hierarchical model, we proceeded to
estimate premium values under various conditions, however due to lack of information
from the insurer most of these estimates could not be stated categorically.
Applications of the study was also made to the Value-at-Risk theory. This fact not
withstanding, a case has been made for the consideration of the hierarchical modeling
approach to be considered as the means of analyzing health insurance claims
since this model takes into consideration not only the loss (severity) amount submitted
but also considers most especially factors integral to the planning and
budgeting of the insurer, and these are, the frequency and type of claim. The
hierarchical modeling approach thus provided further insight which previously
was overlooked.
Description
A thesis submitted to the Department of Mathematics, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirement for the Degree of M.Phil. Actuarial Science.