Tid: 15 april 2003 kl 1515-1600 (OBS! Tid och dag)

Plats : Seminarierummet 3733, Institutionen för matematik, KTH, Lindstedts väg 25, plan 7. Karta!

Föredragshållare: Fredrik Solberg

Titel: Pricing Child Health and Accident Insurance. (Examensarbete)


Today, Child Health and Accident Insurance products do not provide cover for congenital diseases which are manifested before the age of six years. The main reason for this exclusion, according to insurance companies, is that costs would reach unrealistic levels if cover was provided for congenital disorders in this age group. Geneticists, however, claim that this exclusion is unethical. There seems to be a need to investigate whether or not this exclusion is reasonable.

The development of genetic tests for heriditary disorders gives insurers the possibility to make better risk assessments, if they are allowed to use results from such tests in their underwriting process. The use of such information is controversial, and there has been much discussion about whether insurers should be allowed to use genetic test results or not. It is natural to ask questions like: If insurers have access to genetic test results, what is the cost to an insured individual who has tested positive, in terms of extra premiums; or what is the cost to insurers, in terms of adverse selection, if they are not allowed to use results from genetic testing?

In this thesis it is shown how Markov models can be used to approach the questions raised above. Such a model is used to investigate the problems associated with adverse selection in Child Insurance products.

The results from the computations imply that, when regarding the care allowance and life insurance components of Child Insurance, the extra morbidity for cystic fibrosis and other congenital disorders is not very significant. However, the computations further imply that adverse selection could become a serious problem for insurance companies if levels of genetic testing in the population as a whole are high.

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