Long-term health insurance: the German model

Long-term health insurance: the German model

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Speaker(s): David Richter (PwC GmbH WPG)

In Germany, private health insurance contracts providing a life-long cover have a long tradition. For such contracts there exists a well-established set of measures, regulatory boundaries and calculation rules ensuring that the cover remains guaranteed over the lifetime of the contract. A premium adjustment clause allowing for a regular recalculation of premiums in case circumstances change forms the basis of this insurance model. In our presentation we will describe the model and provide ideas for which types of insurance such a life-time-cover makes sense. We highlight the foundations of the German health actuarial practice framework and explain the basics for the actuarial assumption setting. Trends in benefit curves are taking into account by the method of Rusam which will be explained as part of the talk.

Certainly this system has its limits and challenges, one major issue being the risk of increasing premiums, especially for older insured persons. Therefore these limits and challenges are illustrated and actual as well as potential measures and risk mitigation techniques are explained. The presentation closes with an overview and comparison of alternative calculation methods seen in other countries around the world.

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