Dr George Streftaris, Senior Lecturer in Actuarial Mathematics and Statistics in the School of Mathematical and Computer Sciences at Heriot-Watt University, has given a lecture on 'The effect of model uncertainty pricing critical illness' at a sessional meeting organised by the Institute and Faculty of Actuaries (IFoA) at the Royal College of Physicians.
The presentation was based on recently concluded work carried out with the support of a pump-priming grant awarded by the IFoA in 2012.
Critical Illness Insurance (CII) involves cover which pays out on the diagnosis of an illness which is deemed to be critical. Estimation and graduation of CII claim rates has been challenging, partly due to the diagnosis of the insured event often being unclear or not recorded. This introduces additional uncertainties in the evaluation of claim rates. This project addresses the issue of model and parameter uncertainty in claim rate estimation, when the date of diagnosis is missing, aiming at obtaining graduated rates that can be applied to estimate the future cash flow of CI policies and determine insurers' liability more accurately.
For further information on the lecture please visit: The effect of model uncertainty on the pricing of critical illness insurance.