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Actuarial Society of Greater New York Overview of the Health Reinsurance Market. Michael L. Frank Donald J. Rusconi Aquarius Capital May 27, 2009. Copyright and Disclaimer.
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Michael L. Frank
Donald J. Rusconi
May 27, 2009
The material contained in this presentation has been prepared solely for informational purposes by Aquarius Capital Solutions Group LLC (Aquarius). The material is based on sources believed to be reliable and/or from proprietary data developed by Aquarius, but we do not represent as to its accuracy or its completeness. The content of this presentation is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. This document and its contents are proprietary to Aquarius. Neither this document nor its contents may be copied or reproduced in any manner without the express consent of Aquarius. Any requests or questions about this material should be forwarded to email@example.com.
• Insurance Carriers
• Managing General Underwriters (MGUs)
• Third Party Administrators (TPAs)
• Marketing Entities/General Agencies
• Captive Insurance Companies
• Health Maintenance Organizations (HMOs)
• Medical Provider Groups (“Risk Taking”)
• Employer Groups (“Self-Funded”)
• Disease Management Companies
• Longer Tail Coverage
• Other (Hybrids)
Note: A&H market borrowed many concepts from P&C market!
ASO (UHC, Cigna, Aetna, BCBS)
Contract with employer group.
Direct relationship with employer group or groups retail broker.
Receives administrative fee on a per EE basis.
Provides stop loss directly to group or shopped by broker/consulting house.
Network management and claim payment.
Provides reporting to employer, MGU, Carrier/Reinsurer.
Have their own stop loss product.
Contract with Reinsurer.
Underwrites blocks of stop loss reinsurance business written by Carrier/TPA/MGU.
Business referred by Reinsurance Intermediary.
Receives fee on a % of premium basis with potential profit commission.
Adjudicates reinsurance claims
Handles reinsurance/retrocession reporting
Audits of underlying MGU/Issuing Carrier
Profitable Period (Late 1980’s – early 1990’s)
Many Companies in Market in 90’s Out by 2002/03:
• Swiss Re
• Sun Life
• Transamerica Re
Note: More than 30 companies exited market!
DISEASE MGMT CO.
EMPLOYERThe Disease Management Co. Reinsurance “Food Chain” – Case #2
What information is requested on a disclosure statement?
• Individuals currently disabled or confined in a medical facility/hospital
• Individuals pre-certified within the last three months.
• Individuals that received medical services during the current plan year the cost of which exceeds the lesser of, 50% of the lowest Specific Retention Amount applied for or $50,000, and for which bills have been received and processed by the by the Claims Administrator (TPA) and entered into their Claims System.
• Individuals that have been identified as a candidate for Case Management and as having the potential to exceed during the policy period, the lesser of, 50% of the lowest Specific Retention Amount applied for, or $50,000.
• Individuals that have been diagnosed, during the current plan year, with a condition represented by any of the ICD-9 codes contained in the attached list and have also received medical services costing $5,000 during the same period.
• Self-Insurance Institute of America (www.SIIA.org)
• Society of Professional Benefit Administrators (www.SPBATPA.org)
• MyHealthGuide LLC (www.myhealthguide.com)
• SOA Reinsurance Section Council (www.soa.org)
Regulations 17, 20 and 20-A, at 11 NYCRR § 125.6 provide specific detail as to the type of arrangements that constitute “amounts withheld” under a reinsurance treaty that will enable a ceding insurer to take credit on its balance sheet for reinsurance obtained from an unauthorized reinsurer. 11 NYCRR § 125.6(b) provides, in pertinent part, as follows:
Will financial position of reinsurance market improve?
Impact of the subprime
Other lines of business exposures (e.g., Hurricanes, etc.)
Is the “sins of the past” still haunting people today?
Is a shrinking market for these types of coverage a concern?
Impacts of regulatory market (risk manager conservatism)
Will health plan/HMO consolidation result in fewer or different opportunities?
Federal Healthcare Reform
Michael L. Frank, ASA, MAAA, FCA
President & Actuary
Phone: (914) 933-0063
Donald J. Rusconi II, CFA
Vice President & CFO
Phone: (203) 458-1495
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