Research
Research Studies in Health
Request for Proposals–Comparison of IBNR Methodologies
With increased scrutiny on financial reporting and ongoing solvency concerns,
health actuaries are faced with the need, more than ever, to deliver reliable
estimates of claim costs and reserves. A number of methodologies exist for
calculating Incurred But Not Reported (IBNR) Reserves. However, practical
techniques have not been substantially updated in a number of years. Further,
significant changes in IT and speed of claim payment may make new techniques
more applicable. Currently, when faced with a choice of which methodology
may be most accurate and appropriate in a given situation, there is a dearth
of information to guide health actuaries. As such, the Health Section Council
of the Society of Actuaries has identified a need for comparative information
on the accuracy of various IBNR methodologies.
- Request for Proposals–Comparison of IBNR Methodologies
The Health Section Council (HSC) is seeking proposals for research that would
result in a practical guide on distinguishing between IBNR methodologies for
making qualitative decisions on the best method for a given circumstance.
Researchers will be expected to test a number of methodologies on a dataset
that they provide and rate them for accuracy and applicability for a number
of situations. The methodologies should include those commonly used by actuaries
to calculate IBNR such as the completion factor method (as well as variations of it)
and others. Statistical model methods may also be potentially considered for
evaluation. Proposals should include a list of recommended methods for evaluation
in the opinion of the potential researchers. The final selected methods for
evaluation will be determined in consultation with the Project Oversight Group.
In order to easily compare the methods, the researchers will be expected to either
use a commonly applied measure of accuracy or develop a new measure to score the methods.
Examples of factors impacting the decision on which method is best in a given situation
may include:
- Benefit Plan Variations such as high deductibles, etc.
- Number of working days
- Need for margins/confidence intervals
- Claim Backloads
- HIPAA Requirements
- New IT Systems
- Propensity for Large Claims
The focus of the work will be on medical insurance, although researchers are free to consider
other health–related coverages.
Though not a requirement, the Health Section Council is interested in proposals that include
the creation of basic software tools to accompany the practical guide if appropriate.
The audience for this project is intended to be health practitioners. The methodologies
considered for comparison should also be such that a practitioner could apply them without
the need to purchase special hardware or software packages.
Finally, it is imperative that proposals describe the dataset they will be using and that
this is readily available when the research would commence. The Society of Actuaries will
neither be able to provide nor will assist in the procurement of data for this project.
- Proposal
To facilitate the evaluation of proposals, please include:
-
Within the body of the proposal, the following sections detailing the aims of the
project: Purpose–a discussion of the expected output and content; Data–sources to be
used, how obtained, etc.; Methods–an outline of their development or selection;
Expected Use–expectation of how the research can be used and ideas for the form and
distribution of the guide; Limitations–any potential limitations of the research.
-
B.Resumes of the researcher(s), including any graduate student(s) expected to participate,
indicating how their background, education, and experience bear on their qualifications
to undertake the research. If more than one researcher is involved, a single individual
should be designated as the lead researcher and primary contact. Responsibilities of each
member of the research team, if applicable, should be noted. The person submitting the
proposal must be authorized to speak on behalf of all the researchers as well as for the
firm or institution on whose behalf the proposal is submitted.
-
C.Cost estimates for the research, including computer time, salaries, report preparation,
research costs, etc. Such estimates can be in the form of hourly rates, but in such cases,
time estimates should also be included. Any guarantees as to total cost should be given
and will be considered in the evaluation of the proposal. While cost will be a factor in
the evaluation of the proposal, it will not necessarily be the decisive factor.
-
D.A schedule for completion of the research, identifying key dates or time frames for
research completion and report submissions.
-
E.Other related factors that give evidence of a proposer's capabilities to perform in a
superior fashion should be detailed.
- Selection Process
The HSC is responsible for the selection of the proposal to be funded. Input
from other knowledgeable individuals also may be sought, but the HSC will make
the final decision. The SOA's Research Actuary will provide staff actuarial
support. A Project Oversight Group (POG) will be appointed by the HSC to oversee
the project upon selection of the proposal.
- Questions
Any questions regarding this RFP should be directed by fax, or e–mail to:
- Notification of Intention to Submit Proposal
If you intend to submit a proposal, please send written notification by
March 30, 2007 to:
- Submission of Proposal
Please e–mail a copy of the proposal to: Jeanne Nallon at jnallon@soa.org
Proposals must be received no later than April 15, 2007. It is anticipated
that all researchers who have submitted proposals will be informed of the
status of their proposal no later than May 15, 2007.
Note: Proposals are considered confidential and proprietary.
- Conditions
The Society of Actuaries reserves the right to not award a contract for this
research. Reasons for not awarding a contract could include, but are not limited
to, a lack of acceptable proposals or a finding that insufficient funds are
available to proceed. The Society of Actuaries also reserves the right to redirect
the project as is deemed advisable.
The Society of Actuaries intends to copyright and publish the results of this research.
The research will be considered work–for–hire and all rights thereto belong to the
Society of Actuaries. However, appropriate credit will be given to the researcher(s).
Notification of Intention to Submit Proposal
Please send written notification by March 30, 2007 to