Because of the short-term nature of most health insurance products, the sophistication of insurers' capital modeling tends to lag that of longer tailed life insurers. Additionally, some health insurers treat required capital modeling as a compliance exercise. However, there is considerable value to insurers who take more thoughtful approaches to capital modeling and integrate their capital modeling outcomes into the strategic decision-making process. Gain an overview of common required capital measures, including the advantages and disadvantages of each, and see a demonstration on how some capital measures are deficient for strategic decision-making. In the second half of the session, you will examine a case study of the considerations, design, implementation, challenges and outcomes of integrating a complex economic capital model into the strategic decision-making process. By attending this session, you will be able to:
Understand the difference between economic capital, risk-based capital, and rating agency capital, and the uses, advantages and disadvantages of each.
Evaluate the various capital measures and identify the best capital measure for your organization.
Understand the value of integrating economic capital modeling into the strategic decision-making process, as well as understanding the challenges involved.