Description: In an effort to build a bridge between epidemiological and actuarial modeling, this paper analyzes possible financial arrangements made against expenses resulted from medical treatments given to insured patients. Based on classical compartment models, the first part of this paper designs insurance policies for susceptible participants facing the risk of infection and formulates the financial obligations of both parties using actuarial methodology. For practical purposes, the second part employs a variety of numerical methods for calculating premiums and reserves. The last part illustrates the methods by designing insurance products for the Great Plague in Eyam and the SARS Epidemic in Hong Kong.

Description: Presented at October 2001 Annual Meeting. Discusses three key factors related to catastrophic health care events: • Trends in health care delivery and medical technology that are likely to impact catastrophic care costs • Methods of cost and risk control through early identification and specialized medical management • Modeling the cost of catastrophic events on health insurance programs