Solutions week-5 2020

1. Aggressive strategies of private health insurance companies may lead to (find the
wrong one)
i. Death spiral
ii. Cherry picking
iii. More coverage
iv. Product differentiation

2. Actuarially fair premium is

i. The exact premium which patients have to pay
ii. The expected value of total claims or compensation
iii. The amount which covers claim and the operational cost for the insurance
company
iv. The percentage of total expenditure health insurance company pays for the
patient

3. Monitoring and evaluation of the treatment process by the health care providers is
classified as
i. Prospective services
ii. Concurrent services
iii. Retrospective services
iv. All of the above

4. Retention limit is
i. Maximum amount of coverage a reinsurance company is going to provide to
the ceding company
ii. The fund created by the ceding company in order to pay the anticipated
claims
iii. The difference between the total claim amount that a ceding company has
to pay and its reserve
iv. Maximum amount of loss a ceding company is willing to incur

5. (A) PPO is cheaper than HMO

(B) PPO is more flexible than HMO
Only (A) is correct
Only (B) is correct
Both are correct
Both are wrong

6. Which one of the following is not a characteristics of a HMO

i. You can directly visit your preferred practitioner
ii. There is a subscription fee
iii. Health insurance companies are associated
iv. The patient has to consult a primary physician before they are directed
towards further treatment
 7. Which one of the following is a wrong statement?
i. Due to inappropriate disclosure asymmetrical portfolio poses challenge to
the underwriters
ii. An underwriter has to be consistent in understanding the nature of risk
iii. The role of actuarial scientists follows the decision of underwriters
iv. Putting limits and setting strict norms for exclusions help underwriters to get
rid of moral hazard problems

8. (A) Private and public health insurances can be distinguished based on time of
enrolment and initiation of coverage.
(B) The coverage of health insurance is poor in India because of domination of
private players.
Only (A) is correct
Only (B) is correct
Both are correct
Both are wrong

9. (A) Third party administrators keep the operational cost low for the health insurance
companies
(B) The major difficulty that a TPA face in ensuring limited information asymmetry is
because of lack of standardization from the providers’ side

Only (A) is correct

Only (B) is correct
Both are wrong
Both are correct

10. (A) In case of reinsurance, process of recapture is generally very strict in developing
countries.
(B) First dollar technique is a component of facultative reinsurance

Only (A) is correct

Only (B) is correct
Both are wrong
Both are correct