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Actuarial Applications of a Statistical Model for Long-Term Care Insurance Operated with a Score-based Grading System: A Case Study of Korean Long-Term Care Insurance (K-LTCI)

Author

Listed:
  • Kwon Hyuk-Sung

    (Department of Statistics and Actuarial Science, Soongsil University, 369 Sangdo ro Dongjak gu Baird hall room 509, Seoul 156–743, South Korea (Republic of))

  • Ko Bangwon
  • Kim Ji-Hae

    (Department of Statistics and Actuarial Science, Soongsil University, 369 Sangdo ro Dongjak gu Baird hall room 516, Seoul 156–743, South Korea (Republic of))

Abstract

Long-term care insurance plays a very important role as providing a protection against financial risk of an individual when he/she becomes in a health condition incurring significant costs for long-term care. Construction of an appropriate actuarial model for long-term care is an integral part of maintaining and improving a long-term care insurance system. A model is suggested for analyzing the impact of change in score-based long-term care grading system and for estimating future cost of long-term care insurance. A spliced distribution was used to model assigned scores for long-term care insurance in Korea based on experience data. The suggested approach is quite flexible, as it allows us to adapt to possible changes in the grading system.

Suggested Citation

  • Kwon Hyuk-Sung & Ko Bangwon & Kim Ji-Hae, 2016. "Actuarial Applications of a Statistical Model for Long-Term Care Insurance Operated with a Score-based Grading System: A Case Study of Korean Long-Term Care Insurance (K-LTCI)," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 10(2), pages 217-243, July.
    • Handle: RePEc:bpj:apjrin:v:10:y:2016:i:2:p:217-243:n:3
    DOI: 10.1515/apjri-2015-0028
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