Morbidity study being readied among HMOs for rate assessment

MANILA, Philippines — A morbidity study among health maintenance organizations (HMOs) and insurance firms is underway in a bid to update the pricing and valuation of various financial products.

In an advisory, the Insurance Commission (IC) released the draft circular on the conduct of the Philippine Intercompany Morbidity Study together with the Actuarial Society of the Philippines (ASP).

The first industry-wide morbidity study aims to evaluate rates and reserve valuations of insurers.

Currently, insurance companies and HMOs use various parameters such as utilization rate, length of stay and average claim amount in product development, product pricing and actuarial valuation.

IC commissioner Reynaldo Regalado said the conduct of a morbidity study would help promote and develop reasonably and appropriately priced products based on data-driven studies that cater to the needs of the consumers.

As such, the morbidity study will apply to all life and non-life insurance companies selling health insurance products, as well as HMOs.

Specifically, the study targets to develop industry level health or medical claim costs and utilization rates which can serve as benchmarks for the lC in evaluating the reasonableness of rate filings and reserve valuations of insurers and HMOs.

“This would promote fairness and strengthen consumer protection and prudential regulation,” Regalado said.

It also aims to provide information and insights that would aid the government in health policy making.

The study will cover individuals, family and corporate products using policy and claims data from 2018 to 2022.

The study is also expected to result in the development of a morbidity study system to be used by insurance and HMO firms.

Last January, IC and ASP inked a memorandum of agreement for the conduct of the morbidity study.

ASP is primarily engaged in determining the chances of future risks, like birth, disability, accidental injury, fire, damage to property, need for medical care, or premature death, and calculate the cost of financing these uncertain events by insurance or other related means.

In the Philippines, actuaries have traditionally practiced their profession in the life insurance industry.

The insurance sector’s income went up by 24 percent to P27.78 billion in the first semester of the year, attributed to the increase in premium collection by both life and non-life insurance companies.

The HMO industry reverted to profitability in the January to June period, with net income reaching P636.6 million as against a net loss of P1.19 billion in thesame period last year.