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Morbidity compression and cancer insurance

Published online by Cambridge University Press:  10 August 2023

Hsin-Chung Wang ,
Jack C. Yue ,
Ting-Chung Chang  and
Ting-Chen Chang
Hsin-Chung Wang*
Affiliation:
Department of Statistical Information and Actuarial Science, Aletheia University, New Taipei City, Taiwan, R.O.C
Jack C. Yue
Affiliation:
Department of Statistics, National Chengchi University, Taipei, Taiwan, R.O.C
Ting-Chung Chang
Affiliation:
Department of Accounting Information, Chihlee University of Technology, New Taipei City, Taiwan, R.O.C
Ting-Chen Chang
Affiliation:
Department of Statistics, National Chengchi University, Taipei, Taiwan, R.O.C
*
*Corresponding author. E-mail: au4369@mail.au.edu.tw
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Abstract

Cancer is among the leading causes of death in the world, with about 10 million deaths, one in every six deaths, related to cancer in 2020. In Taiwan, cancer insurance is the most popular commercial health product. However, the loss ratio of cancer products increases with policy year and exceeds 100% in many insurance companies. In addition, almost all cancer benefits are significantly limited in order to avoid financial insolvency. In this study, we evaluate the risk of cancer insurance from the perspective of morbidity compression. We use the data from Taiwan's National Health Insurance Research Database. Also, we apply the standardized mortality ratio and the Lee-Carter model to estimate the trend of cancer-related values. We find that cancer incidence rates gradually increase with time, which indicates that the assumption of morbidity compression is violated. On the other hand, the mortality rates of cancer patients decrease significantly annually. Thus, length of life with cancer increases, and so does the cancer insurance premium. We suggest that cancer insurance covers only the first five years of medical expenditure after the insured is diagnosed with cancer.

Keywords

Cancerlongevity riskmorbidity compressionNational Health Insurancestandardized mortality ratio
Type
Research Paper
Information
Journal of Demographic Economics , Volume 89 , Special Issue 3: International Longevity Risk and Capital Markets Solutions , September 2023 , pp. 465 - 482
Copyright
Copyright © Université catholique de Louvain 2023

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