Evaluation and development of rating models

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Accurate, easy-to-use rating and underwriting models can make or break an insurer’s success in the market. Milliman works with insurers, HMOs, and Blues organizations to ensure this success. We help them standardize rating models, create new models that are easier to replicate, and train new underwriters.

As health plan offerings continue to evolve and become more complex, it is not uncommon to see a proliferation of models—outdated or with little documentation—in use at a single insurer. Different models may produce conflicting results for similar products.

New standardized HMO model created efficiencies

Milliman worked with a large staff model HMO that wanted to update its rating models. It also had a lot of side models in place and wanted to standardize them. We helped the HMO develop a consistent rating model it could use for all of its large groups. The new model:

  • reduced time spent in training new underwriters
  • provided a quicker review process for actuaries
  • improved documentation of underlying assumptions

New model for national insurer increases sales, offered better rates

A large national insurer needed to enhance its rating and underwriting models with several goals in mind. The models should be easy for brokers to use, comprehensive enough for underwriters to conduct their reviews and modify manual rates, link to administrative systems, provide an actuarially sound renewal rating of existing groups, and link to experience systems to enable actual-to-expected analyses of emerging claims.

Milliman consultants worked closely with actuarial, underwriting, sales, and operations at the insurer to build the new rating model. As a result, sales increased because brokers found it easier to work with the company to get rate quotes, underwriter accuracy improved, case installation became more efficient, and renewal processes were automated. At the same time, using a consistent rating methodology in the systems across the entire platform of products generated rates for different plans that were more reasonable and appropriate than rates provided by the prior assortment of models.

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