Actuaries Studying Terrorisms Reach
The American Academy of Actuaries in Washington is currently studying the impact of terrorism on certain life and medical insurance products as well as possible insurance solutions to terrorist acts.
The focus of the study is on nonmedical products that include long term care insurance, group life insurance and short-term and long-term disability insurance as well as medical insurance products.
The nonmedical insurance products are being examined because they are among products that would be sold to employer groups, says Jan Carstens, chair of the AAAs terrorism/extreme events working group and a consulting actuary with Milliman USA, Minneapolis.
One of the goals of the working group, she continues, is to identify who is impacted. According to Carstens, among those affected are insurers, reinsurers, private employers, provider organizations and government.
Issues that are being addressed, she adds, include the availability of reinsurance and the expense of reinsurance, when obtainable, for group life and DI.
Carstens says possible solutions the working group is looking at include forming risk pools, aggregate stop loss coverage in which reinsurance reimburses carriers for losses above a certain dollar amount, and purchasing cooperatives.
Some of the events being looked at by the working group include a biological agent, contamination of water and food supply and a “dirty” or radioactive bomb being detonated, she says.
As medical insurance is examined, Carstens says areas to be studied include an increase in the utilization of certain services and the impact on overall medical costs, particularly prescription drugs and mental health benefits.
The group is also looking at how a terrorist event could affect the general economy, she adds.
At this point, according to Carstens, it has not been decided whether there will be an examination of the impact a terrorist event could have on Commissioners Standard Ordinary Tables.
Reproduced from National Underwriter Life & Health/Financial Services Edition, August 26, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.