Pricing Of Long-term Care Insurance Based On Household Micro Data

China is facing a severe situation of population aging,and the number of disabled people is increasing.At the same time,China’s family structure tends to be smaller,coupled with the greater pressure of young people’s lives,the family’s function of providing for the elderly is gradually weakening.Under this background,our government and society are highly concerned about the long-term care of the elderly,especially the disabled.When the cost of care is high and the supply of care services is insufficient,long-term care insurance can provide insureds with compensation for long-term care costs and support for long-term care services.Long-term care services and long-term care insurance are closely related and jointly promote the development of the long-term care system.How to develop and rely on long-term care insurance to meet the long-term care needs of disabled elderly,and promote the progress of long-term care system has become a new research direction.Whether long-term care insurance products designed and developed by actuaries of insurance companies can attract consumers depends on whether the insurance terms and insurance rates are reasonable.However,China’s commercial long-term care insurance still faces difficulties in product development,and it is worth studying and exploring in terms of pricing practice.For this purpose,this article uses the insurance,the actuarial knowledge and other theoretical knowledge,combined with the development status of China’s commercial long-term care insurance to carry out research on the pricing of commercial long-term care insurance.This article first introduces the importance of the development of commercial long-term care insurance to solve the long-term care problems our society facing under the background of increasingly aging,gradually shrinking family size,and high nursing costs.The concepts of long-term care and long-term care insurance are defined,the characteristics oflong-term care insurance are clarified,and the supply status of long-term care and commercial long-term care insurance in China are analyzed.In terms of long-term care,it mainly introduces the three types of long-term care and the problems of insufficient supply and the poor service content faced by the three types of care.Combining the consideration of the status quo,this paper believes that commercial long-term care insurance should enrich insurance payment methods and introduce nursing services and such payment in kind.Afterwards,a statistical analysis of 17 commercial long-term care insurance suppliers and 75 commercial long-term care insurance products on the market was carried out.The characteristics of the products were explained in terms of protection period,insured age,insurance liability,etc.In terms of product pricing and design,we should relax the insurance payment conditions,increase the insured age limit,and increase in-kind payment and other improvement methods.Secondly,this article studies the pricing basis of long-term care insurance and systematically introduces the criteria for defining the state of long-term care.With reference to the enlightenment of product design pricing from Chapter 2,the long-term care status grade of this paper is defined,and a 4-level health status assessment system is established.Subsequently,four models commonly used in long-term care insurance pricing were compared and analyzed: the Manchester method,the random state duration model,the decrement table model and the Markov model.The Markov model that is the most suitable for the pricing of long-term care insurance in China is selected and applied to the long-term care insurance in this paper.Finally,this paper uses the CHARLS family micro data from 2013 to2015 to calculate the health state transition probability matrix of 45-85year-old individuals at two-year intervals.On this basis,the Kolmogorov forward equation is used to directly estimate the health state transition intensity matrix.In order to ensure the nature of the intensity matrix,the transfer intensity matrix was modified,and the Makeham hypothesis was used to smooth out the change of the transfer intensity with age,and the health state transfer probability matrix with an interval of one year was finally obtained.Based on this result,this paper uses the Markov model to price commercial long-term care insurance for individuals 45-80 years oldwith initial health and initial disability.Pricing results show that: under other conditions unchanged,the premiums of individuals who are healthy initially are much smaller than the premiums of individuals who are initially in a disabled state;the premiums paid by insured individuals increase with age decreasing;under the conditions of the same age of insurance and the same initial health status,the men’s single net premium is less than the women’s single net premium.The main contributions of this article include the following: First,based on ADLs and cognitive ability,this article divides the health status of the insured into healthy and mild disability(1 to 2 ADLs are disabled and have no cognitive function Disorder),severe disability(3-6 ADLs disability or cognitive impairment),and death.Different payment fees are set for mild disability and severe disability,and the insurance benefit is linked to the level of care.At the same time,the actual operating difficulty of the insurance company is considered,and the moral hazard in the insurance management process is reduced.Calculating the classification rate table of commercial long-term care insurance of different ages,different genders,and different initial states,which makes up for the gap of measuring commercial long-term care insurance rates based on the four-level health status assessment system.Second,this article combines the theory and practice of long-term care insurance,starting from reality,fully considering the development status of commercial long-term care insurance,combining the main insurance clauses of the 75 commercial long-term care insurance currently on the market,and discussing the long-term insurance liability of long-term-care insurance,payment conditions,etc.According to the current situation,some design directions of China’s commercial long-term care insurance are proposed,and the inspiration of some product designs obtained from the current situation is reflected in the pricing of this article.