Milliman Pension Buyout Index: March 2020
During February 2020, average accounting discount rates decreased by 19 bps, while annuity purchase rates decreased by 25 bps.
In many healthcare systems and health insurance markets around the world where risk rating is not allowed, risk equalisation is used to enhance consumer protection and market stability. Its aim is to compensate for the risk profiles of different groups of the population such that the additional medical expenses associated with high-risk members are shared amongst healthcare providers or insurance companies. This is generally achieved by the transfer of payments through a risk equalisation pool, or similar mechanism. In this paper we have set out a 'how-to' guide to risk equalisation, or risk adjustment.