Actuarial Science 1021A/B Lecture Notes - Lecture 2: Ontario Health Insurance Plan, State Monopoly, Benefit Society
6 Dec 2014
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Document Summary
To answer this question, we need to understand the similarities between private and. To do that, we need to know some of the characteristics of private insurance: Pooling a technique by which a large number of exposure units are combined or grouped. Exposure groups here are homogenous group of people with common characteristics then the law of large numbers can be used to provide an accurate prediction of future payouts. Payouts of individuals exposed to certain risks are pooled with all other individuals (which allows you to spread the risk over the entire group) Ohip are spread out and paid for by individuals in the program who currently do not need care. In a private insurance, a pure risk is transferred to the private insurance company, which is in a stronger financial position to pay losses than the individual. Similarly in a social insurance program, the financial risk is transferred to the government.
