What is it about?
Unlike other health or life insurance costs, that develop over long periods of time, epidemics spread very quickly in a population. Costs for treatment or death benefits balloon fast, peak out and then die out almost quickly as they appeared. Traditional actuarial techniques do not work when valuing such programs and setting reserves. This paper bridges epidemiological and actuarial models to solve the problem.
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Why is it important?
A key element in an efficient response to an epidemic outbreak is to have sufficient funds to cover the medical treatment of affected patients. Otherwise, untreated diagnosed individuals will continue to infect others accelerating the spread of the disease. Our proposal gives guidelines to set proper reserves (funds) so that funds will be sufficient in the event of an epidemic outbreak.
Perspectives
This was the Master's thesis project of Runhuan Feng, right after the time of the SARS epidemic. He did such a good job that eventually it lead to a publication, despite the very a long refereeing process. The paper came out too late for the wave of interest during SARS, but got a second life after the COVID-19 epidemic.
Distinguished Professor Emeritus Jose Garrido
Concordia University
Read the Original
This page is a summary of: Actuarial Applications of Epidemiological Models, North American Actuarial Journal, January 2011, Taylor & Francis,
DOI: 10.1080/10920277.2011.10597612.
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