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Impact Valuation of the French Health Reform
Sia Partners supports clients in the valuation of impacts that the French health reform (100% Santé) can have. This is achieved using existing models, and by exploiting more complex models with the use of machine learning, notably to enhance predictive accuracy.
The Health sector is subject to ongoing regulatory changes. Insurers must assess the impacts they can generate from their portfolio, make the best use of the available data, adapt their prices and their product range accordingly, and then finally make sure their contracts are compliant. Sia Partners supports clients during these three fundamental stages, in all regulatory developments (responsible contracts, ANI, intra-annual cancellations, etc.):
Building a modeling database:
Reading and exploiting data from data centers is an extremely important step in modeling risk and predicting its evolution. This phase is divided into four parts:
1. From data management to a modeling database
Reconciliation of exposure and claims files, database formatting, and data quality control.
2. Understanding data
Improvement of risk knowledge, and identification of specific features in the available portfolio (overall analysis of the portfolio, analysis of data and its influence on the model, etc.).
3. Development and audit of models
Selection and development of models according to business constraints.
4. Delivery of the final solution
Delivery of a product that is perfectly integrated into business processes (assistance with the implementation of the solution, writing technical specifications, and implementing data visualization tools to communicate the results).
Our approach to measuring the impact of the 100% Santé implementation, and its compliance is as follows:
The "100% Santé" reform aims to regulate Health product features, causing an increasing number of people to cancel or delay healthcare for financial reasons. Three product lines were thus created, the lowest cover includes a commitment to access care and receive a full reimbursement. In this regard, how can stakeholders anticipate costs generated by behavioral changes of the insured in the portfolio?
We can clarify these impacts for our clients, as well as using machine learning tools that refine the prospective vision. Traditional pricing techniques have certain limitations because they are based on linear links between variables, while certain behavioral effects can be more complex. This approach can be broken down into six stages:
Preliminary phase: Integration into an existing environment
Ensure overall consistency, change logic, whilst respecting strategic, financial, and commercial decisions.
Phase 1: Establish a framework along three main pillars (actuarial, risk, compliance)
- Analyze available data and the classification of information centers/IS management
- Assess the optimization of existing tools and the consequent developments
- Define monitoring indicators: risks/impacts (risk appetite / tolerance, written policies, financial communication, etc.) with funding options when necessary
- Compliance: ensuring proper compliance with regulatory rules/constraints in the delivery
Phase 2: Perform preparatory work
- Building the modeling database
- Building/optimizing the necessary tools (pricing, risk monitoring and impact of the reform)
Phase 3: Analysis
- Definition of impacts (using databases and impact tools)
- Provision of funding related to the strategic plan
Phase 4: Making the necessary changes (questioning the technical balance requires a new pricing framework)
- Re-pricing
- Definition of new contractual conditions/features
- Definition of risk monitoring breakdown (management settings consistent with customer reporting needs)
Phase 5: Lead operational implementation
- Set new contractual documents (primarily for new business)
- Take migrations into account (for portfolio business)
- Management preparation (contracts/claims)
Phase 6: Supporting change
- Training sales teams on technical aspects and financial issues
- Technical support and assistance with changing/developing commercial activities (commercial teams are often intermediaries between management and technical monitoring)
The objective is to find a technical balance while facing challenges and considering new regulatory frameworks.
To this end, additional studies can be done, for example, to measure the changes in underwriting behavior caused by the implementation of the reform (for example, to adapt the commercial strategy and optimize acquisition costs).
