Reinsurance in the Supplementary Health: A Counterfactual Study on the Impacts of Reinsurance Treaties Adoption by Healthcare Plans Operators in Brazil

The sustainability of the Brazilian Supplementary Health System has been frequently debated, since the number of operators has decreased considerably in recent years after bankruptcy records. In this context, risk transfer mechanisms are presented as options for financial loss mitigation and asset p...

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Autores principales:	Caio Alexandrino Costa Areias, João Vinícius de França Carvalho
Formato:	article
Lenguaje:	EN PT
Publicado:	FUCAPE Business School 2021
Materias:	supplementary health reinsurance risk management ruin theory Business HF5001-6182
Acceso en línea:	https://doaj.org/article/f90d45c144224d499fbecf332e691743
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spelling	oai:doaj.org-article:f90d45c144224d499fbecf332e6917432021-11-11T15:48:08ZReinsurance in the Supplementary Health: A Counterfactual Study on the Impacts of Reinsurance Treaties Adoption by Healthcare Plans Operators in Brazil1807-734X10.15728/bbr.2021.18.2.6https://doaj.org/article/f90d45c144224d499fbecf332e6917432021-01-01T00:00:00Zhttp://www.redalyc.org/articulo.oa?id=123067049006https://doaj.org/toc/1807-734XThe sustainability of the Brazilian Supplementary Health System has been frequently debated, since the number of operators has decreased considerably in recent years after bankruptcy records. In this context, risk transfer mechanisms are presented as options for financial loss mitigation and asset protection. Reinsurance is one of them, but, due to legal understandings, its adoption has been restricted to insurance companies since 2009 and forbidden for other types of operators, such as cooperatives, self-management, and philanthropic enterprises. Using industry microdata and applying the collective risk theory, implemented by the classic ruin model (Cramér-Lundberg), this study aimed to counterfactually verify how reinsurance would impact operators solvency in a hypothetical long-term scenario in which all of them had access to these tools. By introducing quota share, with retentions of 60% and 80% of the aggregate expenses, and Stop-Loss treaties, with retention limits of 80% and 95%, it was verified that the ruin probability decreased in the first case by around 40% and 20%. However, the adoption of Stop-Loss for aggregate expenses increased the need for solvency capital, as a result of its higher premiums, becoming viable when directed to higher cost events.Caio Alexandrino Costa AreiasJoão Vinícius de França CarvalhoFUCAPE Business Schoolarticlesupplementary healthreinsurancerisk managementruin theoryBusinessHF5001-6182ENPTBBR: Brazilian Business Review, Vol 18, Iss 2, Pp 217-235 (2021)
institution	DOAJ
collection	DOAJ
language	EN PT
topic	supplementary health reinsurance risk management ruin theory Business HF5001-6182
spellingShingle	supplementary health reinsurance risk management ruin theory Business HF5001-6182 Caio Alexandrino Costa Areias João Vinícius de França Carvalho Reinsurance in the Supplementary Health: A Counterfactual Study on the Impacts of Reinsurance Treaties Adoption by Healthcare Plans Operators in Brazil
description	The sustainability of the Brazilian Supplementary Health System has been frequently debated, since the number of operators has decreased considerably in recent years after bankruptcy records. In this context, risk transfer mechanisms are presented as options for financial loss mitigation and asset protection. Reinsurance is one of them, but, due to legal understandings, its adoption has been restricted to insurance companies since 2009 and forbidden for other types of operators, such as cooperatives, self-management, and philanthropic enterprises. Using industry microdata and applying the collective risk theory, implemented by the classic ruin model (Cramér-Lundberg), this study aimed to counterfactually verify how reinsurance would impact operators solvency in a hypothetical long-term scenario in which all of them had access to these tools. By introducing quota share, with retentions of 60% and 80% of the aggregate expenses, and Stop-Loss treaties, with retention limits of 80% and 95%, it was verified that the ruin probability decreased in the first case by around 40% and 20%. However, the adoption of Stop-Loss for aggregate expenses increased the need for solvency capital, as a result of its higher premiums, becoming viable when directed to higher cost events.
format	article
author	Caio Alexandrino Costa Areias João Vinícius de França Carvalho
author_facet	Caio Alexandrino Costa Areias João Vinícius de França Carvalho
author_sort	Caio Alexandrino Costa Areias
title	Reinsurance in the Supplementary Health: A Counterfactual Study on the Impacts of Reinsurance Treaties Adoption by Healthcare Plans Operators in Brazil
title_short	Reinsurance in the Supplementary Health: A Counterfactual Study on the Impacts of Reinsurance Treaties Adoption by Healthcare Plans Operators in Brazil
title_full	Reinsurance in the Supplementary Health: A Counterfactual Study on the Impacts of Reinsurance Treaties Adoption by Healthcare Plans Operators in Brazil
title_fullStr	Reinsurance in the Supplementary Health: A Counterfactual Study on the Impacts of Reinsurance Treaties Adoption by Healthcare Plans Operators in Brazil
title_full_unstemmed	Reinsurance in the Supplementary Health: A Counterfactual Study on the Impacts of Reinsurance Treaties Adoption by Healthcare Plans Operators in Brazil
title_sort	reinsurance in the supplementary health: a counterfactual study on the impacts of reinsurance treaties adoption by healthcare plans operators in brazil
publisher	FUCAPE Business School
publishDate	2021
url	https://doaj.org/article/f90d45c144224d499fbecf332e691743
work_keys_str_mv	AT caioalexandrinocostaareias reinsuranceinthesupplementaryhealthacounterfactualstudyontheimpactsofreinsurancetreatiesadoptionbyhealthcareplansoperatorsinbrazil AT joaoviniciusdefrancacarvalho reinsuranceinthesupplementaryhealthacounterfactualstudyontheimpactsofreinsurancetreatiesadoptionbyhealthcareplansoperatorsinbrazil
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Reinsurance in the Supplementary Health: A Counterfactual Study on the Impacts of Reinsurance Treaties Adoption by Healthcare Plans Operators in Brazil

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