Part 2: Applying Trend to a Renewal
An Illustration
In Part 1 of this series, Did you ever wonder: What causes those crazy health insurance increases each year?, we reviewed the factors that influence Trend. In this Part 2, we review an illustration of how Trend is applied to claims experience to project or estimate future claims for determining premium rates at renewal.
This is not a method unique to the OJTBF. All insurers use essentially the same method in applying Trend in determining health premium renewal rates. Other factors also come in to play, and these will be discussed in later parts of this series.
Clicking here will take you to a chart that will give you a detailed illustration of the concept of applying Trend. You will find an alternate illustration here (looking at it from another perspective may help you better or further understand the concept).
OJTBF©2009 Click for printable PDF version.
