Optimal Insurance Indemnity and Reinsurance Strategy for Health Insurance

Table 1

Parameter values for the illustration model.

Parameter	Symbol	Value
The probability that no shock to insured’s health status occurs		0.5
The probability that the insured gets discount premium		0.2
The probability that the insured’s health status degenerates		0.3
Insurance safety loading		0.2
Reinsurance safety loading		0.3
Severity of health degeneration after treatment		0.3
Initial health status		0.8
Improved health status		0.9
Initial wealth		2
Initial income		1
Discount factor		0.9
Intensity parameter		0.8
Premium discount rate		0.8
Reinsurance premium constraint		0.8
VaR confidence level		0.99