Pros:
“It enables insurers to spread risk among a group, promoting more stable premiums over time. Secondly, by focusing on groups with similar risk profiles, insurers can make more accurate predictions regarding claims, potentially leading to cost savings for both insurers and policyholders. Lastly, this approach enhances accessibility to health insurance by extending coverage to individuals who may have been previously deemed high-risk or uninsurable,” says Rakesh Goyal, director, Probusinsurance.com.
Here are some of the pros:
Cohort pricing can provide a more accurate pricing model based on the specific risk characteristics of each group.
It allows for more customization and flexibility in pricing based on the unique needs and demographics of each cohort.
Cohort pricing can help to better manage risk and control costs by ensuring that each group is charged an appropriate premium.
It can promote transparency and fairness in pricing, as each cohort is treated differently based on their individual risk factors.
Cohort pricing can lead to more efficient and effective use of resources, as resources can be targeted to specific cohorts based on their needs.