Multistate models in health insurance

We illustrate how multistate Markov and semi-Markov models can be used for the actuarial modeling of health insurance policies, focusing on health insurances that are pursued on a similar technical basis to that of life insurance. In the first part, we give an overview of the basic modeling frameworks that are commonly used and explain the calculation of prospective reserves and net premiums. In the second part, we discuss the biometric insurance risk, focusing on the calculation of implicit safety margins. We present new results on implicit margins in the semi-Markov model and on biometric estimation risk in the Markov model, and we explain why there is a need for future research concerning the systematic biometric risk.