Annual claims ratio projections for private medical insurance (PMI) business can help various stakeholders understand the factors that affect the future profitability of the business. For PMI business, one of the effective ways to project claims ratios is through a cohort analysis. Such an analysis tracks the claims ratios of a group of policies underwritten in a particular year for its subsequent durations, repeating the process for each underwriting year.
The advantage of conducting a cohort analysis is that the user can project claims ratios at different durations for each underwriting year. This gives a more comprehensive view of how the portfolio is going to perform at future durations and policy years. This paper by Milliman actuaries Joanne Buckle and Ankush Aggarwal focusses on claims ratio projections in the context of the Indian health insurance market.