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Milliman's UK healthcare practice offers expertise in the critical task of analysing current experience and comparing it to actuarial benchmarks. We show healthcare insurers, payers, and hospitals what can be achieved using best-practice hospital admission rate and length of stay targets for specific populations and time periods. Our benchmarking work spotlights the clinical specialties experiencing the most potentially avoidable admissions, as well as the age groups with the highest excess lengths of stay.

To set our benchmarks, we use Milliman's Health Cost Guidelines™ (HCG), an industry standard that distills 50 years of experience and data into a consistent starting point for all our benchmarking work. We offer guidelines created specifically for the United Kingdom, derived from multiple data sources and informed by our deep understanding of local, national, and international healthcare operational standards.

Our experience analysis helps us both spot trends and understand what drives those trends. Using our benchmarks, we can suggest appropriate strategies, whether they are minor adjustments to rating factor loadings or more major pricing structure or underwriting adjustments. The Health Cost Guidelines tool includes age and sex factors for different categories of medical services and claims probability distributions to assess the impact of excesses and deductibles, as well as duration and geographic loading factors.

Experience analysis reveals the root of a problem

One UK insurer approached Milliman to find out why its lapse rates were increasing. Our consultants performed a statistical analysis of the client’s historical data to isolate the reasons for the growth in lapsed policies. The data review revealed a pattern of increased lapsing in policyholders over age 65, suggesting that retirees might find the policy unaffordable once they left the work force. However, by benchmarking the insurer’s data against the HCG, Milliman could also show that claims rates for this age group relative to younger ages were lower than industry averages, suggesting that the insurer was attracting relatively healthy and profitable people in this population.

Based on this finding, Milliman suggested a change in the product's design to offer special terms to healthy retirees, creating incentives for them to continue with the health plan. This innovation succeeded in improving the client's lapse rates.