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THE CHINESE UNIVERSITY OF HONG KONG
FIN3230 Life and Health Insurance
Second Term 2010-2011
Session A: Tuesday 10:30am – 12:15pm, T.C. Cheng Bldg 111
Thursday 1:30pm – 2:15pm, T.C. Cheng Bldg 201
Medium of Instruction: Cantonese and English
Session B: Monday 9:30am – 11:15am, T.C. Cheng Bldg 201
Thursday 5:30pm – 6:15pm, T.C. Cheng Bldg 201
Medium of Instruction: Cantonese and English
Instructor: Professor Wai Sum Chan Phone: 2609-7715
Office: Room 1226, Cheng Yu Tung Bldg E-mail: chanws@cuhk.edu.hk
Tutor: Miss Iris Lok Lam Au Phone: 2609-7840
Office: Room 1155, Cheng Yu Tung Bldg E-mail: irisau@baf.msmail.cuhk.edu.hk
Part A: Life Insurance
Learning Objectives
In this section, the students will gain the understanding of various aspects of life insurance,
including:
Economics of life insurance
Pricing of life insurance
Life insurance company organization and management
Underwriting of life insurance
Marketing of life insurance
Learning Outcomes
It is anticipated that after this course students are able to explain the major issues in the operation of
life insurance, understand the pricing of life insurance, as well as the factors affecting the
competition in life insurance industry.
Readings
Life and Health Insurance / Black, Skipper (13th edition), 2000, Chapters 1, 2 and 23-26.
SOA-Study Note-210-25-98 Introduction to Pricing and Asset Shares, Chapters 1-5.
Part B: Health Risk
Learning Objectives
This section will provide the students with the knowledge of the problems of health care in the
United States and Hong Kong, the different types of insurance plans and insurance plan coverage,
and the types of managed care organizations and alternative healthcare plans available to patients.
The on-going healthcare financing reform in Hong Kong will also be discussed.
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Learning Outcomes
It is anticipated that after this course you are able to explain the major health care issues in America
and Hong Kong, understand the basic characteristics of individual major medical insurance, long-
term care insurance, as well as disability-income plans. Students should be able to develop
guidelines when purchasing individual health insurance. With knowledge in this course, students
should be able to debate on health care policy and health financing reform in Hong Kong.
Readings
Principles of Risk Management and Insurance / Rejda (10th edition), 2008, Chapters 15 and
16
Textbook website: http://wps.aw.com/aw_rejda_prmi_10
Research Articles
Leung, G.M., Tin, K.Y.K. and Chan, W.S., “Hong Kong’s Health Spending Projections
Through 2033,” Health Policy, 2007, 81, 93-101.
Chan, W.S., Li, S.H. and Fong, P.W., "An Actuarial Analysis of Long-Term Care Demand
in Hong Kong," Geriatrics and Gerontology International, 2004, 4, S143-145.
Hong Kong’s Health System: Reflections, Perspectives and Visions / Leung, Bacon-Stone, 2006
Part IV Commentary: Health Financing Reform by Gabriel M. Leung and John Bacon-
Shone
Chapter 19: Health Financing in Hong Kong: The Current Status by Raymond Yeung and
Chan Wai-Sum
Chapter 20: A Systematic Approach to Reforming Hong Kong's Health Financing: The
Harvard Proposal by Winnie Yip and William Hsiao
Chapter 21: Health Financing and Resources: New Government Proposals by Looi-Looi
Low and Su-Vui Lo
Hong Kong Government Health Care Reform Consultation Reports
(Executive Summaries Only):
http://www.fhb.gov.hk/en/press_and_publications/consultation/HCS.HTM
http://www.fhb.gov.hk/en/press_and_publications/consultation/HCR1.HTM
http://www.fhb.gov.hk/beStrong/eng/consultation/consultation.html
http://www.myhealthmychoice.gov.hk/en/index.html
Learning Activities
Lecture Seminar Project Presentation
In class Out class In class In class Out class
Ten 3-hour One 3-hour Two 3-hour
3 hours/week 1 hour/week
sessions session sessions
M M M M M
M: Mandatory activities in the course O: Optional activity NA: Not applicable
Assessment Scheme
There will be one final examination, one life insurance pricing group project and one health
insurance group project. Students are required to attend all project presentation sessions. The final
grade will be weighted as follows:
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Task Nature Percentage
Life insurance pricing project 15%
Health insurance project 25%
Attendance & participation (project presentation sessions) 10%
Final centralized examination 50%
Total 100%
Life Insurance Pricing Project
This is a group project. You are required to build a spreadsheet model to apply the gross premium
method and asset-share model to price life insurance, to assess reserve and cash value, and to find
profitable insurance premiums. The details will be provided in a document.
Health Insurance Project
This is a group project on health insurance. This group project is about conducting a product review
of medical insurance products of your choice. The objective and scopes are detailed in a document.
The group project requires both written report and presentation in class.
Course Schedule
Week Topic items Readings
#1 Economics of life insurance Black and Skipper
Jan 10 – 15 Chapter 1
#2 Life Insurance Company: organization, Black and Skipper
Jan 17 – 21 management and marketing Chapters 23 and 24
#3 Underwriting and Marketing of life insurance Black and Skipper
Jan 24 – 28 Chapters 24 to 26
#4 (with 1-wk Life Insurance Pricing Fundamentals Black and Skipper
CNY break) Chapter 2 / SOA Notes
Jan 31–Feb 11 Chapters 1 and 2
#5 Life Insurance Pricing using Asset Shares SOA Notes
Feb 14 – 18 Chapters 3 to 5
#6 Discussion of Life Insurance Pricing Project
Feb 21 – 25
#7 Individual Health Insurance Coverage Redja Chapter 15
Feb 28–Mar4
#8 Group Health and Managed Care Plans Redja Chapter 16
Mar 7 – 11
#9 Health Financing in Hong Kong: The Harvard Leung, Bacon-Stone
Mar 14 – 18 Proposal Chapter 20
#10 Health Financing in Hong Kong: The Current Leung, Bacon-Stone
Mar 21 – 25 Status Chapter 19
#11 Health Financing in Hong Kong: The Future Leung, Bacon-Stone
Mar 28–Apr1 Chapter 21
#12 Health Insurance Project Presentation
Apr 3 – 8
#13 Health Insurance Project Presentation
Apr 11 –15
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Feedback for Evaluations
Course Teaching Evaluation. To be conducted during the last two weeks of lectures.
Focus-group meeting. To be conducted in May 2010.
E-mail. Feel free to send comments to the instructor via e-mail.
Performance in test and examination. Assessment of what has been achieved by the students.
Course Materials and Announcements
A course website has been set up in WebCT. Students can download all the course materials from
this website. All course announcements will be made during lectures and through the course
website.
Academic Honesty and Plagiarism
Attention is drawn to University policy and regulations on honesty in academic work, and to the
disciplinary guidelines and procedures applicable to breaches of such policy and regulations.
Details may be found at http://www.cuhk.edu.hk/policy/academichonesty/.
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