Once covered, forever covered: The actuarial challenges of the Belgian private health insurance system

The Belgian Law of 20 July 2007 has drastically changed the Belgian private health insurance sector by making individual contracts lifelong with the technical basis (i.e. actuarial assumptions) fixed at policy issue. The goal of the Law is to ensure the accessibility to supplementary health coverage in order to protect policyholders from discrimination and exclusion, essentially when these operate on the basis of age. Due to the unpredictable nature of medical inflation risk and the difficulty to model future increases of health claims, the legislator introduced medical indices together with a specific updating mechanism, which aim at establishing standardized and fair premium adjustments across the sector. This paper considers two major issues of the current Belgian system. The first one is related to the transferability of the reserves, whereas the second one is related to age-discrimination. We discuss these issues and their interplay, and we address the conflict between the goal of the Law and the practical problems arising in the light of the actuarial techniques.