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Insurer economics: a health insurer in the UAE

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

A fictional health insurer in the UAE covers 100,000 members with an average premium of AED 4,000 a year. Claims (the medical bills it pays) average AED 3,400 per member, and administration costs AED 440 per member. What are its medical loss ratio (MLR), its margin per member and its profit per member per month (PMPM)?

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Insurer margin = premium minus claims minus administration
- MLR = claims / premium
- Admin ratio = admin / premium
- Key: Margin per member and PMPM

4. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: MLR
What a strong candidate does: Claims divided by premium.
Medical loss ratio (percent): 3,400 ÷ 4,000 × 100 = 85
Step 2: Admin ratio
What a strong candidate does: Administration divided by premium.
Administration ratio (percent): 440 ÷ 4,000 × 100 = 11
Step 3: Margin per member
What a strong candidate does: Premium minus claims minus administration.
Margin per member per year (AED): 4,000 - 3,400 - 440 = 160
Step 4: PMPM
What a strong candidate does: Divide by 12 months.
Profit per member per month (AED): 160 ÷ 12 = 13.33
Step 5: Total margin
What a strong candidate does: Times 100,000 members.
Total underwriting margin (AED millions): 160 × 100,000 ÷ 1,000,000 = 16

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

The insurer should focus first on claims, because it keeps only AED 160 per member a year, 4 percent of premium, about AED 13 per member per month or AED 16 million in total. First, the medical loss ratio is 85 percent, and one point of MLR is worth AED 40 per member, a quarter of the whole margin. Second, administration takes another 11 percent, which leaves little room for error. The risk is that premiums do not match the real risk of the members. As a next step, split claims per member into price per service and services per member.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.