# Application of type II diabetes incidence and mortality rates for insurance

## TL;DR

This study uses diabetes incidence and mortality data from Taiwan's National Insurance to model trends and inform diabetes-related insurance design.

## Contribution

The study applies mortality models to diabetes data and considers moral hazard in insurance design, using real-world insurance data.

## Key findings

- The Lee-Carter model provides satisfactory estimates of diabetes mortality trends.
- Regular diabetes medication is associated with lower mortality rates.
- The study explores criteria for diabetes diagnosis and moral hazard in insurance design.

## Abstract

Prolonging life is a global trend, and more medical expenditure is being spent on chronic diseases owing to population aging. Diseases commonly seen in middle-aged and elderly people, such as heart disease and diabetes, have slowed mortality improvement in recent years. Diabetes is a common chronic disease and comorbidity of many serious health conditions. The total estimated cost of diabetes in the United States was $327 billion in 2017. However, many people are unaware that diabetes is common, and at least 21.4% of adults do not know that they have diabetes. The number of diabetes-related deaths has been increasing, and diabetes was the 5th cause of death in Taiwan in 2019. In this study, we explore the trend and influence of diabetes in Taiwan and apply mortality models, such as the Lee-Carter and Age-Period-Cohort models, using data from Taiwan’s National Insurance to model the incidence and mortality rates of diabetes. We found that the Lee-Carter model provides fairly satisfactory estimates and that people with diabetes regularly taking diabetes medication have lower mortality rates. Moreover, we demonstrate how these results can be used to design diabetes related insurance products and prepare the insured to face the impact of incurring diabetes. In addition, we consider different criteria for judging whether people have diabetes (as there is no consensus on these criteria) and investigate the issue of moral hazard in designing diabetes insurance products.