Scientific Research Journal (SCIRJ), Volume VII, Issue VII, July 2019 90 ISSN 2201-2796 www.scirj.org © 2019, Scientific Research Journal http://dx.doi.org/10.31364/SCIRJ/v7.i7.2019.P0719676 ENSURING THE PROFITABILITY AND CONTINUITY OF PRIVATE HEALTH INSURANCE DR. YOHANNA GYANG JUGU DEPARTMENT OF ACTUARIAL SCIENCE UNIVERSITY OF JOS E-mail: juguy@unijos.edu.ng DOI: 10.31364/SCIRJ/v7.i7.2019.P0719676 http://dx.doi.org/10.31364/SCIRJ/v7.i7.2019.P0719676 Abstract: Every Insurance undertaking has to do with risk evaluation to ensure that the insurance business is always solvent and continue to exist. Health insurance like life insurance funds and non-life insurance funds must ensure that it remains in business and can discharge their liabilities as at when due. Hence the need to keep adequate reserves or economic capital always. The paper derives the methodology for deriving premiums taking into consideration the incidence of sickness and the medical bills. They are both assumed to follow a normal distribution with known means and standard deviations. The extra liability or reserves that must be kept is shown in a functional relationship. Various probabilities of ruin are used to compute the reserves. The reserves increases from 12.089% of the expected liability for a probability of ruin of 0.25 to 53.562% of normal liability for a probability of ruin of .001. The Insurance provider wants an almost guarantee that ruin or insolvency is impossible it goes for a probability of ruin of 0.001 and reserves is more than half the expected liabilities . Keywords: incidence of sickness, medical claims, normal distribution, variances, probability of ruin and economic reserves, solvency. INTRODUCTION The health sector in any country has been recognized as the primary empire of growth and development (obansa and akingbade, 2014). Therefore the economic reserve for insurance is of great importance. Insurance providers over the years have had failures because their liabilities exceed their accumulate assets. There is need to forecast on the long term viability of the funds either with profit or without profit to meet its liabilities and also statutory required solvency ratio. Solvency margin refers to a defined safety margin by which a company’s assets must exceed its liabilities. Insurance companie s or insurance providers are expected, like any company, to be able to evaluate their risk and ensure measures to adequately mitigate all risks continuously and consistently. A solvency margin acts as an extra guard in the event that risk occurrence exceeds the anticipated range for which measures have been taken; it serve to ensure that when supervisory authority involve their action to liquidate a company, there exist sufficient funds to meet their liabilities. The paper sets out the expected liabilities and assets build up. There are various techniques for arriving at solvency margin or reserves.