doubt in chapter 10 of st1

question 10.18 says
state how you expect claim recovery rates to vary in relation to the following factors :i) the length of the deferred period of the policy .
ii) the length of time since the claim payments were stated .


Solution 10.18
(i) Deferred period
The majority of sickness durations (ie the times between onset of sickness and ultimate
recovery or death) are very short, usually under 6 months in length. Of the remaining
cases (ie those that are greater than 6 months in length), the great majority will
experience durations well in excess of 6 months.
So, for short deferred periods (ie of less than 6 months) the recovery rates tend to be
very high in the period immediately after the start of claim. For longer deferred periods,
these initial recovery rates tend to be very much lower.
Additionally, the length of the deferred period can affect the type of individual taking
out a policy, affecting recovery rates further.
Note that the underlying variable affecting recovery rates is the time since the onset of
sickness. So, provided all other factors (like the type of lives insured) were the same,
the deferred period would not affect the rate of recovery as at a particular duration
since the start of the disease.
(ii) Duration since start of claim
Recovery rates will decrease with increasing duration since the start of claim, reflecting
the reducing proportion of the less serious cases remaining. This effect will be more
pronounced the shorter the deferred period is (as explained above).

my answer to this question is :

kindly convey whether this is correct /not

for short deferred period of say 3 mths. .he is suffering from the illness/ injury still so his chances of recovery is less . but for a deferred period of say 6 mths . he might be recovering from illness (since a long period has elapsed than 3 mths period )when/and the payment will start ,so the chances of recovering from illness more for a deferred period of 6 mths Rather than for a 3 mth. Period .

so I think that for short deferred periods the recovery rates are less.and for a higher deferred period the recovery rates are high .

also , in the next answer bit (ii) the recovery rates will increase with increasing duration since the start of the claim ,since everyone is interested to returning to work and recover as fast as possible .

so I think that recovery rates will increase with increasing duration since the start of the claim .

 

No - what you've said contradicts the question/solution in the course.

I think you're assuming that all illnesses last the same amount of time, which is not true.

What the question/solution is saying is that most illnesses only last a short time, for example many people get the flu and have to take a day off work, but they (almost) always recover.

Very few illnesses last a long time, and when people get really ill, they're much less likely to recover.

So most people who have been sick for a short time period are expected to recover (high recovery rates), whereas most people who have been sick for a long time are less likely to recover (low recovery rates).

If you're still sick at the end of a very long DP (eg 1 year), then you're less likely to recover than if you're still sick at the end of a short DP (eg 1 month), so claims from policies with longer DPs might be less likely to recover (lower recovery rates) than claims from policies with shorter DPs.