A Stochastic Actuarial Solvency Model for Antimicrobial-Resistance Risk in Health Insurance: A Scenario Analysis Informed by In-Vitro Data from a Quinoline–1,2,4-Oxadiazole Patent Application
Osama H. Mahmoud Hassan, Eman A. EldessoukyAntimicrobial resistance (AMR) is an emerging trend risk for health insurers. This paper develops a multi-year actuarial framework of the kind used in an own risk and solvency assessment (ORSA) to assess how an unpriced AMR trend affects capital adequacy and how a potential new antimicrobial agent would change it. Resistance prevalence follows a logit random walk, claim numbers are mixed Poisson, premiums are repriced with a one-year lag, and solvency is measured by the first passage of own funds below a stylized 99.5% capital benchmark, distinguished from classical ruin. A patent-informed candidate compound serves only as a secondary illustration; its in vitro activity sets one scenario parameter. We derive the expected cost and break-even price under two payment arrangements, the conditional and predictive variance of annual claims, and the repricing-lag loss. In a hypothetical portfolio, the 15-year breach probability is 0.332 without the agent and 0.279 conditional on its success, equivalent to an additional capital buffer of about 7% of the requirement; with a market-entry probability of 0.03, the effect is negligible. About two-fifths of the benefit disappears when premiums anticipate the trend, so the agent acts largely as a hedge against unpriced trend risk. All portfolio parameters are hypothetical.