6 Assessing the risk Flashcards
PEC
Disease, illness or injury that an individual has already suffered from before seeking insurance
Mortality risk
The risk of dying in the next time period (usually the next year)
Mortality
Statistics used to estimate probably life expectancy of a customer
Morbidity risk
That the insured will need medical treatment
Morbidity
- The probability of occurrence of certain medical conditions
- The frequency these conditions may affect a member
Considerations when covering cancer
- High costs
- Potential to become chronic
- Conditions may become cancerous
6 Cancer cover options
- Excluded
- Limited term cover
- Cover for primary cancer
- NICE-only
- Maximum amount claimed in one year
- No restrictions
Main cancer costs for insurers
- Cost of chemotherapies drugs
- Hospital mark up for preparing drugs
- Bed charge
- Specialist fees
What happens when a customer asks their insurer to cover experimental treatment
Insurer seeks evidence that the treatment is appropriate and recognised – usually advised by the CMO
Who pays for experimental treatments if authorised by the CMO?
European Medical Agency
Purposes of underwriting
- Determine potential risk
- Ensure t&cs are appropriate and profitable
Methods of underwriting
- General exclusions
- PECE
- FMU
- Moratorium
- MHD
- CPME
Options with FMU
- Allow cover on standard terms
- Exclude specific conditions
- Exclude, but review at a later stage
- Standard terms, but on higher premium
Advantages of mori
- Saves time
- Saves costs
- Avoids non-disclosure
Disadvs of mori
- Lack of clarity for policyholder
- Delays at point of claim
Main problem with CPME
New provider dependent on accuracy of original underwriting
Customer rights to review
A customer could ask their insurer to review an existing rating at any time, although the insurer is not contractually required to do so
Tele-underwriting
Customers complete a written/online form which is considered by an underwriter
Little t underwriting
– Customer completes form
– Underwriter follows up
Big t underwriting
– All information collected by an underwriter
Typical FMU questions
- Any medical conditions?
- Any hospital admissions in last 5 years?
- Any GP consults in last 12m?
- Do you have foreseeable need for treatment
Underwriting history assessment factors
- Age
- Gender
- Start date of illness
- Frequency & reoccurrence potential
- Present state of health
Individual premium pricing considerations
- Age
- Marital status
- Smoking
- Postcode
- Claims experience
- Hospital banding
- Type of policy
- Excess
- Lifestyle
High excess medical savings plans
Customer self-insures their cover, using the savings to build up a fund to pay for costs in the future, so they can afford to pay high excesses
No claims bonus
Premiums are discounted for every year no claim is made
Health cash plan underwriting
– Typically PECE
– Some use discretion
Dental insurance underwriting
Usually PECE, but can cover for larger group schemes
Capitation plan underwriting
Requires full check-up at commencement
Hospital treatment insurance/major medex/surgical cash underwriting
Usually excludes all pre-existing conditions (or uses mori)
Travel insurance underwriting
Usually PECE, unless the insurer notified
PA insurance underwriting
Usually PECE
PPI underwriting
Usually PECE
LTC insurance undewriting
– Ratings usually applied in the form of an extra premium
– Specific conditions may be excluded
Later life products
Cash lump sum on needing long-term care
IP underwriting
– Ratings usually applied in the form of an extra premium
– Specific conditions may be excluded
– Medical evidence often required upfront
CI underwriting
– Ratings usually applied in the form of an extra premium
– Specific conditions may be excluded
– Family history sometimes considers
Additional underwriting sometimes required for specific extra risks
- Financial questionnaires
- Pathology
- Occupation/hazardous activities questionnaires
