Ch31: Underwriting Flashcards
1
Q
Purpose of underwriting
A
SAFARI
1. suitable special terms
2. avoid anti-selection
3. financial underwriting
4. actual in line with expected
5. adequate risk classification to ensure all risks are rated fairly
6. identify substandard risks
2
Q
4 types of underwriting
A
- medical
- lifestyle
- financial
- claims
3
Q
Medical evidence sources
A
- questions on the proposal form completed by the applicant
- reports from medical doctors the applicant has consulted
- a medical examination carried out on the applicant
- specialist tests on the applicant
4
Q
Factors to consider when deciding on the appropriate level of underwriting
A
- the expenses associated with the level of underwriting
- the extent and financial significance of any potential anti-selection
- the interaction between the level of underwriting and the potential level of sales
- claims underwriting may deter people from taking up a contract
- the effectiveness of the proposed underwriting
- the more detailed the underwriting, the greater the homogenisation of the risk that may be achieved
- the impact of regulation
- interaction between underwriting level and terms offered by company’s reinsurers
- how to vary underwriting criteria
5
Q
How to limit risk of anti-selection on a group contract
A
- applying exclusions
- setting free cover limits
- ensuring members are actively at work when cover begins
- setting take-up rates on voluntary schemes
- laying down take-over terms where the insurer accepts a scheme previously insured elsewhere