Preferred underwriting is simply the aggregation of risk into groupings, according to a set of predetermined criteria representing a certain level of risk. Historically, the insurance industry simply classified individuals as either standard or substandard risks.
Ageing is an innate and often emotional process. We generally sense our own ageing in a visceral, illogical way; for example, we could feel rejuvenated by a healthy diet or regular exercise. In fact how we feel could reflect our biological age, which may better indicate our current health status by taking account of improvements and deterioration, than chronological age that increases continually and incrementally.
This edition of ReFlections contains an in-depth review of the role of genetics in the rapidly changing diagnostic criteria, risk stratification, and treatment of individuals with chronic lymphocytic leukemia (CLL). RGA also discusses the relatively new but increasingly popular Cancer Reimbursement product and its design, underwriting and claims issues. ReCite, a medical literature review section, has articles of interest to both underwriters and medical directors.
According to IBM, 90% of all the data in the world has been created in the past two years. Each of us is utilizing and providing data every time we log in to our computers, browse the Internet or simply drive down the highway with our iPhone in our pocket. The challenge for every industry is how to harness and effectively utilize that data to drive more profitable business.
The life insurance industry has relied mostly on the knock-out approach to underwriting preferred risks. When reviewing the thresholds for individual risk criteria, one may ask whether the system is too liberal – i.e., are we admitting too many questionable risks into our best classes? Yet industry experience seems to indicate that the system works well.
In underwriting, the ability to obtain accurate health information from an applicant is paramount. The practice of asking people to report their health has been perfected over decades, yet under-reporting remains an issue in markets around the world. This leads us to consider: is it something about the way we ask the question?
With decades of underwriting experience to research, the author reviews some of the criteria commonly used to try to answer the question: “We have done well in the past, but could the industry use its criteria to make risk selection more effective?”