Underwriting is a way of determining the insurability of the client by reviewing his/her medical and financial details using various risk classification models. This practice can be dated back to 1800 B.C, when undertaking risk, or underwriting risk, of ships with goods was done. From those days, underwriting has evolved greatly and is presently categorized into life and non-life underwriting, both including financial underwriting. Life underwriting can be further divided technically into medical and non-medical underwriting.
Here are a few tips for prudent medical underwriting:
1. Use your analytical mind - Ask, “Does it make sense”
Always ask yourself whether the data given makes sense. In most of the cases the data presented can be manipulated or it can be false positives. For example, a client can take a hypoglycemic drug and go for a fasting blood glucose test or the value of nine given can be HbA1, when a HbA1c test was to be performed.
2. Read between the lines
Analyze what is not given in the data provided or find the potential risks the medical reports point to. For example, a 44-year-old female undergoing tooth extraction was also asked to undergo an electrocardiogram and fasting blood sugar test. This data created a doubt and when further investigated revealed diabetes mellitus.
3. Study medical history and genetic susceptibility
Carefully analyze the medical history as it can give you a lot of information about the client’s current health status and possible endothelial damage, which must have occurred in their body. For example, in the case of diabetes, hypertension along with the date of diagnosis can provide a clear idea on the risks involved. Also some disorders are genetically manifested, for example arthritis, thallassemia, diabetes, arthritis and obesity to name a few. Hence understanding the medical history of the client and his first line relatives can provide substantial data for classifying the risk to him.
4. Do not look from a clinical point of view
Remember insurance medicine is different from clinical medicine. You as medical underwriter are not required to identify the root cause of the disease, but to identify the pathology and analyze how much risk it presents to the life of the client and also within how much time the client is going to suffer from that expected disease.
5. Use probability principles
Use probability principles to evaluate the chances of death or susceptibility to critical illnesses covered by the health insurance product proposed within that span of the coverage by the company.
6. Do not think long term
A medical underwriter should not think from a long-term point of view. Remember you should only be interested up to the extent of the duration of the plan proposed. In addition, you need to evaluate if the risk coverage money (premium) is recovered within the first few years of the plan. Then you should evaluate the risk and underwrite, taking into consideration only that duration of time.
7. Correlate all findings
Human body mechanisms are complex and interrelated processes. Try to find the correlation between the different pathologies and sum them up to find the total risk presented by the client. For example, a person with diabetes mellitus and smoking presents a higher risk than that presented by the person with only diabetes mellitus.
8. Apply Cost Benefit analysis
A medical underwriter is also required to have an understanding of financial terms like cost benefit analysis and use them prudently to evaluate the risk.
Use the 3-point formula:
Cost of further medical investigation – Expected material information – Type of plan selected. Depending on the plan, evaluate if further medical tests will provide with any material information. Information is termed as material if it is vital in decision-making.
By using these tips for medical underwriting and other risk stratification models, a medical underwriter can help in reducing losses to the company in the form of early claims. Nevertheless, these skills can be acquired with medical underwriting for a large number of cases for life and health insurance and with continuous practice one can become an expert medical underwriter.
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—About our writer:
Girish is qualified in Pharmaceutical sciences and Insurance Risk Management and has over 4 years of experience as a Health Care Risk Analyst. Currently working as a key member in Clinical Research and Drug Development. His area of interest is "Understanding Human Psychology" as he believes that it will solve most human related problems on earth. I like swimming, horse riding and exploring new places.
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