Underwriting

Insurance underwriting is the process of evaluating a risk to determine if the insurance company will insure it and, if yes, then pricing it. Underwriting began as a manual process based entirely on developed acumen. Today, that process also involves the use of tools such as data analytics and artificial intelligence

Her underwritter decides wether to accept the risk and at what price. Health insurance underwriting around the concept of morbidity.

What Does Morbidity Mean?

Morbidity is the rate at which disease occurs in a group of people over a given period of time.

Morbidity rates are often used by actuaries to price certain insurance policies, including life insurance, health insurance, and long-term care insurance

Insurance Explains Morbidity

Many diseases can trigger an insurance payout. For example, an insurer may have to pay health insurance benefits to a policyholder who becomes sick and requires medical attention, and a terminal disease might lead to the payment of a death benefit. Insurers, therefore, use morbidity rates to determine the likelihood that they will have to pay out a claim and price their premiums to offset this insurance risk.

A morbidity table is one of the tools commonly used to calculate morbidity rates.

What Is Medical Underwriting?

Medical underwriting is the?process of evaluating an application for health insurance coverage by examining the applicant's medical history. The price of coverage is determined by the risk factors of the applicant.

Depending on the insurance company's policies and federal and state regulations, medical underwriting for high-risk candidates may lead to the exclusion of coverage for certain conditions, denial of coverage altogether, or coverage offered only at a very high price

General Information

The general information asks for the underwriting name, address, birth date, social

security number and gender of the insured and owner.

The relationship of the owner to the insured is also needed. The name or names of

beneficiaries is also requested, along with the percentage for each beneficiary or other

beneficiary designation, and the relationship of each beneficiary to the owner. Some

applications also require the beneficiary‘s social security number. This is to aid the

insurer in identifying the proper beneficiary, if necessary.

Medical Information

Medical questions include asking whether tobacco or nicotine products have been used,

and if the insured had been diagnosed, treated or hospitalized for:

· Cancer;

· Heart attack;

· Stroke;

· Diabetes;

· Kidney disorders;

.Alzheimer‘s disease;

· Liver disorder;

· Organ transplant;

· Alcohol or drug use treatments;

· AIDS or HIV;

· Irregular heart beat;

· High blood pressure;

· fainting spells;

· Emphysema or other chronic lung or respiratory disorder;

· Inability to work for more than a week in the past six months or year; and

· Other similar questions.

If there is a ―yes‖ and no response to the medical questions asked, the application will generally

ask for more details. Once the application reaches the home office, medical reports or an

attending physician statement may also be requested. Or, the insurer may have issued

underwriting guidelines to the agent, who requests such reports through his or her agency

office.

Who are the Underwriters and what is their job?

Underwriters are people appointed by an insurance company to assess the risk associated with issuing an insurance policy to the applicant. They act as the risk managers of the company. Underwriters analyse your details that include finances, medical conditions and lifestyle. Based on their evaluation, they submit recommendations about the risk you pose. Here are some observations they make.

1. Whether or not the company can issue an insurance policy to the applicant.
2. Whether the applicant’s medical conditions need to be taken into consideration while issuing the policy.
3. Whether the premium that the applicant will have to pay has to be increased. Higher the risk,
4. higher the premium amount.?
5. Basic principes
6. Core principles from an integral part of any insurance contract .

a)Utmost good faith

An insurance contract is known as a contract of 'Uberrima Fides', the Latin term for a contract based on 'Utmost Good Faith'. This means that both you, and the insurer must disclose all material facts such as, pre-diagnosed medical conditions, history of illnesses in the family, and other relevant details. Insurance is sharing of risk by creating a common pool of the premiums paid by all policyholders. This means that when a claim arises, the claim settlement is made from the same common pool, which belongs to all the policyholders.

1. Hence, an insurer has a duty to protect the interests of all policyholders and cannot pay

2. fraudulent claims out of the common pool. Based on this principle, a claim can be repudiated or rejected by the insurer because of non-disclosure or misstatement.

3. In legal terms, if one party commits breach of contract by not maintaining the declaration (in the proposal form) of having replied truly and correctly, the other party i.e. the insurer is not liable to honor the claim.

B)Insurable interest

The interest that a person has in something such as a particular property or another individual, which means that the person would suffer a loss should that property or individual be harmed. In insurance law, you can only buy insurance for something or someone in which you have an insurable interest.

C) Proximate Cause

The principle of proximate cause is applied to determine as to where the loss was caused by a

risk coverd, not coverd or excludedin the policy.

What is affect morbidity

1. Age: Age is most importan in underwiting. We dived age in young 26 and old age after 45.In underwriting Age group that is 26 to 40 is Low risk and age between 45 to 99 is put in high risk. After the age 45 and 50 some disease like Diabetes and High blood pressure found in this group age.
2. Gender: Women are exposed to additional risk of morbidity during child bearing period.
3. Habits : Bad habit alos affect morbidity as tabacco,alcohol or narcotics that increse high risk. So much smoking and alcohol is not good for health that effect human body.No proces to detect that habit but in the claim time found in medical report somuch smoking and alcohol then claim rejected.
4. Occupation :some occupation is come in risk that also affect morbidity. eg. Driver,blaster,aviator,x-ray machine operator,miners etc.
5. Family History : As genetic pre-disposition of some disease asthma,diabetes,certain cancers etc does affect morbidity.
6. Build Stout : Height, weight, Abdomen and chest – Measurements provide . Average may be associated with morbidity in certain grups.
7. Past illness or surgery : It has to be ascertained whether the past illness has any posssibility of causing increased debility or impairment and accordingly the policy term should be decided. For e.g kidney stones are known to recur and similarly, cataract in one eye increases possibility of cataract in the other eye.
8. Current health status : Risk and insurability and can be established by appropriate disclosure and medical examination.
9. Residence And Environment: That is rul and urban area Environment that also affect morbidity.

Tools For Underwriting

1. Proposal form
2. Age Proof
3. Financial documents
4. Medical reports
5. sales Reports

1. Proposal Form :The porposal-form is the application-form for the Insurance.These are printed by Insurance companies and some cases, Insrance companies have the proposal-form on the Internet.

• Information about to be assured Name, sex, Date of Birth, address, occupation, income.
• Family History (Family Members, their age, Health conditions) of the life to be insured.
• Amount of insurance-cover
• Plan and Term, Perferred
• Mode of premium, opted for,
• Details of nominee

2. Age Proof : Policy may not have been issued, had the correct age been stated. For these reasons, proof of age is required, at the commencement of the policy.

3. Financial documents : Knowing the financial status of the proposer need to demand financial documents. This documents help in products selection and baget selection.

4. Medical reports: Proposed tombe Insured, is subject to a medical Examination, to determine the state of his or her health based on age and sum assured proposed. If Medical Examination is required, personal statement is given to the medical examiner, who will send it to the insurer, with their report on the medical Examination

• Special Reports The underwriter has the right and discetion to request Additional Information, throug special Reports if they consider these reports, necessary for a fair assesssment of the risk.

5. Sales Reports : Sales Personnel can also be seen as grassroots level underwriters for the company and the information given by them in their report counld form an important consideration. The sales personnel have an incentive to generate more business, there is a conflict of interest, which has to be watched out for.