6 Assessing the risk

Question 1

PEC

Answer 1

Disease, illness or injury that an individual has already suffered from before seeking insurance

Question 2

Mortality risk

Answer 2

The risk of dying in the next time period (usually the next year)

Question 3

Mortality

Answer 3

Statistics used to estimate probably life expectancy of a customer

Question 4

Morbidity risk

Answer 4

That the insured will need medical treatment

Question 5

Morbidity

Answer 5

1. The probability of occurrence of certain medical conditions
2. The frequency these conditions may affect a member

Question 6

Considerations when covering cancer

Answer 6

1. High costs
2. Potential to become chronic
3. Conditions may become cancerous

Question 7

6 Cancer cover options

Answer 7

1. Excluded
2. Limited term cover
3. Cover for primary cancer
4. NICE-only
5. Maximum amount claimed in one year
6. No restrictions

Question 8

Main cancer costs for insurers

Answer 8

1. Cost of chemotherapies drugs
2. Hospital mark up for preparing drugs
3. Bed charge
4. Specialist fees

Question 9

What happens when a customer asks their insurer to cover experimental treatment

Answer 9

Insurer seeks evidence that the treatment is appropriate and recognised – usually advised by the CMO

Question 10

Who pays for experimental treatments if authorised by the CMO?

Answer 10

European Medical Agency

Question 11

Purposes of underwriting

Answer 11

1. Determine potential risk
2. Ensure t&cs are appropriate and profitable

Question 12

Methods of underwriting

Answer 12

1. General exclusions
2. PECE
3. FMU
4. Moratorium
5. MHD
6. CPME

Question 13

Options with FMU

Answer 13

1. Allow cover on standard terms
2. Exclude specific conditions
3. Exclude, but review at a later stage
4. Standard terms, but on higher premium

Question 14

Advantages of mori

Answer 14

1. Saves time
2. Saves costs
3. Avoids non-disclosure

Question 15

Disadvs of mori

Answer 15

1. Lack of clarity for policyholder
2. Delays at point of claim

Question 16

Main problem with CPME

Answer 16

New provider dependent on accuracy of original underwriting

Question 17

Customer rights to review

Answer 17

A customer could ask their insurer to review an existing rating at any time, although the insurer is not contractually required to do so

Question 18

Tele-underwriting

Answer 18

Customers complete a written/online form which is considered by an underwriter

Question 19

Little t underwriting

Answer 19

– Customer completes form
– Underwriter follows up

Question 20

Big t underwriting

Answer 20

– All information collected by an underwriter

Question 21

Typical FMU questions

Answer 21

1. Any medical conditions?
2. Any hospital admissions in last 5 years?
3. Any GP consults in last 12m?
4. Do you have foreseeable need for treatment

Question 22

Underwriting history assessment factors

Answer 22

1. Age
2. Gender
3. Start date of illness
4. Frequency & reoccurrence potential
5. Present state of health

Question 23

Individual premium pricing considerations

Answer 23

1. Age
2. Marital status
3. Smoking
4. Postcode
5. Claims experience
6. Hospital banding
7. Type of policy
8. Excess
9. Lifestyle

Question 24

High excess medical savings plans

Answer 24

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

Question 25

No claims bonus

Answer 25

Premiums are discounted for every year no claim is made

Question 26

Health cash plan underwriting

Answer 26

– Typically PECE – Some use discretion

Question 27

Dental insurance underwriting

Answer 27

Usually PECE, but can cover for larger group schemes

Question 28

Capitation plan underwriting

Answer 28

Requires full check-up at commencement

Question 29

Hospital treatment insurance/major medex/surgical cash underwriting

Answer 29

Usually excludes all pre-existing conditions (or uses mori)

Question 30

Travel insurance underwriting

Answer 30

Usually PECE, unless the insurer notified

Question 31

PA insurance underwriting

Answer 31

Usually PECE

Question 32

PPI underwriting

Answer 32

Usually PECE

Question 33

LTC insurance undewriting

Answer 33

– Ratings usually applied in the form of an extra premium – Specific conditions may be excluded

Question 34

Later life products

Answer 34

Cash lump sum on needing long-term care

Question 35

IP underwriting

Answer 35

– Ratings usually applied in the form of an extra premium – Specific conditions may be excluded – Medical evidence often required upfront

Question 36

CI underwriting

Answer 36

– Ratings usually applied in the form of an extra premium – Specific conditions may be excluded – Family history sometimes considers

Question 37

Additional underwriting sometimes required for specific extra risks

Answer 37

1. Financial questionnaires 2. Pathology 3. Occupation/hazardous activities questionnaires