International Medical Underwriting Approaches and the Impact on Profitability

Aree Bly, United-States

The rapidly growing economies around the world are presenting tremendous opportunities for the insurance industry in numerous countries. However, differences in regulation and competitive market practices dictate different levels of sophistication in international medical underwriting. Medical underwriting is the process of considering a wide range of information to better predict the expected costs for a potential applicant or group of applicants. The current international approaches to medical underwriting include an extensive use of riders to limit coverage for specific conditions, reliance upon medical professional judgment for rating purposes, and application of life insurance underwriting guidelines or US medical underwriting guidelines. While the use of these methods could be justified by the fact that these might be the only available tools for international underwriters, the reality of inappropriateness of their use for medical rating purposes remains unchanged. It is important for underwriters around the world to understand the costs of using inferior methods. Although it might be less expensive initially to use such methods, the costs due to adverse selection by applicants and underestimation of medical costs can be extreme. It is critical that an insurer use underwriting tools at least as good as its competitors, or else it may attract undesirable risks, and lose its competitive edge.
Date: 1 June - Time: 14:15 to 15:45 - Room: 251
Theme: 9.A. Various topics