Page 12 - Life Insurance underwriting Ebook IC 22

 Hobbies/avocations (e.g. bungee jumping, mountaineering

etc.).

b) 2nd phase: environmental factors
 occupation (whether hazardous or not)
 place of residence and / occupation (whether living in

countries featuring in the list of "restricted countries")
c) 3rd phase: hereditary factors

This includes ascertaining the medical history of the family

members of the applicant (like diabetes, blood-pressure etc)

For each phase, numerical or percentage assessment of the risk is

made by underwriters.

1.5 The Numerical Rating Method

a) Define value of standard risk

The underwriter needs to first define the "value of standard risk" which will be
accepted by insurance company. This value is generally fixed at 100%. The

relative value then assigned for each factor is expressed in relation to this
reference point value of 100%.

b) Risk assessment for personal, environmental and heredity factors

The risk assessment starts with the assessment of an individual's physical build
that includes the height and weight of the individual once the physical build is

examined then other personal, environmental and hereditary factors such as –
age, gender, medical history, occupation, place of residence, family medical
history and moral hazard factors are assessed.

c) Assign numerical ratings based on EMR

Mortality rate and extra mortality rates (EMIR) for sub-standard lives need to

be referred to from manuals, and accordingly, numerical ratings are assigned
to different factors.

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