Page 231 - IC38 GENERAL INSURANCE

Summary

a) Health insurance is based on the concept of morbidity which is defined as
the risk of a person falling ill or sick.

b) Underwriting is the process of risk selection and risk pricing.

c) Underwriting is required to strike a proper balance between risk and
business thereby maintaining the competitiveness and yet profitability for
the organisation.

d) Some of the factors which affect a person‟s morbidity are age, gender,
habits, occupation, build, family history, past illness or surgery, current
health status and place of residence.

e) The purpose of underwriting to prevent adverse selection against the insurer
and also ensure proper classification and equity among risks.

f) The agent is the first level underwriter as he is in the best position to know
the prospective client to be insured.

g) The core principles of insurance are: utmost good faith, insurable interest,
indemnity, contribution, subrogation and proximate cause.

h) The key tools for underwriting are: proposal form, age proof, financial
documents, medical reports and sales reports.

i) Medical underwriting is a process which is used by the insurance companies
to determine the health status of an individual applying for health insurance
policy.

j) Non-medical underwriting is a process where the proposer is not required to
undergo any medical examination.

k) Numerical rating method is a process adopted in underwriting, wherein
numerical or percentage assessments are made on each aspect of the risk.

l) The underwriting process is completed when the received information is
carefully assessed and classified into appropriate risk categories.

m) Group insurance is mainly underwritten based on the law of averages,
implying that when all members of a standard group are covered under a
group health insurance policy, the individuals constituting the group cannot
anti-select against the insurer.

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