Page 107 - Ebook health insurance IC27

Sashi Publications

(vii) It facilitates the work of building new statistics.
(viii) It provides a working rule to assess the combined effect of a number of

impairments which has stood the test of experience.
(ix) Underwriting is practically reduced to application of a formula, and can be

handled without the attention of medical experts.
(x) While reviewing a case, one can easily see how the decision was arrived at.

There are some disadvantages of this method too:
(i) It has not been possible to fix the percentage of increased claim

experience for all adverse features. Hence proposals with these
features have still to be referred to the Medical referee with the special
reports.
(ii) The assumptions that (a) every adverse feature results in a constant addition
to the mortality rate and (b) process of equating the adverse with favorable
features will give the net extra mortality, are not always correct.
(iii) The fixing of the extra percentage for each adverse feature is also arbitrary,
though consistent.
(iv) In many cases, the rating manual only gives a range of debits against certain
impairments and actual ratings have to be depended on the underwriter's
judgement regarding the severity of the impairment, and other correlated
aspects.
(v) Ratings have to be often modified by taking into account the interaction
of various aspects of risk and in particular the probable influence on
risk, viz, occupation, habits, mode of living, socioeconomic status, moral
hazard etc. The numerical ratings can only serve as a guide, and the risk
selection mostly on the prudence of the underwriter.

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