Page 108 - Ebook health insurance IC27

The Insurance Times

Q9. Describe the process involved in taking underwriting decisions.
Ans. The underwriting process is completed when the received information is carefully

assessed and classified according to risk categories, based on the following tools:
(i) Accept risk at standard rates.
(ii) Accept risk at Extra Premium (Loading) - this is not allowed in all countries,

though.
(iii) Postpone the cover for a stipulated period/term.
(iv) Decline the cover.
(v) Counter offer ( either restrict/deny part of the cover), and
(vi) Levy permanent exclusions under the policy.

If, any illness is permanently excluded, it is endorsed on the policy certificate itself,
as an additional exclusion apart from the standard policy exclusions.

Expert individual risk assessment is vital to insurance companies to keep the system
balanced. Underwriters enable insurers to group the same level of expected risks
together, and charge them the same premium. The policyholder should get a cover
at fair and competitive price whereas the insurer should maintain the experience of
its portfolio in line with the morbidity assumptions.

Q10. Why standard or general exclusions are applied in a health insurance policy
? List some of the examples.

Ans. The majority of policies impose exclusions that apply to all the members. These are
known as standard/general exclusions. Insurers basically try to limit their exposure
by the implementation of standard exclusions. Some common examples are :
(i) All diseases/injuries which are pre-existing when the cover incepts for the
first time.

112 Guide for Health Insurance