Page 110 - Ebook health insurance IC27

The Insurance Times

Q11. Discuss the important underwriting factors that must be considered in
group health insurance policies.

Ans. Group insurance is underwritten mainly based on law of averages, implying that
when all members of a homogenous group are covered under a health insurance
policy, the individuals consisting the group cannot anti-select against the insurer.
Thus, while accepting a group for health insurance, the insurers should take into
consideration of the existence of few members of the group, who may have severe
and frequent health problems.

Hence, excepting for group cover, if such individuals are underwritten on individual
basis, they would be construed either substandard or uninsurable risks.
Underwriting of group health insurance requires analyzing the characteristics of
the group to evaluate its conformation with the insurers' underwriting guidelines as
well as those of the regulator. Standard underwriting process for group health
insurance requires evaluation, based on the following parameters:

(i) Type of group
(ii) Group Size
(iii) Type of industry
(iv) Eligible lives for coverage
(v) Whether entire group is being covered, or there is an option for members to

opt-out.
(vi) Level of coverage - whether uniform or stratified
(vii) Composition ofgroup in terms ofage, sex, singleormultiplelocations, income

level of members, employee turnover rate, whether premium paid entirely
group holder/ members.

114 Guide for Health Insurance