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The Insurance Times

Though basic underwriting consideration are similar to the standard underwriting
factors, there are some additional factors to be considered for. They are :
(i) Size of group - small group size may suffer volatility
(ii) Differential Healthcare cost in different geographical regions
(iii) Risk of adverse selection in all group constituents do not participate in the

group health insurance plans.
(iv) Persistency of members in the group.

In an effort to rationalize canvassing ofgroup insurance by theinsurers, the insurance
regulator of India has issued some group insurance guidelines. Non-employer
groups can include employer-welfare associations, holders credit cards of a specific
company/bank, customers of a particular business where insurance is offered as a
benefit, borrowers of a bank, and professional associations or societies.

The rationale is to restrict formation of groups for the sole purpose of business in
terms of offering flexible and customized covers. It has been observed that such
selection of groups inevitably lead to an adverse selection against the insurers and
eventually high claim ratios in the long run. So the guidelines by the regulatory
authority, thus help in responsible market conduct, in not only instilling underwriting
discipline but also in canvassing group insurance schemes and setting up
administration standards.

Q13. What are the uses of Genetics in underwriting ?
Ans. This is a controversial application of the science of Genetics, but underwriters of

the future may be able to study the genetic information of individuals for health risk
assessment. Human DNA, the blueprint of life, contains genetic instructions used
in development and functioning of living organisms, provides an innovative and

116 Guide for Health Insurance