Page 334 - Ebook health insurance IC27

The Insurance Times

On the other hand, group underwriting is generally concerned with the nature and
composition of the group as a whole. It does not rely on underwriting individuals' one-
at-a-time.

A group is a population that comes together for job, profession or reasons other than
acquiring medical insurance. Obtaining medical insurance is not the group's primary
goal. Therefore, in contrast to individual insurance, group insurance enjoys a built-in
spread of applicants across a broad range of health conditions.

In summary, the main objective of group underwriting is twofold:
1. To minimizing the risk of anti-selection (meaning those who are more likely to have

claims are those who are more likely to seek insurance) by insuring a sufficient
spread of lives; and
2. To lower premium rates through reduced administrative expenses

Small groups and late joiners under large groups are also subject to individual
underwriting. It is not really possible to dispense with individual underwriting unless
there are at least 10-15 members.

Underwriting pre-existing condition

Pre-existing conditions may be underwritten by using the following methods:

Full Medical Underwriting (FMU)

This refers to asking detailed questions about the applicant's state of health. If the applicant
has a medical condition which is likely to recur, the insurer will still issue a policy but is

338 Guide for Health Insurance