Page 85 - Ebook health insurance IC27

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 Insurers must be very careful while scrutinising proposal forms. Many diseases
cannot be detected even by tests and still may exist. Insurers therefore on the basis
of past history try to identify existence of any pre-existing disease.

 Moral hazard is very high in health insurance and underwriters must be quite
experienced to reduce the instances of moral hazard.

B. Non-medical underwriting
 Medical underwriting is usually dispensed with in cases where the sum insured is

low and below the age of 45 years.
 So in non- medical underwriting cases the insurance company can save a lot of

money which might have been paid for medical tests and diagnosis.
 However in cases where there is previous history of claims the company may insist

for medical underwriting in small cases also.
 For non-medical underwriting the underwriting team of the insurer must be strong in

order to carefully assess all the information is given in proposal form and decide
accordingly.
 In a small cases where medical is not necessary even if there is a slight increase in
claims ratio it is compensated by saving in medical tests.
 Companies usually create a medical grid to indicate at what age and stage should
medical underwriting be done so as to strike a balance between business and risk.

C. Numerical rating method:
Numerical rating method of Underwriting is a method used in classifying applicants for
life insurance according to certain demographic factors and assigning weights to these
factors. Factors include physical condition, build, family history, personal history, habits,
and morals.

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