Page 86 - Ebook health insurance IC27

The Insurance Times

Thus the Numerical Rating Method is a systematic procedure for assessing the value of
risk, which is based on two practical rules, viz., and the "hypothesis of unchanging extra
mortality and addition of specific rates of extra mortality for various impairments/factors."

Rating may depend on one or more of the following factors:-
1. Family medical history
2. Personal medical history
3. Present condition of health and habits including build
4. Occupation

Under the numerical rating procedure the value of any special hazard in respect of each
of the above factors is measured in terms of an appropriate extra mortality ratings and
the extra mortality rating for various factor are then combined to arrive at the value of
the risk as an extra mortality.

For example, If an applicant is 5 feet 8 inches and weighs 90 kg, his mortality expectation
based on this height-weight ratio may be 150% of a standard risk who weighs 60 kg at
that height. (The weight of applicant is 50% more)

In this instance a debit of 50 percentage points would be listed next to the weight factor
on the applicant's underwriting sheet.

If the applicant has an excellent family history (no hereditary diseases such as diabetes),
his mortality expectation based on this factor is 90% of the standard risk. Here a credit
of 10 percentage points would be listed next to the family history factor.

Upon completion of the debiting/crediting process, debits and credits would be totaled

9 0 Guide for Health Insurance