Category Healthcare
SUB CATEGORIES General  |  HIV |  Medical Schemes | 

Can the underwriting process be improved?

06 December 2004 Nico van der Walt

Brokers are used to hearing complaints from their clients regarding the medical examination required for high income earners applying for life or disability cover under group insurance schemes. The complaints generally relate to the time taken and the inc

However for insurance companies, medical underwriting remains a crucial risk management tool and is the only way in which insurers can truly assess their risk when offering these individuals insurance cover. One should also bear in mind that under most group schemes only a small proportion of the lives in the scheme will have to provide medical evidence to enjoy their full cover.

This is according to Nico van der Walt of Momentum Collective Benefits who says, “What our research indicates is that despite the fact that underwriting in South Africa is recognised to be of a world class standard, the process can be improved even further. Solutions that could help to improve the efficiency of the underwriting process should be applied to those areas where there is maximum inconvenience for clients and brokers. The market has already begun to address these issues.”

Van der Walt explains that it is important to ensure that the selection process of lives that have to go for underwriting (ie: setting the free cover limit) is as efficient as possible. This will result in fewer applicants having to go for medical examinations. He also points out that insurers should make it as easy as possible for clients to go for their medicals. Innovations in this regard include on-road nurses that go to the executives’ offices to draw blood and fill in the medical forms saving the executive time. Probably the most important issue, according to Van der Walt, is that of communication between all the parties. He says, “Clients should clearly understand that by not going for medicals they will not enjoy their full cover and insurers must make sure they make it clear at what levels clients are covered.”

Depending on the results of the underwriting, a person could be accepted on normal rates, which occurs in the majority of cases, or be accepted with a loading or be accepted with certain medical conditions excluded from the cover. In extreme cases, the cover may be declined, but this does not happen often. Loadings are generally applied to a policy because of the applicant’s health problems, but if the applicant takes part in potentially dangerous sports, loadings may also be applied.

“Although going for medicals is often inconvenient for the applicant, the full medical examination has also been known to be very beneficial, in some cases saving lives of applicants through early detection of serious illness and in other cases merely identifying potential health problems that are then able to be solved through dietary or lifestyle changes,” says Van der Walt.

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