Underwriting Factors 核保因素
Underwriting places each proposal in a suitable risk class, so that the premium fairly reflects the risk and anti-selection is kept in check. Underwriters rely mainly on the proposal form, and may also use an agent's report, medical reports and other enquiries.
Physical factors include age, sex, build (height in proportion to weight), current health, personal medical history and family history. In general, mortality rises with age, and women usually have lower mortality than men. Family history helps show whether the life insured may be more prone to conditions with a hereditary tendency, such as diabetes or heart disease.
Lifestyle factors include occupation, hobbies, habits such as smoking and drinking, place of residence and travel. A hazardous job, or an activity such as motor racing or diving, can raise the risk of accidental death even when the person is healthy. Smokers usually pay more than non-smokers.
Underwriters also consider financial standing, insurable interest and the plan applied for. A sum insured well above the person's income or financial needs may point to moral hazard or anti-selection. Insurers may charge according to risk, but in Hong Kong the Sex Discrimination Ordinance (Cap. 480) and Disability Discrimination Ordinance (Cap. 487) generally expect such differences to rest on actuarial or other data that can reasonably be relied on, and to be reasonable.
Medical Reports 醫療報告
Insurers do not ask every life insured to have a medical examination. Non-medical limits are usually set by age and sum insured: a younger person applying for a lower amount can generally be underwritten on the health questions in the proposal form, while a case above the limit may need an examination. Each insurer sets its own limits.
Being non-medical does not remove the need to disclose health matters. The proposer and life insured must still answer the health questions truthfully and disclose material facts. If the answers reveal a health issue, the insurer may ask for medical evidence even when the sum insured is within the limit. Having an examination does not remove this duty either.
A medical examiner's report is completed after an examination by a doctor appointed or recognised by the insurer, and may come with test results such as blood, urine or ECG. An attending physician's report comes from a doctor who has treated the life insured and covers their history, diagnosis, treatment and recovery. The two should not be confused.
Before asking an attending physician for a report, the insurer needs the life insured's written authorisation, which is normally included in the proposal form. These reports contain sensitive personal data, and collecting and using them must comply with the Personal Data (Privacy) Ordinance (Cap. 486).
Sub-Standard Life and Underwriting Measures 次標準人壽及核保措施
Underwriting outcomes broadly fall into standard acceptance, sub-standard acceptance, postponement and decline, and some insurers also have a class better than standard. A sub-standard life is one whose expected mortality is above standard but who can still be accepted on special terms. Rating systems often use 100 as the standard base, adding points for unfavourable factors and deducting them for favourable ones. A total of 150, for example, suggests expected mortality of about 150% of standard. Each insurer decides what action applies to each range of scores.
The measure should fit the pattern of the extra risk. A broadly constant extra risk, such as a hazardous occupation, suits a flat extra premium: a fixed yearly amount per HK$1,000 of sum insured. A decreasing extra risk, such as recovery after surgery, suits a lien or a temporary flat extra premium. An increasing extra risk, such as some chronic illnesses, suits a rated-up age or a percentage extra premium.
A rated-up age means charging the premium for an age above the actual age, for example charging a 35-year-old the premium for age 40. With a lien, the policy is issued at the standard premium, but the death benefit is reduced by a set amount if the life insured dies within a specified period, and the reduction usually falls each year. This lien is simply a reduction in benefit, unlike an ordinary lien over property.
Other measures include excluding a specific risk (such as private flying), reducing the sum insured or moving to a lower-risk plan. If a medical condition is still unclear, the insurer may postpone the decision, and if the risk is too high it may decline. An acceptance on special terms is legally a counter-offer, so no contract is formed until the proposer accepts it.
Practice
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