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Claims underwriting criteria

E

Eleanor Cawston

Active Member
In Chapter 7 of the ActEd notes, on page 9 under "Claim underwriting" it reads:
"The claims procedures that the insurer tends to utilise will be another important consideration in the pricing and product design process. It is imperative that these are consistent with the underwriting criteria that are used to accept policyholders and important also that they are consistent with the data underpinning the pricing calculation..."

The point on consistency with experience data for pricing is clear, but I don't really understand "[claims procedures] are consistent with the underwriting criteria that are used to accept policyholders".
Is this just a (rather indirect) way of saying that any endorsements or exclusions made to a policy at inception must be observed when a claim is assessed? eg checking against the listed pre-existing conditions.

Thank you for any clarification,
Eleanor
 
Hi Eleanor,

Yes, I think that your interpretation is definitely part of what the Core Reading is saying. I wonder if it may also be a bit broader than this, for example suggesting that a very stringent underwriting process should be followed by an appropriately stringent claims management procedure.

I hope that helps!

Anna
 
Hi Anna,
Thanks for your answer. But I'm not sure it makes sense to me! If you have a "lax" underwriting at inception (eg medical history disregarded for a group scheme) you would still want to have stringent claims underwriting, no? Conversely, if we think about a very comprehensive medical underwriting process at inception (doctor's reports, extra tests such as ECG, etc), I don't see why that should necessarily imply that the claims underwriting needs to be extra-strict too.

In my understanding, the purpose of the claims underwriting is to ensure that the claims paid are in line with those which are assumed at the pricing stage - ie that the policy is intended to cover. Isn't that more to do with the definition of the policy than the level of underwriting a prospective policyholder needs to undergo?

Thanks again,
Eleanor
 
Hi again,

That was why I said "an appropriately stringent" claims management procedure (rather than an "equally stringent" claims management procedure). In short, we need to make sure we consider the two processes together to make sure that they work alongside each other.

Anna
 
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