Content area
Full text
Before it enters the impaired-risk market, an insurance firm must carefully weigh how its agents can find the best underwriting opportunities for clients with high-risk medical conditions.
When my company, for example, entered the impaired-risk market in 1992, we wanted to make sure we wouldn't become paper pushers submitting pointless trial applications to insurance companies jumping in and suddenly claiming to cover hard-to-place applicants.
"Shopping" risks was too costly and time-consuming, since the rate quotes often didn't hold up when the underwriters looked at the formal application. We searched long and hard for companies that approach underwriting with the applicant in mind.
One approach is called "clinical underwriting." This is akin to custom-tailoring a suit, as opposed to offering an off-the-rack or a one-size-fits-all selection. The underwriter looks at each client individually, as a doctor would. Before using clinical underwriting, my company for example, would turn away about 10 percent of the applicants presented to us for whom we can now find coverage.
A company underwriting impaired-risk candidates needs to consider, along with factors like age, occupation, etc., how the applicant's medical condition is controlled, the prospective insured's compliance with the doctor's orders, and...