Transcription
Principles ofLife Insurance UnderwritingSeptember 19, 2014The Gibraltar Life Insurance Co., Ltd.New Business Service Team
Table of contents1. Participation rate of life insurancein Japan11.Investigation through policyconfirmation Forth selection 2. Cause of death in Japan (by age)12. Underwriting of physical risk3.Flow of life insurance examination13. Response to physical risk4.The necessity of risk selection14. Underwriting of environmentalrisk5.Types of risks6.Types of moral risks7.Risk selection method8.Observation by LCs Firstselection 9.Information collection by selectionmethod Second selection 15. Response to environmental risk16. Underwriting of moral risk17. Response to moral risk18. Utilization of reinsurance19. Next issues10. Examination by an examiner third selection 2
1. Participation rate of life insurance inJapanParticipation ratio ofhouseholds in JapanOwnerNon-ownerAverage amount of total death claim by household: 27,630kAverage number of policies by household：4.1 policies90.5%Average amount of total annual premium by household: 54.8%HouseholderSpouseChild20%Source: Japan Institute of Life Insurance:FY2012 national survey of actual conditions of life insurance0%3
2. Cause of death in Japan (by age)Age1st cause of death2nd cause of death3rd cause of death-4CongenitalmalformationAccidentMalignant neoplasm-9AccidentMalignant neoplasmCongenitalmalformation- 14Malignant neoplasmAccidentSuicide- 19SuicideAccidentMalignant neoplasm- 24SuicideAccidentMalignant neoplasm- 29SuicideAccidentMalignant neoplasm- 34SuicideMalignant neoplasmAccident- 39SuicideMalignant neoplasmHeart disease- 44Malignant neoplasmSuicideHeart disease- 49Malignant neoplasmSuicideHeart disease- 54Malignant neoplasmHeart diseaseSuicide55 -Malignant neoplasmHeart diseasePneumoniaSource: “2012 Population Survey Report” issued by the Ministry of Welfare and Labour4
3. Flow of life insurance examinationPolicyholder/ InsuredLCApplication formApplication form・Fill out application form・Disclose health conditionsHOApplication form・Confirm incomplete documents・Observe insured’s health conditionsInsurance certificateDeliver・ Confirm incomplete documents・Assess insured’s health conditionsNo conditionOfferNotice of special conditionApproveInsurance certificateDeliverNotice of rejectionOfferSpecialconditionRejection5
4. The necessity of risk selectionLifeinsurance・ Fairness ofrisk・ Uniformity ofrisk・ Law of greatnumbersStability ofinsurance business Cover-up ofmedical recordsVocationalfraud Moral riskAdverse selectionIn order to create an insured group without adverse selection,it’s necessary to appropriately select risk.6
5. Types of risksPhysical riskMoral riskRisk of lifeinsuranceEnvironmental riskMedicalUnderwritingFinancialUnderwriting7
6. Types of moral risksInsurance murderIllegal receptionof benefitSuicideMethod of murder is diversified: Making death looklike a death of disease by using poison/ accidentaldeath/ accident in a foreign country, etc.Applications after a disease is diagnosed in healthcheck and that of voluntary applications by directmail or on the Internet increases adverse selection.Involvement of doctors cannot be denied in somecases.Suicide exclusion was effective for 1 year inpolicy provisions of ordinary insurance.However, since there was no end to the numberof insured who committed suicide, the suicideexclusion period was extended to 2 years.8
7. Risk selection method1st SelectionObservation by LCs2nd SelectionInformation collectionby selection method3rd SelectionExamination by an examiner4th SelectionInvestigationthrough policy confirmation9
8. Observation by LCs First selection 1st SelectionObservation by LCsInterview・・・Interview is LCs’ responsibility andobligationObservation・・・ Observe complexion / expression/conversation/ physical disorder/ living conditions.Question・・・Ask about health conditions such as actualsymptom/ anamnesis, occupation, and living conditions.10
9. Information collection by selectionmethod Second selection 2nd SelectionInformation collectionby selection methodMedical examinationdoctor handlingMedical check-up notification handling/thorough medical check-up handlingHealth managementcertificate handlingNon-medical form handling11
10. Examination by an examiner Third selection Examination by an examiner3rd SelectionAcceptance/ rejection of appliedpolicies and finalization of conditionsStandard lifeSubstandard lifeInsurableriskPostponable lifeRejectable lifeNon-insurablerisk12
11. Investigation through policy confirmation Forth selection Investigationthrough policy confirmation4th SelectionPolicy confirmationConfirmation by those who lack interest ininsurance sales.Pre-issue policy confirmationPost-issue policy confirmation13
12. Underwriting of physical riskNumerical Underwriting method ：This is a method to assess risksby scoring mortality indicators based on Underwriting methodAdvantage・ Quantification of risks decreases examiners’subjective view.Disadvantage・ Combination of medical impairment requires aviewpoint of clinical medicine.14
13. Response to physical riskIncreasing type riskExtra premium planEverlasting type riskExtra premium planDecreasing type riskLien planMain special conditions・ Extra premium plan ・・・A plan to receive extra premium.・Lien plan・・・A plan to reduce claim at a designated ratio for a certain period of time(up to 5 years)・ Particular Organ Exclusion Clause ・・・A plan applied to hospitalization protectionto exclude specified part from claim payment.15
14. Underwriting of environmental riskSelection based on habitExcessive drinking and routine use of drugs/ stimulant drugs are factorsthat increase mortality rate.Selection based on assets/ incomeAssets and income are important factors to determine insuranceamount. Policy with excessive insurance amount could containmedical adverse selection or moral hazard.Selection based on environmentThose who belong to anti-social forces/ those who have no regularemployment tend to purchase a policy out of impure motives.16
15. Response to environmental riskLimitation on insurance purchasebased on contract rule・Limitation on maximum insurance amount based onissue age・Limitation on insurance amount based on income/ assets・Limitation based on overseas traveling destination・Third party recipient contractLimitation on insurance purchasebased on vocation ruleLimitation on insurance purchase・Limitation on insurance amount by dangerous hobbies・Money laundering17
16. Underwriting of moral riskMoral risk:The number of deliberate and intensive insurance fraudsis increasing.Items of Note for Underwriting(1) Motive for application・・・Does a policyholder voluntary apply for a policy?(2) Policy with excessive insurance amount・・・Is insurance amountexcessive compared to age/ job/ income/ assets?(3) Inverse rank policy・・・ Is insurance amount excessive compared toprimary wage-earners or representatives of company?18
17. Response to moral riskUse of policy coverageregistration systemPrevention ofintensive applicationUse of information heldby our companyUse of information heldat the time of medical examinationPrevention ofanti-social forces, etc.Provision of informationfrom sales teams19
18. Utilization of reinsuranceDiversification of risks of high-value policiesand policies with high physical riskTypes of reinsuranceAutomatic ceding ・・・Policies with a certain amount and aboveare ceded at a certain ratio. This is applied mainly to high-valuepolicies.Arbitrary ceding ・・・Mainly, policies that fall under highlysubstandard life are individually ceded.20
19. Next issues (1)Influence of advanced medical technology Genetic testing・Japanese life insurance companies does not utilize genetic testing as examinationmaterials.A famous actress received preventive treatment based on genetic testing, which was recentlyin the news. Genetic testing has been rapidly recognized in the public. The number ofthose who use genetic testing may increase.・If use of genetic testing is legally limited in Japan, like other countries, handling of genetictesting results may be an issue (whether the results fall under declaration, etc.).In Japan, medical check-up notification and thorough medical check-up result are used asexamination materials. If genetic testing becomes a required item of medical check-up, it maybe needed to review the selection method.・Preventive treatment based on genetic testing result is not currently considered to be qualifiedto receive benefit. In the future, however, this could be evolved into a trouble. Whetherpreventive treatment should be qualified to receive benefit may be examined. Advanced treatment techniqueAs typified by application of induced pluripotent stem cell (IPS cell), life prognosis of diseases,which have been regarded as intractable disease, is expected to be improved as medicaltechnology advances. Accordingly, life insurance companies may expand the underwritingscope. Examination techniques such as revision of the examination standards are requiredto be enhanced.21
19. Next issues (2)Response to aging societyAs the population ages globally, the number of elderly people is also increasingevery year in Japan.Compared to young people, many elderly people have combined disorder and wererejected.The issue is to improve examination technique to include elderly people inunderwriting scope.Development of underwritersDevelopment of underwriters, professionals of underwriting, is essential for life insurancecompanies. It is ideal if medical examiners alone can do examination. It is, however, practicallydifficult. Therefore, an increasing number of life insurers utilize underwriters with specializedknowledge about examination.“Underwriters Association of Japan” was recently established, and popularizes and developsthe underwriter system. Although the underwriter system is not spread in the U.S. that much, itis essential to enhance underwriters’ technique to solve issues which life insurance will face inthe future.22
In Japan, medical check-up notification and thorough medical check-up result are used as examination materials. If genetic testing becomes a required item of medical check-up, it may be needed to review the selection method. ・Preventive treatment based on genetic testing result is not currently considered to be qualified to receive benefit.
