Factor Selection in Health Insurance Collection

ON several previous editions, I have to tell you about the various health insurance programs that can be set by a company-sponsored, among others, and Indemnity Plans Manage Care Plans.

To add to our knowledge about this type of insurance program, I will explain to you about important factors to be the benchmark for insurance companies in the risk selection process. In this edition, I will examine the factors associated with the characteristics set or group in the context of the research group for the purposes of risk insurance for employees.

Typically, the underwriter of group life insurance company will conduct a parallel study of related factors. The study was conducted to determine eligibility and insured insurance program proposed by the closure of a group insurance application.

Selection of Eight Risk Factors

In principle, there are eight key factors that will be examined by life insurance companies in order to evaluate the issuance of a life insurance policy for one group, namely 1) the existence of background, 2) type and the type of group, 3) stability, 4) scale the number of participants, 5) type of business, 6) level of participation in the program, 7) age, and 8) sex.

First, the background of the existence of the group.
most, life insurance companies less willing to publish an insurance policy for the group when the group was formed solely or established with the aim to cover the needs of life insurance for its members in it.


This corresponds to a tendency to occur (based on experience in some countries) that may occur in antiseleksi this group. Antiseleksi is a term commonly used in the insurance sector about situations that occur as a result of asymmetric information.

In this case, the insured or prospective policyholder requesting the insurance to life insurance companies associated with severe disease or high health risks that have been known by the concerned.

Second, the type and type of group. In this case, what concerns insurance companies associated with the evaluation of a group. For example, if a group is formed because of the relationship between workers and employers? Or, if the group is a cooperative, association, or other entity?

Third, stability. Stability associated with the condition in which group or groups could maintain the flow of entry of new members of the younger, from time to time so that this condition allows the group has members aged spread evenly.
Experience shows that old age has a risk of morbidity and mortality is higher.

Group underwriters also considered an indication of the high-intensity changes in a short period. In this condition, life insurance companies will be subject to additional administrative costs in the context of the administration of the insurance coverage of each member in the group.


Fourth, the amount of participants. Currently there are many life insurance companies that provide less stringent limits on the size of the number of participants in the group. However, a large number of participants in a group tend to have the three following characters:

a) The closer the number actuarial assumptions in terms of morbidity and mortality rates,
b) tend to have small fluctuations in the claims,
c) the management requires administrative costs of smaller (percentage of the amount of premiums).

Fifth, the type of business. In the process of risk selection, the group was watching underwriters of these factors. Why? For life insurance companies, types and certain types of business have a probability higher risk than other types of businesses. Sixth, the level of participation in the program.

Life insurance companies generally classify Program Group Insurance Plan into two parts, namely noncontributory plan and contributory plan. In the noncontributory plan, the company sponsoring employer will pay for the program entirely to the company's insurance premium life insurance. In this case, the employees as members or participants in the group did not join pay a premium. How about the contributory plan?

In this case, the participants contributed in small part to pay premiums. To reduce the effects antiseleksi, the noncontributory plan, insurance companies generally require all participants must follow the insurance program. Conversely, for contributory plans, insurance companies frees participants to join.



Seventh, age. Although no group underwriters will evaluate the risk to each participant in the group one by one (except for groups with very few participants), insurance companies continue to evaluate the age distribution of members or participants in it. In particular, life insurance companies will pay attention to the large number of participants who are old. Experience shows that this group has a risk of morbidity and mortality is higher.

Eighth, sex. The proportion of sexes in a group of participants is also a factor for the evaluation of life insurance companies. Generally, groups of women in the group tend to have less risk. That is why, a group with the proportion of women participants is statistically greater will have a smaller risk for insurance coverage.


In next week's edition, I will discuss several other factors associated with coverage in the group health insurance program. These factors will be a study for life insurance companies to assess the feasibility of the company in obtaining health insurance protection for employees.