REINSURANCE: small, limited underwriting products VS large,
fully underwritten products
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www.finmark.org.za
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Insurance take up across LSM groups
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Transforming financially www.finmark.org.za
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Transforming financially www.finmark.org.za
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THE SOUTH AFRICAN SPECTRUM CUSTOMERS PRODUCT TYPES BENEFITS AND
PREMIUMS FEATURES RISK MANAGEMENT HIV TESTING UNDERWRITING LIMITED
UNDERWRITING FULL UNDERWRITTEN
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Different Risks: The moment you go into different markets you
assume different risks
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Fully Underwritten vs Limited Underwriting Customers
Millennials Boomers and Gen X
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Fully vs Limited Underwriting: Product types Death Critical
Illness Functional impairment Disability -lumpsum Disability Income
Credit Life Funeral Cover Accidental Cover Cancer Cover Hospital
Cash
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Benefits and Premiums Fully U/WLimited U/W Rating FactorSocio
Economic (LSM) - Income, education Gender, Smoking loadings Make
use of Data Analytics to determine optimal rate variations Premium
Patterns Range of patterns -Level -fixed increases -age rated
Single Premium Pattern, with automatic changes DesignHigh maximum
cover levels - Disability capped at 100% replacement ratio Low
Maximum cover levels T&CsDetermined after underwriting,
depending on the information disclosed Standard exclusions -
pre-existing conditions - Accidental death only etc Underwriting
result Accept, decline, loaded, deferred, additional medical
requirements, exclude Accept or decline
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Product Features Fully U/WLimited U/W ConvenienceCompliance
ProcessComplete at end of Call UnderwritingMedical and HIV tests
requiredSpecific Medical only; HIV test after application only
AcceptanceCover granted after completion of U/W Cover cancelled for
dishonesty in application CostHigh Commission; Medical testsLow
large volumes StructureMultiple variations. riders and claim
definitions Single, vanilla format only Distribution channel
Questions answers by agent/broker Call Center / on-line / mobile
application ExclusionsFew, reflecting U/W resultsMany standard
policy exclusions Margins5-8%Excess of 20% ScaleLimited to agent or
broker network Very, especially on-line or mobile platforms
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Risk Management Options Fully U/WLimited U/W Reinsurance:
Surplus treatyReinsurance: Quota Share or stop-loss agreements
Important to really understand the risk ask for lots of information
Avoid asking unnecessary questions Smart underwriting / Analytics
Meeting the claim condition, proof of loss of income Exclusions of
Pre-existing conditions and limited risks covered Financial
Underwriting to limit exposurePhased in Waiting periods on risks
covered and sum assured Claims Assessor trainingLimited sums
assured size and have clear claim definitions Broker and agent
analysisPattern recognition for fraud Automated systems needed to
red flag risky policies and claims
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HIV testing requirements HIV testing type Laboratory (4th Gen
Combination test), or Spot/Rapid test (finger prick or saliva)
Accuracy and retest of results, speed of result, costs If HIV+
Limited U/W products allow post acceptance testing Only allow
accidental death or reduced Sum Assured Managed care products allow
cover to be retained Need to monitor CD4 count: Remove natural
death cause cover if below required level
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Underwriting Efficiency Limited underwriting Mostly a few
underwriting questions (medical focus) Use automated rules and
decision trees Make certain the appropriate questions are asked
Make use of an expert underwriting system Make best use of limited
time Fully underwritten Questions on various risk areas, medical
exam and bloods Most still use manual (human) underwriting process
Slower, less consistent but free text not an issue & dont miss
any information Starting to use Expert U/W System some input from
UWs still required
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Rent a body get a death certificate Rent an Identity document
cross check IDs Rent a doctor find pattern of doctor/hospital name
Hospital Bed & Breakfast require stays of >3 days Stolen
medical records - ??? Source: SAICB How to Fraudulently claim.
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The future of limited underwriting Millennials want simple
products Dont care about reading the contract Price, convenience
and accessibility key factors Must be low cost and easy to complete
the transaction Determine risk via smart underwriting Only give
cover for specified risks exclusions and waiting periods key But do
they understand when they can claims or NOT Control risk by looking
for patterns Analyse data to identify systematic causes of
fraud