Insurance companies usually select risks and put them into a number of pools of similar lives in ord...
Insurance companies usually select risks and put them into a number of pools of similar lives in order to then charge competitive rates. Selection occurs in a variety of ways, the most common being the proposal form.
The life office will calculate at which level it is financially viable to obtain routine medical evidence. The cost of this evidence is balanced against the level of non-disclosure experienced by the company. These limits vary by contract type and age in line with levels of non-disclosure (which vary by age) and the levels of incidental findings (which increase with age).
When an individual discloses information regarding their past medical history, it may also be necessary for the life office to request certain medical information. Certain companies will tailor the evidence requested, depending on the risk.
At high levels of cover, a greater amount of medical evidence will be obtained and companies will constantly monitor the value of all of this additional evidence, bearing in mind the costs involved. Examples of this would be a microscopic urinalysis (a test to identify any abnormalities in the urine) and resting ECGs (a graphic recording of the heart, able to pick up any variations in rhythm or heart size, or any damage to the heart muscle) which have been dropped from certain companies' non-medical limits. Recent data has shown that both these tests are of little added value.
IFAs frequently contact underwriting helplines to ascertain what evidence will automatically be requested, if any, based on a person's age and the sum assured being applied for, or the disclosure of a certain medical condition. The evidence that may be required is not always self-explanatory and the IFA may be unaware of exactly what certain evidence is. This article will hopefully explain in simple terms the different types of medical evidence that may be requested by the underwriters.
Types of evidence
Some of the more commonly requested types of evidence are as follows:
l Point of sale questionnaire:
These questionnaires are issued direct to clients to obtain further information or clarification regarding a medical disclosure on the proposal form. The aim is to alleviate the need for a private medical attendant's report (PMAR), therefore saving time and resulting in a quicker turnaround from the date the proposal is received to the date it is accepted. The questionnaires are designed specifically to identify certain illnesses, such as asthma, epilepsy, stress and blood pressure.
l Private medical attendant's report (PMAR):
A PMAR (see box on page 50) is issued direct to the proposer's GP, who will complete the report from the patient's medical records. It can be issued as a result of automatic age/sum assured limits or as a result of the medical history provided on the proposal form. If there is a particular condition that has been disclosed that requires specific details, it is usually possible to ask an additional question on the report to try and ensure the correct level of detail to assess the risk is obtained in one go.
If, on receipt of the report, further information about a particular entry is required, either because the GP has not given the detail requested or it is information that was not disclosed on the proposal, it is possible to then write back to the GP (or a named consultant if this is felt to be more appropriate) to obtain the information required.
l GP questionnaires:
These can be issued to the GP either alongside the PMAR or in isolation. As with the point of sale questionnaires, they cover specific conditions that may have been disclosed on an application. They have been designed to extract specific information relating to certain medical conditions.
Some of the more common questionnaires include tumour, ischaemic heart disease, diabetes and asthma. However, there will be differences in the types and number of questionnaires used by companies.
The information requested on these questionnaires may also differ slightly. Companies will regularly review the number of questionnaires they use and, where appropriate, design new ones or bring existing ones up to date.
l Independent medical examinations (MERs):
MERs provide up-to-date information on a proposer (see box below). MERs may be obtained due to age/sum assured limits, as a result of information provided on the proposal, or as a result of information provided on the PMAR report, or the GP questionnaire which may need further up-to-date information.
The underwriter has the option to ask the examiner to pay particular attention to a certain medical condition or part of the body at the examination, for example, if the application is for income protection and the client has a history of back pain, the examiner will be asked to pay particular attention to the applicant's spine, or if they are an MS sufferer, the doctor would look for tremors, walking difficulties or speech problems.
Usually medical examinations are independent and not performed by the client's GP. However, it is sometimes possible to consider allowing this if there is a specific request to do so.
Some companies now use mobile doctors to obtain the majority of examinations. This is a much more customer-friendly approach. The mobile doctors' company will find an appropriate doctor in the area, issue papers, contact the client and arrange a mutually convenient appointment for the examination to be performed either at the client's home, place of work or at the doctor's surgery.
Although this method can be used for the majority of examinations, for cases over a certain sum assured a life office may require a consultant to perform the examination. In these instances, the doctor will be selected from the insurance companies' panel and papers will be issued in the usual way.
l Paramedic screenings:
These are similar to MERs in terms of content, but they are carried out by a nurse rather than a qualified doctor and again can be an automatic request or as a result of medical disclosure.
The process for arranging paramedic screenings is similar to the mobile doctor medicals and can be performed either at the applicant's home or place of work.
Paramedic screenings can be useful where the underwriter requires more information on a specific area but does not need a full medical examination. For example, a client may disclose a history of hypertension (raised blood pressure) and the GP may have provided information relating to this but does not have any up-to-date blood pressure readings. A paramedic screening will be able to provide this information.
l Cotinine:
This is a saliva or urine test that indicates if a client is a smoker. Some companies automatically request a cotinine test to be performed alongside a medical examination at the higher sums assured to check for non-disclosure.
l HIV tests:
HIV tests will either be requested routinely according to marital status, sex and level of cover applied for, or if it is felt the applicant has been, or is, exposed to an increased HIV risk. This is either a saliva or blood test.
l Biochemistry:
This is also a blood test. It can be a routine request due to age and sum assured or as a result of medical information already obtained. It is wide-ranging and covers liver function, renal function and lipids (cholesterol).
l Exercise ECG:
This test is usually only asked for as a routine request on the high sum assured cases. It is similar to the resting ECG in that it is a graphic recording of the heart, able to pick up any variations in rhythm, heart size or any damage to the heart muscle.
The difference is that the exercise ECG is conducted on a treadmill. Coronary disease may cause no symptoms or abnormalities in a resting ECG, but by increasing the workload on the heart abnormalities may become apparent (see box).
Tailored investigations
The above tests are the most commonly requested, whether it be due to medical disclosure or age/sum assured limits. However, there will be certain disclosures of medical information where companies will need to tailor the evidence accordingly and a different test may be required in order to have sufficient information to assess the risk accurately. Examples include:
l Glycosolated haemoglobin:
Glycosolated haemoglobin reflects the blood control in diabetics retrospectively over a period of two to three months, independently of the day-to-day fluctuations in blood glucose levels. It is therefore a good indicator of long-term diabetic control and may be used to aid diagnosis. Consequently, this test can be useful when underwriting a diabetic where there is no real indication of their current control.
l Drug screening:
This test can be saliva, urine or hair sample. It will be requested if an applicant has a history of drug abuse or is currently abusing certain drugs. It will test for:
l Hallucinogenics
l Cocaine
l Opiates, for example heroin.
l Barbiturates
l Cannabis
l Amphetamines
Where an adviser has a potential applicant with a known medical history, or if they are aware that the client has a clean medical history but the level of cover requested is high, it is recommended the IFA should take advantage of any underwriting helpline made available by a life office.
These are normally staffed by experienced underwriters that will be able to give an indication of what medical evidence will be required, which will assist the IFA in packaging the case for their client.
Kirsten Jones is life and disability underwriter at Guardian Financial Services
