It is important to look at the driving forces behind the price increases. Some of the factors that c...
It is important to look at the driving forces behind the price increases. Some of the factors that could produce upward pressure are the extent to which current morbidity data actually reflects true population morbidity levels. Screening, for example, can identify higher levels as can new diagnostic techniques.
The higher actual, as opposed to predicted claims experience, is another factor. Is this because the CI insurance buying population are different from the population as a whole? In the NHS, there is the well known 'inverse care law' where the better off get better care and earlier diagnosis. Are people more aware of their health status than they let on and, as a result, are getting away with non-disclosure? If the Ombudsman's practice tends towards leniency then that will not have been priced for.
On the other hand, factors that could produce downward pressure are revisions to the ABI's Statement of Best Practice disease definitions ' excluding claims for conditions that are no longer life threatening due to improved treatments ' and Government success with its public health policies in disease prevention.
Right now insurers and reinsurers are taking a more pessimistic view of the balance between these driving forces than they did in the past. I think we can expect to see guaranteed rates continuing to fluctuate in the short-term until they reach a level that is generally regarded as sustainable ' until the next medical advance when the debate will start up again.
