by Leo Penney, Innovative Underwriting
How many times as underwriters, after a client has been rated or declined for insurance, have we heard these types of comments.
“My doctor says there is nothing wrong with me and the insurance company does not know what they are talking about”.
Often the attending physician will write to the insurance company to disagree with the underwriting assessment or to request a conversation with the underwriter or medical director. The reason for the underwriting decision may be based on the insurer’s routine age and amount requirements, but many times is based on information submitted by that same attending physician. Where is the disconnect?
Much of this disagreement I would submit is caused by our traditional approach of how we communicate the reasons for our underwriting decisions. The communication is seldom done either verbally or in written form with the client or his agent. Instead, with the client’s permission, we send information to attending physicians asking them to explain the underwriting rationale to their patient. Unless decisions are based on fortuitous findings in the insurer’s routine requirements, we end up repeating back history the attending physician is aware of and presumably has already discussed with his patient. This is where the difference of opinion often begins. Consider these recent examples of actual cases.
- Male age 65, PSA on insurance exam 7 ng/ml, free PSA 8%. Attending physician has reported historical PSA readings in the 4-6 ng/ml range, no free PSA done. DRE (digital rectal exam) and ultrasound of prostate within normal limits. The attending physician has decided on a watch and wait approach with his patient while reassuring him. The insurer has declined but would reconsider if the results of a biopsy become available. The attending physician does not regard his patient as uninsurable and has advised his patient not to be concerned.
- Female age 50. Attending physician has done a breast ultrasound based on history of breast lumps. Mother had breast cancer at age 48 but is alive and well at age 81. Ultrasound shows 3 cysts that appear benign but slightly atypical. Follow up in six months is recommended. Patient has been told follow up is routine, nothing to be concerned about. Insurer declines/postpones subject to the repeat ultrasound. Attending physician disagrees with underwriting decision and advises patient insurer is being unreasonable.
- Male age 55. Consults attending physician complaining of chest pain. Only previous history is GERD. Resting ekg shows T wave inversion in leads 2,3 and AVF. No prior ekgs for comparison. No other risk factors. Physician reassures patient and tells him to be in touch if symptoms persist. Insurer declines/postpones subject to a cardiac workup. Does not define what is meant by cardiac workup. Physician advises patient nothing further needs to be done if he feels fine.
- Female age 45. Blood work on insurance exam shows AST 95, ALT 84, GGT 100, Hep. screen negative. No reflex testing done. Client reports on application occasional wine with dinner. The attending physician report is unremarkable. Insurer offers at 200% mortality and sends blood test results to attending physician who repeats tests with similar results and does ultrasound on liver which is normal. Advises patient results are normal for her and insurer’s decision not correct.
Where is the disconnect? Who is correct, the insurance doctor or the attending physician. The answer is they are both correct with respect to how they approach medicine. The clinical practitioner is charged with diagnosis, treatment and reassurance of the patient. If the patient’s condition changes then the clinician can do more tests and consider other forms of treatment. If the patient adheres to his doctor’s advice then he can expect optimum outcomes. It becomes disconcerting, when in reaction to an insurance application, the insurer makes an adverse decision that may not only call into question an interpretation of an individual’s health but his doctor’s management of the patient. Inadvertently the insurer may have placed the attending physician in a defensive position with his patient and in an adversarial role, rather than a supportive role, with the insurer. When this happens it’s natural for the patient to align himself with his physician and view the insurer’s decision as at least suspect.
What then is the role of underwriters and their medical director. Underwriting is the art and science of examining and assessing various risk factors for an individual. Decisions are not made at that point to suggest life expectancy or mortality assumptions specific to that individual. Rather the underwriter’s role is to place that individual in a much larger risk group of people with similar risk factors. Actuarial science can then predict average life expectancies for that much larger risk group. Any individual within the group can over time demonstrate better or worse mortality assumptions. The insurer has no way of knowing at the time of policy issue if their client’s risk factors will improve or deteriorate. It is locked into a contract and does not have the benefit of being able to change the mortality assumptions used, if those assumptions become inadequate based on adverse health changes for the insured. The insured on the other hand can always request the insurer, subject to underwriting, to consider improving the pricing of his contract.
Our examples above suggest various risk factors for those individuals. The underwriting decision in each example is not meant to question how the attending physician is advising and treating the patient. It is not even to suggest for any individual what their specific mortality and life expectancy will be. It is only to say that actuarial studies have predictive value for sufficiently large risk groups with a commonality of risk factors and to assign the individual to the proper risk group.
Often information submitted by the attending physician can seem ambiguous and limited to symptoms and diagnosis, without benefit of accompanying test results which allow interpretation. It seldom includes more favourable information that allows the underwriter to differentiate similar risk factors for one client from another. These would include changes in life style, diet, exercise, compliance with doctor’s orders, etc. This information can improve underwriting decisions by moving the client into a better risk factor group. The application and examination process for insurance does not elicit this more favourable information, rather the questions are designed to find out what’s wrong with an individual. Questions prefaced by “Have you ever had any disease or disorder of….”. Those gaps can and should be filled by the insurance agent but many are reluctant to discuss with their client anything to do with health. The incorrect assumption is that all appropriate information will be provided through the insurance exam and the attending physician’s report. Opportunities for better underwriting decisions are lost because of incomplete information. This is the insurance agent’s opportunity, through better communication with the client, to write a covering letter to the insurance company elaborating on health or other issues, from the client’s perspective.
When disagreement emerges in the communication process between insurance companies and attending physicians, insurance agents look for other means of improving underwriting decisions for their clients. This often results in applications being submitted to different insurance companies in the hope of obtaining a better result. Many times the result is exactly the same after wasting the agent’s time, the client’s time and resources within insurance companies, incurring additional expenses. Better outcomes can be achieved by packaging the case properly for one carrier by providing better information from all involved.
Letters to attending physicians, sent in an attempt to explain reasons for ratings or declines, are usually just a data dump of information, such as findings on an insurance exam, blood work, ekg results, or regurgitation of information submitted by the attending physician. This does not explain how an underwriter thinks or has arrived at a decision. Why then do we expect the physician to support and explain underwriting decisions to the patient? It would be very simple to include a paragraph in those letters defining the underwriting process, such as contained in this article.
Clinical medicine and insurance medicine can and should work together, if as underwriters we communicate better with the client, his physician and the agent.