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Q: Group life and health underwriting ( Answered 4 out of 5 stars,   0 Comments )
Subject: Group life and health underwriting
Category: Business and Money > Finance
Asked by: rick35-ga
List Price: $10.00
Posted: 16 Aug 2002 10:14 PDT
Expires: 15 Sep 2002 10:14 PDT
Question ID: 55305
I just started a new job as a recruiter.  My job is to find group life
and health underwriters for different companies. I have no real help
in getting started.  When an employers says to me "I am looking for a
large group medical
underwriter" what products are they refering to?  Are they meaning
group life, group disability, or group hmo, ppo?  Can it mean all of
these things?  What is a group medical underwriter underwriting and
what products would they generally underwrite?
Subject: Re: Group life and health underwriting
Answered By: angy-ga on 18 Aug 2002 00:10 PDT
Rated:4 out of 5 stars
Hi, rick35 !

Looks like you've been thrown in the deep end !

As a general comment, the first thing I'd do is look up the potential
employer to see what areas of insurance they specialised in - that
should give you a guide as to what kind of person they are seeking.
And don't be afraid to ask people to clarify what they mean or to give
you more detail - usually they won't think you're stupid - just
conscientious. But here is some information that may help you
understand what they are looking for, and what qualifications you
should be requiring from your candidates.

The Occupational Outlook Handbook by the Bureau of Labor Statistics,
an agency within the U.S. Department of Labor.

gives an excellent rundown on the work of an underwriter.

...."With the aid of computers, underwriters analyze information in
insurance applications to determine if a risk is acceptable and will
not result in a loss. Applications are often supplemented with reports
from loss-control consultants, medical reports, data vendors, and
actuarial studies. Underwriters then must decide whether to issue the
policy and the appropriate premium to charge. In making this
determination, underwriters serve as the main link between the
insurance carrier and the insurance agent. "

"Most underwriters specialize in one of three major categories of
insurance—life, health, or property and casualty. Life and health
insurance underwriters may further specialize in group or individual
policies. The increased complexity of insurance plans and attention to
the "bottom line" is changing the nature of underwriting. In the past,
insurance agents acting as underwriters, particularly in the life and
health fields, could accept or reject applications. Now this
underwriting role is done mostly by full-time underwriters in the home
or field office of the insurance company. "

"An increasing proportion of insurance sales, particularly in life and
health insurance, is being made through group contracts. A standard
group policy insures everyone in a specified group through a single
contract at a standard premium rate. The group underwriter analyzes
the overall composition of the group to assure that the total risk is
not excessive. "

Examples of group policies would be those covering particular sporting
associations for injuries, or those offered to parents of
schoolchildren to cover playground accidents. A large group would be -
say - a nation wide association of netball clubs, involving many
members of all ages. Or it might cover industrial health related risks
for an entire industry and perhaps be arranged through the labor
union. Or an independent retirees association might negotiate a policy
to cover its members.

A small group may be - say - 30 empoyees all working for one firm.

Cal Health "California's Health Insurance Specialist"

explain it like this:

"Underwriting refers to the process of health qualification in order
to be approved for health insurance by a carrier. A major distinction
with Small Group is that you are required to qualify in terms of
health to be approved for an Individual plan. There is not a physical
involved but there are roughly 30 health questions on the application.

For an individual policy, a medical is often required, and for large
groups there are so many people involved that the insurance may well
be arranged by and paid for through the club or association. As the
population ages, there is expected to be more need for specialist
underwriters in the health area.

When recruiting, qualifications that you will need to look for in a
medical underwriter are a college degree and computer skills, plus a
year or more general experience before specialising in the health

The Insurance Institute of America offers a program called
"Introduction to Underwriting" for beginning underwriters, and various
speciality designations in commercial underwriting.

The American College, 270 South Bryn Mawr Ave., Bryn Mawr, PA,

 "offers the Chartered Life Underwriter (CLU) designation and the
Registered Health Underwriter (RHU) designation for all life and
health insurance professionals. "

gives details of the qualification:

"The Registered Health Underwriter (RHU) designation is the undisputed
professional credential for persons involved in the sale and service
of health insurance. Individuals earning the RHU designation
demonstrate a high level of knowledge about the principles and
practices governing the health insurance business, including medical
expense insurance, disability income insurance, and long-term care

Click on "read more" for more details:

"The Registered Health Underwriter (RHU) designation demonstrates that
the student has successfully completed a rigorous three-course
program, met experience requirements, maintains ethical standards, and
has agreed to comply with The American College's Code of Ethics and
Procedures and recertification/continuing education requirements. The
focus of this designation is to prepare professionals to advise
clients on their health insurance needs."

The next qualification on is the REBC - Registered Employee Benefits
Consultant, so any potential recruit holding this is likely to fit
your bill, too.

Information on careers in the health insurance field can be obtained
Health Insurance Association of America, 555 13th St. NW., Suite 600
East, Washington, DC 20004-1109. Internet:

They also offer a range of courses, details of which are in an almost
unreadable PDF file, printed in pale grey on pink . They have a Health
Insurance Associate (HIA) designation.

A knowledge of specialist software designed to speed up the decision
making process would obviously be an advantage. One such is MPlus for
Aion users by Computer Associates:

"...the Aion service group
has also used its extensive experience in the
area of medical underwriting to develop a
consulting framework? The framework is called
MPLUS, Medical Policy Underwriting System.

The MPLUS framework allows the Aion consulting
group to implement an automated underwriting
system very rapidly compared with an
equivalent custom developed system.

Designed specifically for Individual and Group
medical policy underwriting, MPLUS allows an
underwriter to automate the medical underwriting
process ...."

is a web site where insurance specialists post their resumes. You
might like to browse there to see who is in the market.

Depending on experience underwriters expect to earn:

" Median annual earnings in the industries employing the largest
number of insurance underwriters in 2000 were:
Fire, marine, and casualty insurance 	$44,360 	
Life insurance 	42,900 	
Insurance agents, brokers, and service 	42,140 	
Medical service and health insurance 	38,060" 
(Occupational Outlook Handbook - op.cit.)

An employer offering well below the median is likely to be looking for
a less experienced underwriter; and a senior person is likely to
expect to earn above the median.

I hope this helps give you a start.

Request for Answer Clarification by rick35-ga on 20 Aug 2002 05:50 PDT
I appreciate your answer to this questions.  My actual question is
more direct.  If a company is looking for a medial underwriter does
that mean an underwriter that has experience underwriting HMO or PPO
group policies or can it mean group life and disability?  This is
where I get confused.  I know that some companies such as Cigna offer
group life and disability policies as well as group health policies. 
I have gotten confused when I have asked what kind of underwriter they
are looking for and they say "must have medical underwriting
experience".  Perhaps you answered this and I just missed it.

Clarification of Answer by angy-ga on 20 Aug 2002 20:41 PDT
Hi, Rick 

I'm out for a few hours (daytime Australia) - I'll get back to you as soon as I can.

Clarification of Answer by angy-ga on 21 Aug 2002 23:52 PDT
Hi, rick35 !

The best run down on the underwriting profession in the medical field
that i have been able to find is:

A Review of Health Insurance Underwriting Guidelines
Used in Texas Summary Findings - by the Office of Public Insurance

"When an individual or small business applies for health insurance,
the insurance company carefully scrutinizes the applicant's medical
history and other factors to decide whether to offer coverage. This
process is known as underwriting. Each insurance company develops its
own underwriting guidelines to outline the characteristics the company
considers desirable and those that make an applicant ineligible for

Insurance companies consider underwriting guidelines to be
confidential trade secrets. Consumers usually cannot find out what
criteria a company used in deciding whether to offer or deny

It's possibly this "trade secret" attitude that you are running up
against, when you are seeking clarification as to what precisely an
client requires from apotential recruit.

The article goe on to analyse the different approaches to underwriting
used in both the individual and group markets.

On medical underwriting they say:

" Medical Underwriting

All companies selling individual major medical insurance policies
examine the medical history of every applicant, using questions on the
application, follow-up phone calls, Medical Information Bureau
reports, paramedical exams, and blood and urine samples.

Of thirty-two individual major medical insurers surveyed, six require
blood and urine samples from every applicant, nine review MIB reports
on every applicant and eight phone each applicant to collect
additional information. Although most companies do not order attending
physician statements on all applicants, seven companies always order a
physician statement on older applicants (over age 50-55.)

Medical underwriting manuals are extensive and include detailed
discussions of known illness for each of the body's systems
(circulatory, nervous, reproductive, etc.). Because many manuals
discuss hundreds of potential diagnoses, OPIC selected only a subset
of conditions for evaluation: disabilities as defined under
regulations implementing the Americans with Disabilities Act;
pregnancy; mild to moderate asthma; fibrocystic breast changes;
adjustment disorder; and the major addictions (alcohol and tobacco).
The statistics listed for each condition should be considered a
conservative assessment, because some companies provided full and
detailed medical manuals, while others provided only summary
information that could not be analyzed at this level of detail."

The article goes on to analyse insurance companies' approaches to
these various disabilities and diseases.

Part II of the article is at:

Talking specifically about Texas, they say:

"Group medical underwriting
If a small company applies for health insurance, the insurer usually
either asks each employee to answer medical questions or asks the
employer general questions about the employees. Medical under-writing
of each covered person becomes less stringent as the group size grows.
While every small group insurer underwrites individuals in a group,
only 25% of large group insurers ask about the medical conditions of
each individual.

In the small group market, if one employee has one of many serious
conditions, underwriters frequently decline the entire group (see the
chart on page seven). Persons with disabilities in large groups are
much more likely to be offered major medical insurance. Fewer than 20%
of the insurers surveyed decline coverage to a person with HIV if that
person is part of an otherwise qualified large group. This is because
large groups can generate sufficient premiums to offset potential
losses from serious medical conditions.

Companies that insure small and medium employers often assign a point
value to each medical condition present in the group, then divide the
total points by the number of employees. If the per person point value
is too high, the insurer declines the group. If it is high but
insurable, the company will add a surcharge to the premium.

Companies commonly rely on historical claims experience if the
employer has purchased health insurance in the past. Sixty-seven
percent of large group insurers, 59% of medium group insurers and 42%
of small group insurers require the employer to provide previous
claims experience if available. Nearly as many require disclosure of
prior rates and renewal rates. For companies that base their decision
entirely on this information, an individual's diagnosis will not
affect the insurability of the group unless there have been
substantial claims.
Many companies that rely on claims experience do underwrite late
enrollees on an individual basis. Insurance companies also use the
claims history and the prior carrier's rates to determine the new rate
the group will pay. Companies use both these strategies-averaging a
point value for health conditions across the group and/or looking at
claims experience-to develop a price close to the predicted claims
(plus administration costs and profit)."

So I would say from that that medical underwriters certainly deal with
HMOs and PPOs and probably the other areas as well.

I assume as a recruiter your job entails short listing candidates for
the employer to interview. Why not look for candidates with a range of
experience from broad to specialised and let them do the final
selection? Clearly from the article above each company will need to be
prepared to train their choice of recruit in the company policies

Good luck in your new career.
rick35-ga rated this answer:4 out of 5 stars
Very good answer I am not sure that it gave me the specific answer I
was looking for.  It could be I am asking a poor question.

There are no comments at this time.

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