Expert view: Mercer’s Mike Naulls on a two-tier approach to medical underwriting
Insurers on the market can now use health data to get a more accurate, and nuanced, view of an individual’s health, which can lead to better decisions around underwriting, fairer pricing and more tailored pricing. That also means that decisions around underwriting can be made much more quickly.
But the flip side of having more accurate data is that, arguably, the identification of risks becomes far easier. That means that in some respects, insurers must then tread that line around what is going to be ethically right but at the same time minimise risk. They could then manage their risk by using data to identify what could potentially be a problem claim or a problem condition further down the line.
Some health insurance providers may say explicitly that they are collecting data and that if you use their services, you effectively consent to that upfront.
This could lead to a two-tier approach to underwriting and pricing, where those who are willing to share health data are perhaps priced differently because there’s more evidence about the claimant, allowing better risk analysis to be made.
That’s not ideal. But it could be a potential trend further down the line, and, ultimately, these issues need to be resolved. However, we are at a very promising stage of medical advancement.
