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2 key medical underwriting trends that could benefit your clients in 2024

When arranging life insurance and income protection for your high-net-worth and ultra-high-net worth clients, it is important to understand how certain pre-existing conditions might affect their premiums.

Clients who have mental health conditions or who have had cancer in their lifetimes may fear that their premiums could be higher.

Fortunately, recent changes to legislation and shifts in cultural attitudes have meant that these particular conditions may not be as costly as clients would imagine.

Read on to learn about two key medical underwriting trends that we expect to see in 2024 and how they could help your clients mitigate the impact of certain pre-existing conditions on their premiums.

The market is beginning to take a more consistent approach to underwriting for mental health conditions

In recent years, society has experienced a widespread shift for the better in how we talk about and approach mental health.

In the past, mental health disorders were less frequently disclosed on life insurance questionnaires, perhaps because consumers felt embarrassed to disclose these conditions. Instead, they were often discovered incidentally in GP reports that may have been requested purely due to the amount of insurance applied for.

Nowadays, though, the stigma is beginning to fade, and many consumers are feeling more confident about discussing their mental health experiences. Consequently, we are seeing more diagnoses of mental health conditions and more accurate disclosures of these diagnoses to insurers.

The next step for insurers is to understand more about the risks that mental health conditions present, and to take a more accurate and consistent approach to them in underwriting terms.

For some conditions the risk is clearer than others, especially considering that many mental health conditions can be either chronic or acute. For example, anxiety and depression can be a temporary diagnosis as a result of a patient’s circumstances (such as a bereavement), or it can be a more chronic situation that may over time also increase the risk of other conditions such as heart disease, or stroke.

More data is becoming available about the risks that certain mental health conditions can present. Underwriters can also now use bespoke calculators that enable them to take multiple factors into account and be more consistent in their approach to mental health conditions.

Over the course of 2024, we hope that underwriting for mental health conditions can continue to become more accurate and consistent. In doing so, consumers can feel confident that the premiums they are paying fairly reflect their circumstances.

The “right to be forgotten” raises some interesting challenges and opportunities for the future of medical underwriting

In several EU markets, including Ireland, consumers who have a medical history of cancer now have a “right to be forgotten” in applications for residential mortgage-related life insurance. This means that, if they have been in remission for seven or more years, they do not need to disclose their cancer diagnosis in their questionnaire.

A positive outcome of the change is that more people will be able to arrange life insurance to cover their mortgage, at a time when many homeowners and first-time buyers face mounting challenges. Rising interest rates and the cost of living crisis can compound for cancer survivors who, up until now, may have found it more difficult to organise life insurance and income protection.

Additionally, it is interesting to consider whether this legislation change could be rolled out to more health conditions in the future.

For example, consumers who have experienced a heart attack may face similar challenges to cancer survivors when it comes to arranging affordable life insurance. If this were to be covered by the right to be forgotten, it could help more people access affordable insurance premiums and support their property purchase.

This somewhat radical change in legislation presents an interesting challenge to accepted underwriting practices. The most pressing issue to consider is who might pay for the added risk on the affected policies.

If individuals do not need to declare this history when taking out life insurance, the risk will not be included in their premiums, but it does not go away simply because it has not been declared.

Most likely, the risk will be subsidised across all consumers, raising premium costs slightly across the board to offset the change.

Of course, there is also an opportunity here for insurers to be more proactive in helping their customers mitigate the health risks associated with a historical cancer diagnosis. Value-added services could help consumers to manage their own health and reduce the risk of recurrence. This might include:

  • Regular medical checks and screening
  • Advice about how to take care of their health
  • Subsidised access to healthcare facilities such as specialised gyms
  • Access to counselling to manage the potential psychological impact of surviving cancer.

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