The Case Against Paper-Based Risk Assessment
Article by Tia Goss Sawhney
Abstract:
The author asserts that there is a quantum leap with respect to the quality, consistency, and the speed of life and health insurance industry underwriting decisions if the industry would 1) eliminate paper-based risk assessment questions and 2) dramatically redesign the teleinterview and internet-based data collection processes so that they collect and use primarily databased, structured data.
Background:
The largest sections of individual life, health, disability, long-term care, and sometimes accident insurance applications are devoted to eliciting information from the applicant in order to assess the applicant’s risk profile – aka the underwriting questions. These questions ask about medical history and a number of other risk parameters, such as smoking habits, driving history, and occupation.
Historically the risk assessment information has been collected via pre-printed paper forms. Although the reliance on pre-printed paper forms has been supplanted somewhat by teleinterviews (where the information is entered directly into a computer) and on-line applications, most teleinterviews and on-line applications are only mimicking paper-based data collection methods and rely heavily on free text responses.
On-line applications, in fact, often must mimic paper-based data collection methods as both paper and internet applications are often offered simultaneously, with the end result of an internet application being a print-out that looks exactly like the pre-printed paper application. The internet application in this situation should be thought of as “virtual paper”.
Status:
This article was published in the November 2008 "Software Supplement" of Contingencies.