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A health insurance underwriter is a person employed or contracted by an insurer to assess applications for insurance. This assessment determines first whether to cover the person at all, and second what premium to charge if the insurer does offer coverage. The assessment is based on both the demographic details of the applicant and his or her medical history.
The exact procedures followed by a health insurance underwriter in deciding on coverage and premiums can and do vary from insurer to insurer. In the US, depending on the state, the procedure may have to be submitted to state officials. For example, in California, the state government compiles details of procedures and then publishes lists of medical conditions for which no insurer offers coverage, and conditions for which some but not all insurers offer coverage.
The work of a health insurance underwriter almost always involves computer software. This software takes the data provided by an applicant, looks at each individual factor, then calculates the likelihood of a claim being made. These calculations are based on historical data about past claims made by customers. Both the software and the underwriter need to consider not only the likelihood of a claim, but also the likely costs of a particular claim. For example, a professional skateboarder assessed as having a 35 percent chance of breaking an ankle in the forthcoming year is likely a more attractive customer to an insurer than a smoker assessed as having a 5 percent chance of contracting cancer: The latter may be much less likely to happen, but the cost of treatment could be considerably higher.
Whether the work of a health insurance underwriter is a one-off task depends on the prevailing jurisdiction, which can include both state and federal law in the US. The general practice is that a policy is guaranteed renewable, meaning the insured person can automatically renew the policy each year simply by keeping up payments, rather than requiring reassessment, which could potentially result in higher premiums if the insured’s health has worsened. With a guaranteed renewable policy, the initial premium calculation has to take long-term risks into account, even in somebody who is currently in perfect health.
The work of a health insurance underwriter is not necessarily restricted to health insurance. The same examination of data can also contribute towards calculating life insurance as health is inherently the major factor in somebody's life expectancy. The data can also be used for critical illness coverage, which covers costs such as mortgage payments if somebody is temporarily or permanently unable to work because of illness.