The art and science of underwriting: Analysis of the whole picture

Insurance Insights

April 24, 2017

Contributed by: Dennis Farronato | Manager, Underwriting, Association & Affinity Business, Sun Life Assurance Company of Canada

Underwriting is the analysis of medical, non-medical and financial information about a member to determine the effect these factors statistically have on mortality or morbidity. This is also called risk classification.

No one can accurately predict how long any particular individual will live or when (and if) they will develop health conditions. However, morbidity and mortality risks can be assessed by analysis of comparative outcomes of groups with similar risk factors. Underwriters maintain a global perspective, continuously monitoring global medical trends to help them accurately address diverse medical issues in populations of applicants.

Underwriters assess an insurance applicant’s medical history and health conditions to determine morbidity and mortality risks. They rely upon the applicant’s self-report and the doctor’s report (if required) to help them accurately assess the risk. In contrast to clinical medicine where a physician has several opportunities to revise their clinical analyses, underwriters have only one opportunity to assess medical risk, often projecting risk 30 years or more into the future.

Analysis of comorbidities is a very important aspect of underwriting the whole picture and it is of vital interest to insurers. Insurance applicants (who are also patients) can have multiple medical conditions including obesity, diabetes, cardiac disease and cancer. These concurrent conditions can interact synergistically and become important factors in predicting insurance risk. Underwriters analyze the risk as a whole, rather than addressing each factor individually. The underwriter exercises sound judgement by looking at the big picture to effectively stratify risk. Underwriters work in teams, collaborating with other professionals including insurance physicians (from a diverse range of specialists), actuaries and business experts.

Comorbidities are present when “one plus one” no longer equals two. The analysis of comorbidities which complicate the primary condition can be complex and challenging. For risk selection purposes, a nuanced analysis of the full range of severity of comorbidities is considered to determine insurability.

These are some examples illustrating the underwriters’ analysis of Type 2 diabetes and comorbidities.

  • A person with Type 2 diabetes, chronic obstructive pulmonary disease and asthma may have more difficulty with diabetic control than diabetes without these comorbidities. Treatment with Prednisone adds potential medical risk, including making diabetic control more difficult.
  • A person with inflammatory bowel disease who has insufficient dietary intake due to symptoms or has to undergo surgery, will have subopitmal diabetic control under these circumstances.
  • Rheumatologic conditions treated with Prednisone will worsen diabetic control. Increased cardiovascular risks are associated with some rheumatological conditions, which add to the cardiovascular risk associated with diabetes.
  • Chronic kidney disease (CKD) in a person who also has diabetes adds to the overall morbidity and mortality risks. The underwriter must consider kidney function, severity of CKD and additional relevant comorbidities such as hypertension control.

Additionally, a person might have various multiple symptoms from two or more conditions that may not appear to be related at first glance. Multiple physicians involved in medical care add to complexity as each physician may analyze only part of the overall medical picture. The family physician has a key role in bringing the pieces together but may not have all the medical records and test results from specialists. Diagnosis or treatment may be delayed, which may affect the prognosis. This delay may increase the risk for disability or mortality as the symptoms may have unduly progressed.

Patient compliance is relevant as some patients have suboptimal compliance with medical advice. Psychiatric comorbidities such as depression, which is highly prevalent, impact compliance, response to and recovery from disease.

Underwriters must assess the whole picture, keeping in mind that a person with certain conditions such as diabetes may not recover as quickly or respond to treatment as well as a person without those conditions. Also, underwriters recognize that within the group of applicants who have a medical condition such as Type 2 diabetes, some applicants have much better outcomes than others. Underwriters utilize a balanced approach, weighing favorable and unfavorable features for each medical situation.

Comorbidities are complex issues and their true relationship to a disorder may be difficult to disentangle, since comorbidities could represent a precursor risk factor, consequence and/or coincidence, in varying combinations. The underwriter must follow established risk classification principles that differentiate fairly on the basis of sound actuarial principles and/or reasonable anticipated mortality or morbidity experience, while providing a nuanced analysis of each unique case.

Underwriting risk classification represents a unique application of business practice and science. It is intended to ensure fair business pricing in determining whether a risk can be accepted within the association’s pricing parameters. It uses sound actuarial principles and is based on reasonably anticipated experience. Underwriters rely on sound underwriting judgment to arrive at the fairest and most reliable price when assessing risk. For example, it is known that obesity, high blood pressure, diabetes or renal disease are risk factors that have a greater impact on adverse mortality together than individually.

The underwriter has a very important role in ensuring the whole picture is assessed and to accurately determine a member’s insurability. The underwriter must review each case based on its own merit, always keeping in mind the combination of all factors and their impact on each other. There are endless examples of the various types of comorbidities that have an impact on mortality or morbidity; each must be assessed carefully.

The client’s physician has an important role in partnership with the underwriter. The information the physician provides has tremendous value to inform the underwriter’s nuanced, accurate risk assessment. Our common goal is to help the patient. Underwriters’ daily work helps people acquire the financial protection they need for themselves and their families when unanticipated illness or death occurs. Insurance coverage provides a promise that is potentially life-altering: to deliver support at the time of greatest need in our lives.


The Alberta Medical Association stands as an advocate for its physician members, providing leadership & support for their role in the provision of quality health care.