Insurers dread cryptic risk. Even the word “cryptic” conjures the images of an old grave or lost symbols that cannot be translated in today’s language. In the insurance sense, it pertains to risks that are not easily detected.
Those undetected risks can dearly cost insurance companies. Insurers can expect accidents to happen and claims to be paid fairly early during a policy. But what about underlying medical conditions that are not properly rated?
ExamOne recently hosted 65 insurance industry representatives to learn more about Risk IQ and how this tool can improve the accuracy of risk assessment, while shortening underwriting time. Using case studies for different insurance applicants, Risk IQ showed instances where different data highlighted cryptic risk. On the other hand, it showed some instances where people should have received coverage or a better rating – “the hidden healthy.”
As assessed by Risk IQ, more than 30 percent of applicants currently excluded from preferred pools actually present lower mortality risks than the majority of preferred-qualified individuals. Conversely, more than 25 percent of preferred applicants actually exhibit higher mortality risk than most non-preferred individuals.
The March 2011 edition of On The Risk: The Journal of the Academy of Life Underwriting (subscription required) published research that examines the approach that Risk IQ uses in gauging mortality risk.