Risk assessment
There is a tendency to reduce health questions in application forms and Sales forces often demand or support this development. To balance risks and underwriting requirements automated underwriting systems may be a solution.
Such systems consist of a set of specific drill down questions related to disclosed heath conditions. They are available for all kinds of personal insurance.
The higher the risk the more detailed the underwriting process and this statement is valid for systems and manual processes.
In cooperation with Triangulum-Ag, VMS Hannover has developed numerous system solutions for different lines of business and integration depths. In specific solutions, the 100% threshold for final processing at the point of sale was even reached (Opti 5, Barmenia, adcuri). The first “second pass system” with automated processing of incoming medical reports was also put into production.
Efficient systems generate decisions in one step based on the same set of questions for all products. Even those not applied for but finally without extra rating.
The number of applications which are subject to automated underwriting for systems at point of sale depend on complexity of a case. Complexity could be classified in stages. The simplest level involves application forms without any disclosed medical condition. The highest level could be described as automated second pass system. Several system solutions are possible in between the two extreme levels. These are imaged as complexity pyramid.
(*) The complexity pyramid was first introduced in presentations on automated underwriting at Hannover Re’s POS by Dr. Sittaro in 2002 and has been further developed since then. The latest version is from 2018.
Benefit check
Main focus on the following products
One focus of claims service from VMS is liability in personal injury or accident insurance. In accident insurance, this includes FDI (functional disability insurance) benefit cases. Several thousand cases have been processed here in recent years.
A large part of the personal injury claims in liability insurance and accident insurance can be processed automatically. Here, VMS, in cooperation with Triangulum AG, has operational systems that can decision even complex cases.
Product development
Especially in the area of extended personal accident insurance, VMS has implemented numerous product solutions and further developments of products in recent years. These include:
Functional disability is an insurance cover which is based on degree of functional impairment due to disease or accident. The ability to perform a certain occupation is not the leading issue of this insurance. For almost all parts of the body – regardless of whether relating to musculoskeletal or organ functions – medical classification or staging levels determine the degree of functional impairment. These medical stages are the basis for definition of claims. Claims assessment itself becomes simple and fast. The insurance covers approximately 80 % of an established insurance cover for TPD own occupation.
Differences Occupational Disability to Functional Disability
Individual accident insurance generates accident products that are fully customized to a customer’s wishes. Factors such as type of continental scale, accelerated benefit , specific riders and additional coverage inclusions are individually combined to form a personal accident policy. This is only possible if all coverage elements are actuarially calculated. In this area, we cooperate closely with the Institute of Finance and Actuarial Science in Ulm.
Personal accident insurance might be considered as an unexciting insurance product but as soon as offered to the age group 70 plus it would meet a huge market. Accidents in that age group are a leading cause of advanced disability, mobility impairment and cause of long term care. Incidence rates are high.
In cooperation with our assistance partner several solutions were developed and introduced in the past years.
Future risks Accident insurance
Invoice auditing and medical necessity testing in private health insurance
VMS works very closely with Medexo GmbH in the auditing of private health insurance statements and the necessity testing of medical measures.
Medexo has more than 80 proven medical specialists from almost all areas of expertise, enabling it to carry out necessity audits at the highest level.
In 2018, the MDK Nordrhein recovered around 307 million euros from hospitals by reviewing conspicuous invoices. Extrapolated to the federal territory, this means: The approximately 2,000 hospitals could have overbilled health insurers by up to three billion euros last year. Invoice audits therefore mean cash money here.
(Sources: Trade Journal: False billing by hospitals | PWC: Billing fraud often goes undetected – in german)
