Underwriting 2012 Myths and Realities Hank George FALU

Underwriting 2012 Myths and Realities Hank George, FALU, CLU, FLMI

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What did we learn from the 2011 Underwriting Requirements Survey?

• 36% of companies get an APS on 31% or more of their life applications • 34% never get an MD exam • 81% screen with PSA; 98% of them require a PSA at age 75+ and 93% do likewise at ages 85+ • 68% reflex to a Free-PSA test on some basis

POP QUIZ How would you assess a PSA test result if the applicant was taking finasteride for BPH?

You would have to DOUBLE IT to accurately reflect the applicant’s TRUE PSA level

• 50% of companies get fewer resting ECGs than they did 5 years ago • 35% do no exercise ECGs • 58% doing them don’t order one at age 55 until the face amount exceeds $5, 000 • 80% say they should never be ordered over age 70 • Only 12% expect them to be around in 5 years • Only 8% screen with chest x-rays on any basis

• 43% screen with Hb. A 1 -c • 39% screen for microalbumin • 77% use pharmacy profiles; 21% say they intend to • 87% screen with MVRs • 29% use court/criminal records • 62% do teleinterviews with drilldowns… but only 30% require producers to use them on all cases!

• 15% screen for HCV antibodies and 82% order this test reflexively • 15% do it based on ISOLATED GGT elevation…but only 5% do so when the insured as tattoos • 83% use alcohol markers • 74% order CDT when there is an isolated elevation of GGT…but only 18% get CDT when MCV is elevated on an APS

What are the 3 ABSOLUTE INDICATIONS for an alcohol marker? • • • History of drunk driving History of alcohol use disorder Elevated MCV in the absence of other evidence of alcohol abuse

42% use NT-pro. BNP The other 58% are making a foolish mistake!

8% screen with CEA 2% are thinking about it Hopefully, the other 90% have more sense!

POP QUIZ Which cognitive screening test that insurers use is essentially garbage?

CLOCK DRAWING • Almost impossible to consistently interpret accurately according to experts… and we do not use experts to interpret them • Useless for detecting mild cognitive impairment… which is far more prevalent in elder applicants

13% of companies screen for marijuana use

The Inconvenient Truth Based on a review of the global literature, recreational marijuana use by adults…

• Confers no COPD risk • Is not linked to lung or head/neck carcinoma • Is not an independent CV risk factor • Has no increased risk of psychiatric impairment • Cannot per se induce psychosis • Lowered risk of car crashes in some studies; lower overall risk than in cigarette smokers • Has no excess mortality in any credible study And, Cannabis is an effective Rx in over 10 disorders

It is grossly inappropriate to charge “tobacco/nicotine user” rates to marijuana users who do not also smoke tobacco There is no credible basis for arbitrarily denying “preferred” to adults self-reporting marijuana use on an occasional basis

POP QUIZ Which 3 criteria in a “thin” melanoma collectively make it a substantially worse risk than currently reflected in underwriting guidelines?

• ≥. 075 mm measured thickness • Level III or IV invasion or horizontal growth pattern • ≥ 85% regression

Why will most life insurers build or buy an underwriting engine?

Because it cost-effectively expedites the approval of “clean cases”… such that underwriters can focus entirely on those cases that require their expertise

What is the #1 problem insurers say they encounter after purchasing an underwriting engine?

Writing “rule sets” to adapt the engine to their underwriting practices

FACT Underwriting engines pose no significant occupational risk to underwriters!

In the 2011 Underwriting Engine Survey • “Reducing the workload on underwriters” ranked among the top 4 motives for deploying an engine • “Reducing underwriting staff” ranked (dead) last among their motives

POP QUIZ What is BUTT ROCKET?

A street term for methamphetamine… specifically alluding to its route of administration!

Underwriting-Related Predictive Models • Based on lab test results and paramedical measurements • Based on personal purchase records

What is fundamentally wrong with using personal purchase records in underwriting?

#1 – It is 100% inference-based #2 – It will ignite tremendous justified angst amongst producers, proposed insureds, their physicians and regulators In the 2011 Requirements Survey, the substantial majority of chief underwriters were opposed to doing personal purchase record predictive modeling for a variety of excellent reasons

What is the huge paradigm shift underwriters must embrace when using predictive scoring based on lab tests and paramedical measurements?

“All normal tests are normal, but some normal tests are less normal than other normal tests”

All of the following are affected • • • • High normal GGT Below normal and high normal ALT Below normal and low normal bilirubin High normal alkaline phosphatase Below normal and high normal cholesterol, HDL-C and triglycerides Low normal serum albumin High normal creatinine Low BUN High normal glucose High normal albuminuria Prehypertension Low blood pressure in elders Underweight Overweight at BMI 27. 5 – 29. 9 High normal resting heart rate

Unresolved Questions • How will PRODUCERS react when a client qualifies for preferred based on published practices…but has a high (unfavorable) risk score? • How will REINSURERS respond when an applicant does not qualify for preferred based on your agreedupon criteria…but has a low (favorable) risk score? • How will ATTENDING PHYSICIANS react when their patients are denied preferred coverage or rated based on “normal” tests and measurements?

POP QUIZ What mechanism has now been shown to reduce or prevent detection of benzoylecgonine in bodily fluids?

According to Venkatratnam et al at John Jay College of Criminal Justice in New York City, ZINC SULFATE “can be an effective adulterant” preventing detection of cocaine use Journal of Analytical Toxicology. 35(August/September, 2011): 333

Thank you for your attention LIVE LONG AND PROSPER! Peace, Hank