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SEPTEMBER 29, 2012 - The strategies that insurance companies use to price coverage for new customers is changing during the national insurance reform transition period. The intent is to attract healthy, financially stable applicants and avoid taking applicants who but insurance only because they expect to incur medical expenses in the near future. UnitedHealthOne, a national marketer of individual medical insurance issued by Golden Rule Insurance Company was among the first carriers to announce a change to the formula it uses to prices insurance coverage for individual applicants. Earlier this year the carrier began considering the new coverage based on whether an applicant had prior insurance coverage. Since then, other insurance carriers have adapted similar strategies. Assurant Health previously tested this underwriting method in 1997 but later abandoned the practice.
An applicant who has maintained continuous prior coverage may be a lower risk of high utilization than a person who suddenly applies for insurance after a long gap in coverage, according to a sales agent for HCC Insurance Group.
Some international medical insurance companies have always considered prior coverage in the underwriting process. Worldwide major medical insurance plans underwritten by Lloyds of London, for example, considers prior coverage on each new application.
Beginning January 2014, all U.S. insurance companies are expected to eliminate pricing differences between classes of applicants. Until then we expect to see insurance carriers try new approached to attract healthy, financially stable and responsible customers and minimize the chance of attracting unhealthy or high risk applicants.
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