Early-warning system

Early claims have always affected actuaries’ assumptions. Swiss Re is encouraging life companies to ensure that their impact is fully analysed.

Any claim within two years of inception is classified as an early claim. Understanding any trends associated with these claims can help insurers price more effectively and provide better products for the consumer. With this in mind, Swiss Re recently analysed 330 early claims across different product lines.

According to Alan Dott, a senior UK Life & Health underwriter at Swiss Re: “We discovered a range of trends in early claims. These include a relatively high rate of non-disclosure, a high level of claims due to alcohol and drugs, and many claims arising on policies with high sums assured. We also saw a lot of suicide claims, which amounted to 13% of those surveyed – although a quarter of these were not paid due to suicide exclusions.”

Seeking solutions

To get a better picture of the impact of early claims on the underwriting process, Swiss Re hopes to carry out further analysis in conjunction with primary insurers.

Alan believes that a reinsurer’s expertise can add value in facilitating this process: “We’ve already worked with one major client to look into the firm’s early claims experience and action has been taken to address the findings,” he says. “Reviewing the application process as a result of this type of analysis is one area where the associated risks can be reduced.

“These analyses are proving great value and are leading to concrete improvements being made. We would now like to work with more of our clients to identify any adverse trends and help reduce their likelihood of reoccurring.”

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