Blood...Without Blood: A Novel Simplified Underwriting Asset
The success of simplified life products in the marketplace will be greatly impacted by how the premium rates match up against fully underwritten products.
Premium rates are tied to how the product is underwritten, because the less you know about the risk the more you have to charge to cover it.
Simplified underwriting is also disproportionately vulnerable to antiselection for a number of reasons (fewer risk questions, no agent/customer interaction, no HIV and cotinine screening, rare-to-nil APS ordering and so on).
The cornerstone of simplified life risk assessment is the use of rapid-access underwriting resources. Two essential components of full underwriting – paramedical and lab tests – are off the table. This leaves a short list of viable options:
- Motor vehicle records
- Pharmacy records
- Electronic identify checks, court records, etc.
- Drilldown amplification of YES answers to application question via telephone interview or online
Now, there is another rapid access resource.
Blood…without blood, so to speak.
Just one service provider offers this at present but others could do so going forward.
What does "blood…without blood" mean?
It means having test results without collecting fluid specimens.
Millions of laboratory tests are done every year for healthcare purposes. The only time we know their results is when we access applicants' medical records. Most carriers get medical records on somewhere between < 5% and 0% of simplified cases.
With this resource, we have instant access to bodily fluid test results over the preceding 36 months, without having specimens gathered and analyzed.
What are the advantages of having such access?
Just like being privy to medications the applicant takes, knowing what lab tests were done in the recent past, as well as the results of those tests, confers substantial protective value.
It empowers us to do a more thorough job assessing risks because:
- We will identify individuals who fail to disclose high-risk impairments.
- We will clarify the implications of ambiguously acknowledged medical histories such as anemia, hepatitis, acute pancreatitis, chest pain, etc. et al.
- We will be able to approve good risks we might otherwise have declined.
- We will be able to decline bad risks we might otherwise have insured.
What are the two distinct questions that must be addressed whenever an applicant has had a lab test?
- Why was it done?
- What were the results?
The first question is highly significant when clinical lab test histories are reviewed in a vacuum (that is, without the MD report).
For example, consider the 20 year-old male who reports a family history of thyroid cancer diagnosed when his father was 35 years old…and the lab report shows that a calcitonin test was done.
The fact that the test was negative does not make this history insignificant by any means.
Calcitonin is used to identify those at risk for hereditary medullary carcinoma (a malignancy with considerable excess mortality). Some offspring at high risk will have a negative calcitonin test at age 20 and a positive test a few years later, with all the attendant implications.
Therefore, even if this test was normal at age 20, we may be disposed to defer offering insurance until this applicant is older…and only then if interim calcitonin tests are also normal.
There are many tests where the reason for its use is highly significant regardless of whether or not it was normal. We will see these scenarios often with clinical lab test histories.
Will these reports help underwriters sort out ambiguous medical histories?
How often do we see "hepatitis 3 years ago, no treatment needed"?
For the most part, this comes down to one of 3 possibilities: hepatitis A, B or C.
Hepatitis A is not a problem.
A substantial portion of acute hepatitis B patients recover completely. Others become asymptomatic carriers (which requires that their liver enzymes be consistently normal) and the rest develop chronic disease. Carriers are not treated and many with chronic hepatitis B are also untreated for a variety of reasons.
Acute hepatitis C is often asymptomatic and usually identified by screening high risk individuals, those with elevated ALT, etc. At least half are not treated, again for a variety of reasons (including mild depression and even just an unwillingness to make a commitment to alcohol abstention).
Therefore, the vague applicant history cited above would be accurate – albeit incomplete – for many B and C cases despite their mortality implications.
A lab test history will tell us what we need to know for simplified underwriting: results of antibody/antigen tests plus liver and related test results at the time of diagnosis and over the interim.
Will lab test histories identify high-risk cases even if the doctor tells the applicant he is perfectly healthy?
Absolutely…and this is one of the huge hidden payoffs.
For example, consider the 50 year-old male who had a routine physical exam and says he was told that everything was "A-OK."
The complete blood count (CBC) – almost ritually done in this context – showed a mean corpuscular volume (MCV) of 106 (normal range 80-100 fL).
Because the applicant was not anemic (normal hemoglobin), the physician ignored this "isolated" finding.
What do we know about elevated MCV in non-anemic middle-aged males?
It is a highly specific marker for heavy drinking.
Suppose that on his application, this individual also:
- Admits to taking citalopram for "anxiety" 2 years ago
- Acknowledged 2 emergency department visits in the last 18 months prompted by traumatic injuries
- Had 3 moving violations over the last 5 years on his driving record
Is the elevated MCV the tipping point?
Consider the 45 year-old female with an episode of chest pain 18 months that she was told "was not caused by a heart problem."
In this case, the obligate CBC had one abnormal finding, a red blood cell distribution width (RDW) of 17% (normal range 11.5%-14.5%).
Rest assured, her doctor will ignore this because she is not anemic.
However, an RDW elevation of this magnitude is associated with extra mortality to the extent that it precludes issuing coverage in an aggregate "standard" class priced for risks with 0-50 debits.
Will lab test records also allow us to approve cases that we might otherwise decline?
Absolutely and there are myriad scenarios where this will occur.
Consider a 45 year-old mildly obese male who tells us his doctor said he had "abnormal liver tests" and reassured him they were "not important."
We know that clinicians may dismiss liver test findings associated with extra mortality because their perspective and ours often differ.
The lab history report reveals a fasting blood chemistry profile with 2 abnormal findings:
- ALT is 50 (normal range 0-45 IU)
- Total bilirubin is 1.8 (normal range 0.2-1.1 mg/dL) and nearly all of this accounted for by the indirect (unconjugated) fraction
The CBC is normal.
What inferences can we make based on these findings?
- Minimally elevated ALT in an obese male is most likely due to some degree of nonalcoholic fatty liver disease and the fact that the AST and platelet count were normal greatly reduces the odds of nonalcoholic steatohepatitis (NASH).
- Because there is no evidence of hemolytic anemia and most of the bilirubin elevation is in the indirect fraction, this finding is almost always due to Gilbert disease (a "disorder" recently linked to more favorable mortality than having a normal bilirubin level!)
We can now confidently approve this case without getting medical records or deferring until repeat liver tests are done by his doctor.
Consider a 38 year-old female who says she has a Pap smear every year and her doctor told her the one she had 2 months ago was abnormal.
The possibilities here are numerous.
"Atypical glandular cells of uncertain significance" (AGUS) is a Pap smear finding that is a potential harbinger of occult invasive carcinoma, especially in the uterus.
Do we have to go back and question her further as to whether treatment has been done or recommended?
Not this time, because the lab history report shows that the positive Pap smear cytology was due to atypical squamous cells of uncertain significance (ASGUS).
Unlike AGUS, ASGUS is a low-risk finding and can be accepted standard (doubly so considering she has an annual Pap smear).
Is screening with clinical lab test histories likely to confer substantial protective value?
It is difficult to answer this question until an adequate study has been done on a large batch of consecutive lab history reports.
I did review a small batch a few months ago to see what their impact might be. I literally poured over 8 consecutive reports out of a series of 50.
Of the 8 reports, 6 had a significant impact in a simplified underwriting context, including 2 that should have led to declination and several others that would be approved despite an ambiguous history reported by the applicant.
So far, so good…but this is nowhere near enough to make any credible assessment.
What is our major concern with clinical lab test histories?
Unlike test results reported in medical records that we secure and review, these reports are just a "snapshot" of the risk.
The underwriter should be able to glean at least some useful insights from the applicant's recounting of his medical history…especially if the history has been adequately amplified with drilldown questionings.
However, much of this will be vague and thus the underwriter will often have to make decisions despite knowing little or nothing of value regarding the context in which most non-routine tests were done.
Therefore, the underwriter's ability to effectively use a "test results in a vacuum" asset will depend on how much he or she knows about clinical lab tests, particularly as regards the implications of their use and the relative significance of their results.
There is currently no underwriting focused lab test resource that facilitates this process. Underwriting manuals typically offer little of value in this regard. The same is true of clinical laboratory reference manuals, (and even if one did use them they would have an adverse impact on underwriter productivity).
What underwriters need to effectively use a substantial portion of these lab test history reports is on online guide that addresses every bodily fluid test done more than rarely. This guide must succinctly answer two questions for each test:
- What are the circumstances in which clinical doctors order the test?
- What are the insurability implications of both normal and abnormal results?
If underwriters can rapidly access and read this information in a bullet point format, their decision-making capabilities will be greatly enhanced and there will be no productivity concerns.
What are the prospects for wide embrace of "blood…without blood" in simplified life underwriting?
Based on what I have seen to date, the prospects are intriguing and this requirement could potentially have as great an impact as any other rapid-access screening options.
It all depends on whether or not underwriters can make efficient use of the content in terms of identifying otherwise invisible bad risks, accepting cases that would otherwise be declined, avoiding unnecessary physicians records and unmasking intentional nondisclosure (antiselection)…
…doing all of this without compromising application-to-issue turnaround time as well as their productivity.