I am so glad that a life insurance company came clean with me this last week and admitted that, yes, they had in fact changed their stance on underwriting of bipolar disorder life insurance and other mood disorders as well. They admitted that a case that they had approved at preferred best in 2007 was now a best case table 2.
Preferred best to table 2 is a 300% swing in the real world of premiums. Unfortunately this company wouldn’t give me the answer as to why this 300% shift in mortality risk was necessary, but in fitting pieces together from other less forthcoming companies it seems that the culprit, the risk they are trying to compensate for is suicide. One company sort of indicated that the rate of claims they were processing for suicide related death has jumped dramatically and with the state of things these days it wouldn’t surprise me, but they weren’t able to offer any statistics linking that to a 300% increase in mood disorder premiums or if the claims were for people who had been underwritten for mood disorders at all.
See, that’s the rub. Until someone shows me the facts, the cold hard statistics, I’m kind of leaning toward the fact that those mood disorders that were approved in the better than standard range were approved that way because they were well controlled and under treatment. Isn’t it more likely that a jump in suicide claim rates would come from a group who are newly stressed out and not still cruising along with a well controlled mood disorder? And if so, will there really be any net gain in mortality exposure for insurance companies who react by raising rates on those with well controlled bipolar disorder, depression or anxiety? Obviously I don’t think so or I wouldn’t raise the question.
This is kind of related to a situation I’ve been trying to get turned around for years. Several years ago I engaged several life insurance companies over the issue of why they wouldn’t approve coverage for children with type 1 diabetes. The answer was that their actuarial data is based on ages 0-100 and doesn’t break out into certain age groups. I supplied them data through a juvenile diabetes association that showed that almost all deaths due to type 1 diabetes in children were diagnosed on autopsies. In other words, those diagnosed and well controlled are not the issue.
Like so many health and mental health issues, the danger for life insurance companies is not with those who are diagnosed and are compliant with treatment and well controlled, but rather, like hypertension, the silent killer, the danger is with those that don’t know and suddenly wake up dead.
Bottom line. So, my challenge to the (formerly) big three in mood disorder underwriting, Prudential, American General and Banner, is to show us the facts. Has there been a mortality change in well controlled mood disorders over the past two years that has caused all three to jump 200%-300% in their approved pricing? Just how much has the suicide claim rate increased in the last two years? Is the increase directly attributable to customers who had well controlled mood disorders when approved for their life insurance? I hope we can get some underwriting and actuarial input on this just to clarify the issue. Not looking for a fight, but I’ve stayed on top of this industry by staying abreast of the underwriting changes. If you have any questions, call or email me directly. My name is Ed Hinerman. Let’s talk