Multi-criteria decision-making methods applied in health-insurance underwriting

This study attempts to structure methodologically the health insurance underwriting process by applying Multi-criteria Decision-making (MCDM) analysis in health insurance underwriting. This is done by assigning a score to each health insurance applicant which can be used to determine whether he or she is accepted, rejected or accepted with special terms and conditions (such as exclusions, additional waiting periods and/ or surcharge). The introduction of MCDM approaches in health insurance underwriting enables the quantification of the selection criteria, the increased standardization and automation of the process and its alignment through quantitative indicators with the risk tolerance/ risk appetite of the insurer, and there lie the novelties of this research. The proposed methodology can be readily implemented by insurers with added value in the underwriting, risk management and distribution (sales & marketing) functions, as well as in the profitability of the company or the level of premium paid by the insured.