Role of Third-Party Medical Assessments within Life Companies

At present, the majority of medical assessments carried out in support of U.K. life policies are performed by GPs. However, in 2011, NelsonHall surveyed life companies in the U.K. to ascertain their attitudes towards use of third-party medical assessments and there are clearly opportunities for third-party providers of medical assessments to play a more significant role in the market.

All of the life insurance companies surveyed confirmed that their organizations require medical certificates in support of in support of their life and investment policy new business.

Typically between 50% and 80% of life policies require medical assessments depending on their risk threshold based on age and medical history. When asked to state which type of new business policy required supporting medical assessments, life insurance firms gave the following typical answers:

• No exceptions - we medically assess to some level all applications. All have at least simple interview on medical history and then depending on age and outcome from interview we escalate to various stages of medical assessment
• Most policies - very few exceptions. We do have some policy types that are limited cover where we generally accept all applicants provided they meet minimum health criteria. These tend to be later life policies
• Depends on risk - all product types have some medical assessment requirements
• All traditional life policies require medical assessment above risk threshold based on age and medical history.

However, the current level of satisfaction with medical assessments within life companies is very moderate. While only ten per cent of the life companies interviewed expressed dissatisfaction with the production of medical assessments, there was also little enthusiasm expressed with the current performance of this service with only twenty per cent of life companies expressing high satisfaction.

The principal concerns of life companies are speed of turnaround (which has a major impact on their new business conversion rates), and lack of service standardization, which can make interpretation of medical assessments more time-consuming and challenging than is desirable.

When asked to suggest how the production of medical assessments could be improved, or areas of particular concern, the answers were typically as follows:

Speed of turnaround

• Speed of turnaround is main problem
• Lack of availability and then the time taken to get a written report back
• Not easy to agree suitable times and some providers are very slow with reports
• Speed and cost are the main considerations

Lack of report standardization & difficulties in interpretation

• Fragmented suppliers / freelance assessors & screening services in use leading to a lack of standardization
• The need to standardize more
• Use of a single company would be beneficial as we would have standard pricing and standard reports.
• Sometimes we can easily interpret reports - where there are unusual elements to the risk/medical history we may get specific investigations and these can offer no insight to risk and we have little ability to interpret internally
• Lack of detail - the relatively high cost of medical assessments leaves us with just primary screening tools in use and sometimes we would prefer to be able to get more from the process to enable a better understanding of the risk.

Overall life insurers express low levels of satisfaction with the current speed and timeliness of production of medical assessments, the range of locations offered, and the cost of assessments these are areas where third-party providers could potentially deliver an enhanced service.

The immediate opportunity is arguably in displacement of GPs to offer a speedy, standardized, cost effective service. At present life companies have a tendency to carry out lower value policy medical assessments through GPs and higher value policy medical assessments in-house. The circumstances under which are medical assessments are produced by the client's GP were typically identified to be:

• Policies under £750k in value and where no pre-existing medical conditions are accepted on risk. Anything where we might have a medical history that needs further and specific investigation we would choose more detailed assessment and where at policy start the person is below an age threshold - currently 39 years at next birthday. This varies a lot and both policy value can fluctuate between £400k and £750k and age threshold can be as low as 36. Also where the GP report is inadequate - e.g. no recent medical history or where the client has lived overseas we would look at other assessments
• Above £300k and below £500k a GP's report is adequate for non-complex medical histories or where there are no pre-existing medical conditions. Outside this we would either take on risk with medical questionnaire outcome alone or progress to further detailed tests. Sometimes we just take basic measurements of height, weight and observations of BP etc. Some medicals are as simple as that
• q GP reports tend to be slow so we don't ask for them routinely. However, there are essential in a range of circumstances - age, medical history and size of policy. Really depends and we are flexible.

Life insurance companies currently tend to use third-party medical staff when availability is limited elsewhere. However, a lower cost third-party service would clearly be attractive to a number of life firms.

When asked to stipulate the circumstances whereby third-party medical staff employed would produce the medical assessment, the following answers were typically given:

• Lower cost and we would choose this - would really depend. Availability is main problem
• Location, availability etc.
• Where we need to complete quickly or where we have no available internal resources
• Where the risk necessitates a medical - then we would resource via lowest cost within a reasonable timeframe
• Lower cost - sometimes lower cost than a GP report and can be quicker. Needs to be an adequate risk / value to offset the cost of the medical in some cases.

In addition, all life companies indicated that they would be prepared to consider using a preferred supplier, with the potential advantages of using a preferred supplier being reduced costs and cost certainty, improved standardization of assessments, and ease of resourcing.

So despite their new role within the NHS, GPs may find that their provision of medical assessments is increasingly challenged by third-parties able to offer higher service levels at a cost-effective price.