Underwriting the Known and the Unknown - Focusing on Thought Process
October 26, 2014| By Michael Clift
L/H General Industry
Remember what Donald Rumsfeld, the former U.S. Secretary of Defense, said about “known unknowns” and “unknown unknowns”? Often mocked, it actually makes a lot of sense - and the theory is particularly relevant for underwriters.
The underwriting process is comprised of a comprehensive review of medical and non-medical factors that typically include objective risk information, such as lab values, blood pressure readings and pathology reports. In most instances, enough information is obtained for the underwriting assessment. In other cases, additional information and further objective results may be needed to finalize the risk assessment.
Underwriters should not only review the known, but also carefully consider the unknown, such as what the absence of an attending physician’s clinical notes might mean. In most cases every single risk factor detail is not available; therefore, underwriting judgment is vital. But recognizing the omission of significant information is as important in assessment as understanding how to evaluate known risk factors.
Take the case of a 44-year-old female with an updated PAP test (Papanicolaou smear) scheduled to be done next month.
The proposed insured has a history of ovarian cancer with metastasis that records show was treated with oophorectomy (removal of the ovaries) and chemotherapy 15 years ago . We don’ t know if a total hysterectomy was done (removal of cervix and uterus as well as ovaries). Despite significant cancer history, she has done very well, with normal results of all recommended surveillance, including follow-up testing of tumor markers, mammograms and Pap smears through February 2013. The Papanicolaou smear (Pap test) is a test used to screen women for cervical pre-cancer or cervical cancer. Testing for human papillomavirus (HPV) is another test for cervical cancer that can be used in women over age 30 in conjunction with the Pap test. Last year’s Pap test result was normal. Subsequently, the proposed insured has had appropriate follow-up testing, except for an updated Pap test, which is scheduled in the next month.
- Should we require the planned Pap result?
Individuals who have had cancer require the follow up appropriate to the specific cancer. Pap tests screen for cervical cancer, a malignancy unrelated to her prior ovarian cancer. We should apply the same guideline for Pap testing that we would use for any woman. Routine screening with Pap test is not a requirement for women applying for Life insurance. Occasionally we may require follow up testing in women with known previous Pap test abnormalities, a situation that does not apply here.
Review with our medical department supported the decision to accept the risk as is. Complex underwriting problems require careful analysis of known and unknown risk factors. Unknown factors may need to be clarified. In some cases, a more thorough assessment can justify making a sound decision based solely on the evidence presented. "Knowing which factors need not be developed further is critical to sound risk assessment. But if in doubt, Gen Re has the expertise to advise on a reasonable course of action.