SEATTLE, Feb. 11 /PRNewswire/ -- In recent years, increasing attention has been paid to the role of Lifestyle-Based Analytics (LBA) in health insurance underwriting. In some instances, proponents of LBA made overly-optimistic claims about the use of consumer data as a predictor in the underwriting process. Milliman expert Jonathan Shreve, FSA, offers a fresh perspective on the appropriate and effective use of Lifestyle-Based Analytics as an advance in risk selection and classification.
Medical studies have shown that lifestyle characteristics and habits have a clear impact on disease prevalence. LBA uses information about lifestyle to enhance the risk classification system for relevant conditions. This information comes from data aggregators, which collect information from a variety of sources. Statistics, when properly interpreted, can enable underwriters to identify relationships between lifestyle information and prevalence of various diseases, which may result in a strong correlation with expected claims. Hence, LBA can help to differentiate high cost and low cost insurance plan members.
According to Jon Shreve, "For some of the correlations we have found, we believe there is a clear cause and effect - people who exercise more have fewer cardiovascular problems, and people who live alone have greater rates of depression. Sometimes, the lifestyle data may reflect the condition, rather than the other way around. People who are obese may be more apt to indicate that they are "walking for health" - not that walking causes obesity!"
LBA is increasingly viewed as a high-quality advance in the art of risk selection. It does not pick out specific individuals in a group who definitely have a condition, thus limiting its application in individual and disease management applications. Nonetheless, LBA does identify meaningful differences from one person to another and from one group to another in the likelihood of experiencing or developing adverse conditions. It now appears likely that LBA could be used in conjunction with other risk classification tools to produce underwriting results with a higher degree of accuracy.
Milliman's most recent white paper entitled "Lifestyle-Based Analytics:
A Practical Guide" addresses what LBA can do and describes in concrete
terms how companies can implement LBA for underwriting. Insights of the
white paper include:
-- Details of integrating LBA with traditional underwriting
-- Conceptual evaluation of the methodology involved in building LBA
-- Further advances in risk selection
To request a copy of this informative white paper, please contact Jon Shreve at (303) 299-9400 or via email at email@example.com.
Milliman, whose corporate offices are in Seattle, serves the full spectrum of business, financial, government, and union organizations. Founded in 1947 as Milliman & Robertson, the company has 47 offices in principal cities in the United States and worldwide. Milliman employs more than 2,000 people, including a professional staff of more than 900 qualified consultants and actuaries. The firm has consulting practices in employee benefits, healthcare, life insurance/financial services, and property and casualty insurance. For further information visit http://www.milliman.com
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