Computerized medical underwriting of group life and disability insurance using medical claims data

A method of estimating the expected group disability insurance exposure for a policy period comprising:

• collecting medical claims data for the group to be underwritten, each medical claim being related to a particular member of the group;
• providing morbidity categories that categorize medical claims, the morbidity categories relating diagnoses from medical claims that are generally homogeneous with respect to incidence of disability and expected duration or cost of disability;
• categorizing with the morbidity categories each member's medical claims in the medical claims data to generate each member's morbidity categories;
• providing a disability probability model for the likelihood of disability arising from each morbidity category during the policy period derived from the formula:
• probability (disability occurring in the policy period given the morbidity category is present for the member)=probability (the morbidity category is present given all the disability claims in a historical disability claims database)*probability (disability in the policy period regardless of the morbidity category)/probability (morbidity category in medical claims);
• applying the disability probability model to the member's morbidity categories for each member in the group to generate respective member's morbidity category probabilities of disability occurring in the policy period for each member in the group;
• providing a statistical model to relate existing medical claims to future disability claim duration or cost to generate an expected duration or cost of disability arising from the morbidity categories during a policy period;
• applying the statistical model to the member's morbidity categories present in the member's medical claims for each member in the group to generate respective member's morbidity category expected durations or costs for each member in the group;
• combining for each member the member's morbidity category probability with the member's respective morbidity category expected duration or cost to generate members' expected disability exposures;
• summing the members' expected disability exposures to form an expected group disability exposure;
• and
• offering group disability insurance coverage to the group.