Insurance case study: Cancer (part 2), the claims process

Do you sometimes wonder why underwriters make certain decisions? Need insight into the different claims processes or help explaining things to clients? This mini-series from Munich Re will hopefully provide some of the answers.

In future articles Hélène Michaud, assistant vice–president, marketing, Munich Reinsurance Company will discuss dementia, cognitive disorders, long term care and critical illness definitions. In this part of our series though, Michaud discusses the critical illness claims process.

See also: Cancer (part 1), the underwriter’s view

Article highlights:

• Case studies: Colon cancer, breast cancer, prostate cancer, assessing CI claims. • More on the claims process.

Understanding the claims assessment process

Critical illness claims are multi-faceted, complex and require careful consideration of policy wording, including the definitions used to identify the different covered conditions, exclusions and the medical evidence submitted to support the claim.

Best practices guidelines from Munich Re are used by most claims adjudicators to help them navigate through the medical and non-medical parts of the process quickly. These guidelines state that an in-depth assessment, including a contestability investigation, is required if the claim should occur within the first two years of the policy’s purchase or reinstatement date.

When assessing cancer claims, the company will:

• Identify if the 90-day cancer moratorium exclusion is applicable — was cancer present during the first three months their policy was in effect? If any symptoms were present occurring during this time, even if the cancer was not diagnosed until later, the exclusion will apply and benefits will not be payable.

• Ensure the disease definition has been met by obtaining complete medical records, including copies of diagnostic testing (i.e., biopsy and pathology reports) to determine that the policy definition has been satisfied and that doctors have not diagnosed a form of cancer that is excluded by the policy. Claims specialists will review the records with medical consultants who have the expertise to provide clinical insight.

• Ensure the individual has outlived the 30-day survival period.

• Ensure that misrepresentation has been investigated. This is important, especially if the cancer is diagnosed within the first two years. A full medical history will be obtained from all physicians, along with a family history to verify the information provided to the underwriter was true and complete at time of issue of the policy. For claims made after two years of the policy effective date, only irregularities in the medical evidence may cause the company to investigate further.

Based on Munich Re’s experience, cancer is by far the leading condition in critical illness claims. As of 2007, the approval rate for cancer claims was 78%. The main reason for most denials include “not meeting the cancer definition” or “cancer claim occurred within the 90-day moratorium period.”

The breakdown below shows all cancer claims by age band for both sexes as a percentage of all cancer claims:

Age 0- 19 = 0.5% Age 20- 29 = 3.9% Age 30- 39 = 12.5% Age 40- 49 = 35.3% Age 50- 59 = 36.7% Age 60+ = 11.2%

Since each individual claim situation is unique, certain challenges may arise when assessing cancer claims (see Case studies: Assessing CI claims, below). Therefore, a claims specialist must be inquisitive, especially attentive to detail and highly analytical to effectively assess critical illness claims. Thorough knowledge of contracts and their intent, as well as medical terminology, is very important.

Case studies: Assessing CI claims

The following case studies illustrate the challenges that might arise when assessing cancer-related critical illness claims.

• Bridgette was 48 when she was diagnosed with an invasive form of breast cancer. A review of her pathology reports indicated this met the definition identified in Bridgette’s critical illness policy. Since the diagnosis occurred within the two-year contestable period, complete medical records were obtained and reviewed by her insurer. Her medical history showed that for the past three years she suffered from anxiety that was treated with medication. She also had routine annual breast screenings that showed “no significant abnormalities.” In completing her application, Bridgette had identified this information, so no issues of non-disclosure were identified. This satisfied the contestability investigation. Following the 30-day survival period, Bridgette received payment for her claim.

• Phillip was 68 when he was diagnosed with carcinoma of the stomach on March 12, 2008. His policy became effective January 25, 2007. Since this claim is contestable, complete medical records were obtained. In reviewing Phillip’s application documents and comparing them to his medical records, it shows that Phillip had peptic ulcers 23 years ago and had a portion of his stomach surgically removed. When completing his application, Phillip admitted this information, so the contestability investigation was satisfied.

After complaining of stomach problems, on April 15, 2007, Phillip was diagnosed with an ulcer and treated with antibiotics.

On February 10, 2008, Phillip made a second visit to his doctor, complaining of further stomach problems, accompanied by weight loss. On March 12, 2008, a specialist diagnosed Phillip with stomach cancer. The medical information and pathology report supported that the definition of cancer under the policy had been met.

The issue requiring further investigation is whether or not the stomach problems Phillip had in April were attributable to the subsequent diagnosis of stomach cancer. If they are, these symptoms occurred within the 90-day cancer moratorium period, and as such the claim would not be payable. Should these symptoms be unrelated to the cancer, Phillip’s claim would be payable.

The authors: Hélène Michaud, assistant vice–president, marketing, Munich Reinsurance Company; Kerin Moreton, assistant vice-president, life and CI claims, Munich Reinsurance Company. Edited by Kate McCaffery, Advisor.ca.

Is this information useful to you? Let us know what you think. Send your comments and feedback to feedback@advisor.ca.

(02/02/09)