When underwriting a large group medical plan, an insurer is most likely to rely on...
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Large group medical underwriting is experience-based: the insurer studies the group's historical claims, demographic mix, and loss ratios to set premiums, because a group large enough produces credible claims statistics. Individual medical underwriting of each employee is unnecessary and, for large groups, generally not performed; individual risk classification matters far more in small group and individual markets. Considering one member's health, age, or hobbies would be contrary to the law of large numbers that governs large group pricing. This distinction between experience rating and individual underwriting is a core large-group underwriting consideration in the group medical expense outline.
Why the other options are wrong
- B) Individual medical questionnaires are characteristic of small group or individual underwriting, not large groups.
- C) The health of a single member is irrelevant to a large group's credible pooled experience.
- D) Avocations are an individual-life underwriting factor, not a large group rating input.
Memory hook
Large groups are rated on their own claims history, not each member's health.