Seattle — In recent years, increasing attention has been paid to the role of lifestyle-based analytics (LBA) in health insurance underwriting, according to Seattle-based actuarial and consulting firm Milliman Inc. In some instances, proponents of LBA made overly optimistic claims about the use of consumer data as a predictor in the underwriting process. Milliman's Jonathan Shreve, author of the white paper “Lifestyle-based Analytics: A Practical Guide”, examined the appropriate and effective use of LBA 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, Milliman reports. Hence, LBA can help differentiate high-cost and low-cost insurance plan members.
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