Underwriting practices and renewal rates

A: True, a drop in complaints does not necessarily mean that the underlying insurance is any better. But underwriting practices and renewal rates may not be as important to health insurance buyers as insurance agents would like to believe. Some people (apparently including members of the Insurance Commissioners' association) believe that complaint histories and trend ratios are useful data to collect. Previous columns explained why I really do not think this raw data is meaningful to consumers except in the few instances where the experience was so overwhelmingly skewed. (The example I cited was that complaints about Mega Life outnumbered complaints about all other health insurance combined during 2000-2003). Underwriting practices and tiered renewal pricing are important issues to health insurance agents but there is no real indication that these are seriously considered by insurance buyers. Market data shows that the overwhelming primary purchase consideration is price alone, not value. And since the average life of an average individual health insurance policy is less than 13-16 months (depending on whose data is used), I am not sure that renewal rates are really important to consumers. Granted, health insurance agents disagree. OnlineAdviser has already weighed in against the practice of tiered renewal rating and FreedomBenefits.net has been politically active to discourage the practice. Still, many health insurance companies continue to use this practice.