What does "excess morbidity" refer to in health insurance?

"Excess morbidity" refers to higher-than-expected rates of illness within a specific population compared to what was anticipated based on statistical models and historical data. In the context of health insurance, this concept is significant because it directly impacts underwriting practices and the overall financial health of an insurance plan. When morbidity rates exceed expectations, it indicates that a greater number of individuals are experiencing health issues than predicted. This can lead to increased claims costs for the insurer, potentially affecting premium rates and the sustainability of coverage options.

Understanding excess morbidity is crucial for underwriters as they assess risk and set premiums accordingly. It helps them identify trends and adjust their strategies to maintain the balance between risk exposure and profitability. When morbidity is higher, it may trigger a need to reassess the health risks within the insured population, potentially leading to more stringent underwriting guidelines or a reconsideration of the types of coverage offered.