Initial selection for Permanent Health Insurance

We investigate the effect of underwriting during the first few years of a policy's life (the initial selection effect) on the individual Permanent Health Insurance claim inceptions by fitting a generalized linear model. Initial selection is found to be significant and we describe its effect using a factor and a ratio that collect the influence of the policy duration detected through the fitted model. Results from both measures suggest that its effect, against intuition, is negative in most cases. (C) 1999 Elsevier Science B.V. All rights reserved.