POSTCLAIM UNDERWRITING AND THE VERIFICATION OF INSURED INFORMATION: EVIDENCE FROM THE LIFE INSURANCE INDUSTRY

Jill M. Bisco, Kathleen A. McCullough and Charles M. Nyce

Journal of Risk & Insurance, 2019, vol. 86, issue 1, 7-38

Abstract: This research investigates information verification by life insurers with respect to postclaim underwriting through denied and resisted claims. We provide a theoretical model to explore the optimal strategy for insurers regarding preloss versus postclaim underwriting. Using differential cost structures, the model predicts that it is possible for some insurers to follow a strategy of postclaim underwriting while others do not. Evidence of this is found in the empirical analysis. Insurers that postclaim underwrite are identified by a decrease in underwriting expenses and an increase in the claim investigation expense in conjunction with increases in denied and resisted claims.

Date: 2019
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https://doi.org/10.1111/jori.12189

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jrinsu:v:86:y:2019:i:1:p:7-38

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