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Postclaim Underwriting And The Verification Of Insured Information: Evidence From The Life Insurance Industry

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  • Jill M. Bisco
  • Kathleen A. McCullough
  • Charles M. Nyce

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.

Suggested Citation

  • Jill M. Bisco & Kathleen A. McCullough & Charles M. Nyce, 2019. "Postclaim Underwriting And The Verification Of Insured Information: Evidence From The Life Insurance Industry," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 86(1), pages 7-38, March.
    • Handle: RePEc:bla:jrinsu:v:86:y:2019:i:1:p:7-38
    DOI: 10.1111/jori.12189
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    References listed on IDEAS

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