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P OSTC LAIM U NDERWRITING AND THE V ERIFICATION OF I NSURED I NFORMATION : E VIDENCE F ROM THE L IFE I NSURANCE I NDUSTRY
Author(s) -
Bisco Jill M.,
McCullough Kathleen A.,
Nyce Charles M.
Publication year - 2019
Publication title -
journal of risk and insurance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.055
H-Index - 63
eISSN - 1539-6975
pISSN - 0022-4367
DOI - 10.1111/jori.12189
Subject(s) - underwriting , business , actuarial science
A BSTRACT 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.