By Jessica Caracofe, R.N., Director of Underwriting Innovation, MIBJuly 26, 2022
Underwriters play a critical role in the life insurance industry. Companies depend on 'us' to measure risk carefully, apply medical and financial guidelines responsibly, and avoid anti-selection.
Today, we rely on consumers, or financial advisors, to provide the pertinent information needed to accurately price each risk. But receiving complete information on an insurance application is a constant challenge. Whether there is an innocent omission or blatant non-disclosure, we are trained to keep our investigative minds attuned to anything that may require further evaluation. On the medical side, we have a plethora of data sources available to help assess individual impairments or uncover conditions that may have been "forgotten." Until now, we haven’t had the same tools available to support financial underwriting.
Knowing the amount of in force and pending life insurance coverage on each applicant is critical to financial underwriting. How do we know the information provided is complete and accurate? We expect a professional advisor to produce detailed information regarding their client’s insurance portfolio. What happens if that client changes advisors, or uses more than one? An advisor may not have a clear lens into the entire financial protection portfolio. Business coverage, policies that were sold or settled, or personal policies dictated by divorce decrees can create a 'misperception' with how much an applicant thinks they have in force, which can lead to unintended non-disclosure. With large cases, financial due diligence often requires the manual task of making multiple phone calls to multiple companies to check for coverage or capacity on a proposed insured. Not exactly an efficient or foolproof tactic.
Without the ability to independently verify the insurance information provided, carriers and reinsurers don’t have optimal visibility into total exposure or a potential fraud scenario. This sets the stage for possible over-insuring, inaccurate pricing, early claims, lost revenue, and potential litigation expenses.
For over a century, MIB Code Solutions has provided our members an industry-supported, contributory database largely focused on protection against medical misrepresentation. By combining TAI's in force policy data and MIB’s pending application data, we have built a new persistent, contributory data vault that offers protection and efficiencies to support the financial underwriting and justification process.
In April of this year, we used the data we’ve collected so far to provide our first solution, the Jumbo Service report. This report allowed participating MIB member carriers and reinsurers to take a retrospective look at their highly insured individuals. With the first iteration of these reports in hand, our customers discovered and resolved multiple treaty violations during the contestability period. Carriers were also able use the data to confirm complete disclosure on in force applications, confirm policy replacements, and more.
Our second solution, the MIB Total Line Service, is under development and will provide in force and terminated policy information along with pending insurance activity at the time of underwriting. The alerts offer a glimpse into application/agent behavior, like stacking or churning, which are challenges particularly in the lower face amounts.
As an Industry, we are taking fraud protection to the next level by removing a blind spot that exists today. Increasing awareness empowers underwriters to make well-informed decisions and protects companies from over-exposure, treaty violations, and more. If you would like to hear more about the MIB In Force Data Solutions, contact us.
Jessica Caracofe is the Director of Underwriting Innovations for MIB. Prior to joining MIB in 2021, she spent over 15 years underwriting in life insurance distribution. Specializing in impaired risk medical underwriting, Jessica also supported multiple business initiatives, including marketing, management, education, strategy and industry representation. Her deep industry knowledge is key in supporting MIB’s business initiatives. Formerly a member of the AHOU Program and Education Committees, Jessica went on to serve as AVP Program of Development, and is currently the VP of Marketing and Membership on AHOU's Executive Council.