Predicting lapse behavior is important to life insurance risk management and has a direct impact on pricing, reserving, profitability and company solvency. When lapses are driven by churning behavior, it also has an impact on broker relations and commission practices. Lapse risk is generally determined based on a book of business retro analysis and, until recently, the industry lacked the ability to accurately predict this risk on an individual applicant. However, MIB has a new service that can give underwriters insight into terminated policy histories as well as total coverage exposure.

Revealing potential adverse behavior

MIB’s new contributory database contains in force and terminated policy data as well as pending insurance activity. Members who contribute data and participate in the MIB Total Line service are able to obtain alerts that provide a full picture of total coverage risk exposure as well as lapse risk.

Below is a case study using REAL data from one of our members. The Total Line Alert revealed three, $2 million dollar policies were issued over three consecutive years, each of which has lapsed. This 71-year-old applied to a fourth company for $4M in August and then to a fifth company for $2M in October. This raises several questions:

• Is the $2M application in addition to or instead of the $4M pending?
• Was he denied coverage for the $4M pending?
• Why were the previous 3 policies for $2M each terminated?
• Is there an affordability concern?

Or…could this be churning? This is a scenario that may require further investigation!

Below is a copy of the full Total Line Alert for this case study (You can also view an expandable version of this Total Line Alert).

This is a real MIB member – could this data be from your company?

Most companies have no way to identify these types of behavior patterns and are left unable to validate an applicant’s total line of coverage or prior terminated policies. Armed with information from the MIB Total Line Service, your underwriters can gain new insights to help them proactively identify patterns and behaviors that may warrant further investigation, such as signs of potential churning.

The MIB Total Line Service

The Total Line Service provides alerts, delivered during the underwriting process, which reflect the total amount of in force and pending life insurance coverage for an applicant. In addition, the alerts include a variety of policy information, including any terminated coverage.

Learn more about how you can empower your underwriters with total coverage exposure data with the MIB Total Line Service by visiting: https://www.mibgroup.com/solutions/total-line-service