Non-disclosure on life insurance applications represents a major challenge for the life insurance industry. Whether medical or financial, intentional or unintentional, these omissions can lead to inaccurate risk assessments that can be costly to a carrier’s bottom line.

Recently, MIB announced that we have a free solution available to our members providing underwriters with immediate insight into potential financial non-disclosure and anti-selective behaviors - Total Line Codes. The value of these new codes lies in the details they provide. Read on to learn how they strengthen risk assessment and improve the decision-making process.

Why Total Line Codes Matter

The Total Line Codes provide underwriters with immediate visibility into the presence of in force and/or terminated policies on an applicant. Delivered alongside the MIB impairment codes that underwriters have used for more than a century to identify undisclosed medical histories, they provide additional clues to identify undisclosed policies and help flag adverse activity that may require further investigation.

Total Line Codes are already demonstrating extraordinary value to those using them. Early feedback from members is reinforcing this—many are discovering undisclosed in force policies on a regular basis.

How Total Line Codes Work

The two Total Line Codes are MIB-sourced, meaning underwriters do not have to code back. One represents in force coverage, and the other reflects policies that were either not taken or no longer in force. Modifiers paired with the codes offer additional detail that help underwriters or automated rules engines determine if a case needs further scrutiny.

Interpreting the In Force Codes

The first clue the underwriter receives is the aggregate range of in force coverage found in the database. This can be quickly compared (or mapped) to the amount of in force coverage disclosed on the application to ensure the values align. If they don’t, the case can be paused for questioning, allowing the underwriter to confirm that the total line being pursued can be financially justified, preventing over-insuring, and minimizing the potential for lapse risk.

The second clue the underwriter receives is the number of in force policies found on the applicant in our database. Aggregate in force coverage (provided in the first clue) can be further analyzed by the number of policies that it is comprised of, to help determine next steps.

When the number of in force policies is higher than makes sense, it could represent an insured who is stacking smaller policies to avoid the underwriting requirements associated with the higher, ultimate face amount desired. For example, if an insured admits to having $500,000 of coverage in force, and it is only one policy, no problem. However, if they have $500,000 of coverage in force and it consists of five or more policies, you may want to take a closer look.

The third clue is the date range for when the applicant most recently placed a policy in force. This clue can reveal if policies have been placed very recently or several years ago, which should align with the information provided on the application. When the IAI shows several pending applications, knowledge of when the most recent policy was placed in force can also help differentiate an applicant legitimately ‘shopping for the best offer’ versus those with intentions to place more than was admitted.

Interpreting the Terminated Policy Codes

The Terminated Policy Code represents policies that were either not taken or are no longer in force. Modifiers paired with this code provide the same information discussed above —aggregate range of terminated coverage, number of policies terminated, and date range of most recent policy termination.

When either the aggregate amount of terminated coverage or number of terminated policies are high, it can clue the underwriter into a potential lapse or churning risk, particularly when comparing the date of the most recently terminated policy to the placement of an in force policy.

We have built a wide variety of ranges for each of the Total Line Code modifiers so that members can filter based on their risk tolerance. Details can be found in the MIB Coding Manual.

Unlock the power of Total Line Codes

Historically, underwriters have relied solely on the agent or applicant to provide the complete details of pending applications and in force coverage, which are critical to financial justification. MIB Total Line Codes provide an additional layer of financial protection and fraud detection, helping underwriters uncover and address non-disclosure and questionable field activity before a policy is approved. And since Total Line Codes are now offered free of charge to any member contributing data to MIB’s contributory in force database, it’s clear that all MIB members strongly consider participating in this industry-wide effort

To get started, reach out to your MIB Account Representative.