January 7, 2025

MIB, the life insurance industry’s most trusted and secure partner for data-driven risk management and digital services, has released findings from a new study that underscores the Protective Value of the MIB Total Line Service for detecting and preventing fraud and adverse selection. Additionally, MIB has introduced enhancements that bolster the service’s efficiency in working within underwriting workflows and automation and expand its capability to facilitate internal analytics.

Available both in Canada and the U.S., the MIB Total Line Service provides unique insights into total insurance coverage exposure on an applicant, to help life insurers identify risk patterns that can affect critical decisions during underwriting, post-issue and at the time of claims. It leverages data within MIB’s proprietary In Force Data Vault, the largest such data repository in the industry, and delivers detailed in force, pending application and terminated policy data to help validate application information, identify undisclosed policy activity, and address behavior patterns that may indicate fraud. Among the adverse behavioral issues identified are stacking (simultaneously applying for multiple policies to increase the amount of coverage while remaining at a lower level of underwriting scrutiny) and churning (replacing an existing policy with a new, similar policy for the purpose of generating additional commission revenue).

Based on their research, MIB estimates that the total cost to the life insurance industry for these adverse behaviors (stacking and churning) nears $1 billion annually. While their research quantified the impact of two specific challenges, the data from the MIB In Force Data Vault can be used to detect and resolve other behaviors such as lapse propensity, misrepresentation or non-disclosure, over-insurance and more which, when added in, cost the insurers even more in aggregate. Breaking down the cost per policy, MIB estimates that the protective value of using the Total Line Service to mitigate potential stacking and churning at the time of underwriting results in savings of over $68 per placed policy. The full results from the study were published in the December 2024 edition of ON THE RISK, The Journal of the Academy of Life Underwriting, and a reprint is available on the MIB website.

The newly enhanced Total Line Service now delivers immediate insights in the form of encrypted codes, delivered at the time of underwriting to subscribing member companies, which indicate the presence of existing or terminated coverage and integrate with automated underwriting engines. Details on the applicant's total in force, applied for and terminated coverage are then presented in Alerts, delivered within 24 hours. Together, Total Line Codes and Alerts safeguard underwriters from non-disclosure and help prevent adverse selection.

MIB can also now provide data in a quarterly report format, which includes all the same data contained in the Alert but delivered retrospectively. This format supports post-issue audits, retrospective monitoring of field behavior and non-disclosure, and can provide actuarial, audit, claims and/or risk management teams with the ability to glean valuable insights unique to their company’s products, process, distribution, and perceived risk.

“MIB members who subscribe to the Total Line Service have told us that they are realizing significant value using the solution, as the service has identified numerous applications where pending and in force policies have not been disclosed,” said Trey Reynolds, EVP, Strategy & New Business Development, from MIB. “Our members have also expressed a raised awareness to the potential for policy stacking and churning and are finding additional value in understanding agent and applicant behaviors. Further, they are excited about the level of detail that the Total Line Alerts can provide to help their underwriting, risk and compliance departments make better, more informed decisions.”

A contributory database such as the MIB In Force Data Vault represents an opportunity for the entire life insurance industry to come together to prevent fraud and ultimately reduce the costs that would otherwise be passed on to consumers. “MIB was originally formed by members of the life insurance industry to facilitate the sharing of data of underwriting significance in order to prevent fraud and omission in the application process,” said Reynolds. “Including total coverage exposure information in a dataset managed by MIB is a natural and important extension of that model. The more MIB members contribute data to the In Force Data Vault, the better the information MIB can provide back to the industry via the Total Line Service, and the more everyone, including the end consumer, can benefit from the protective value of the fraud detection services we provide.”