This article from RGA considers how Behavioral Economics (BE) principles can be applied to the design of questions on insurance applications in order to elicit better responses
To better understand the challenges fraud presents, RGA has reached out to life insurers: We surveyed insurance companies, conducted informational interviews, held discussions at the 2016 RGA Annual Fraud Conference, and conducted our own internal research of claims experience.
The phenomenon we call antiselection constitutes a clear and present danger to the life insurance industry. A simple definition of this scourge is “not disclosing information known by the insurance applicant in order to get life insurance per se or acquire coverage at a lower premium rate than if that information had been revealed on the application.”
The purchase of any type of insurance is based on the premise that the applicant/proposed insured will disclose any and all pertinent information related to insurability and that the insurer will act upon that information in good faith. If information is withheld, the balance of the transaction is altered.
Once in a great while you might come across a sales practice that makes you wonder; something about it doesn’t feel right.
Hank’s presentation on antiselection at the 2015 RGA Re Fraud Forum.
We traveled a great deal this past year, visiting clients, potential clients and attending industry meetings. Along the way, the topic of fraud in the Life insurance industry came up quite a bit.