An insurance advisor was asked to procure life insurance policies for two business owners who were in the process of obtaining an SBA loan. As a prerequisite for the policies to be put in place, both clients would need to submit to examinations with coverage contingent upon the exams outcome. The application also required the advisor to confirm by checking a box “YES” that his clients had been advised of the conditional nature of the binder and that no coverage was in force until exam results were approved by the insurer. The agent checked the “NO” box. The clients signed the application, paid the initial premium and were provided copies of the Conditional Receipt.

A month later, one of the applicants suddenly died before the medical examination was completed. The insurance company denied the claim for the $250,000 life benefit citing the terms of the “Conditional Receipt.” In short order, a suit was filed against the advisor.

As a research actuary, writes Transamerica Reinsurance's David Wylde, he sometimes is asked if the statistics used in his work have any basis in the real world. Or, in other words, how does applied statistical theory stack up against experience?

A case in point is year-to-year death claims analysis – where actual claims often deviate from expected. These claims deviations can be simply the result of statistical variance about the mean, or they may indicate the need to revise expectations. To demonstrate the statistics used in determining whether a change in expected claims is warranted, proprietary Transamerica Experience Database (TED) experience is integrated into an experiment comparing historical claims variance against theoretical predictions.

It's no surprise when health insurers deny a claim or pay only for a certain "reasonable" amount.

It has become a way of life. But we should expect health insurers to process our claims properly and accurately.

In reality, one in five medical claims are processed inaccurately by health insurers, according to the 2010 National Health Insurer Report Card by the American Medical Association.

Cancer and complications from pregnancy were the top causes of long term disability claims filed with Unum Group Corp. in 2009.

The popularity of the multiple CSI television shows and similar real-life (and death) cable programs have raised the public's awareness of forensic science. Insurance companies have also noticed and forensic claim investigations are becoming a normal part of the business, especially in the area of AD&D claims where it is important to determine if a death was accidental according to the terms of the policy.

It seems that everyone is interested or at least has heard of Facebook, Twitter, My Space and other social networking sites. Undoubtedly, they are becoming more and more populari and bringing the world in which we live closer together. These new networks provide an overabundance of possibilities to keep "friends" (real or virtual) informed of our daily status, our activities and even our whereabouts should we chose to do so. This level of sharing has led to the creation of an electronic evidence trail of a user's thoughts and activities including photos as created and recorded by the user. Insurance companies have caught on and have started to "surf" the web to gather information with respect to claimants as part of the claims adjudication process. Telephone interviews and video surveillance do not seem to be enough anymore.

It's a fact that disability income insurance (DI) claims have increased dramatically over the last several years, along with a disproportionate number of inappropriate denials. The claims departments of too many insurance companies have been told to "tighten-up." Claims that once would have been routinely paid are now being denied due to industry trends, contractual misunderstandings and consumer lack of knowledge and inability to contest.

Rising unemployment rates could lead to an increase in morbidity and mortality rates even for workers who keep their jobs.

• Disabled by Illness, Injury, or the Economy
• Disability Reserve Adequacy: Why So Messy?
• Re-assessment of Inherent Conflict of Interest and Bias in the Claims Review Process: Practical Insights from the Supreme Court Decision in MetLife v. Glenn
• Research Update 2nd Quarter 2009
• Upcoming Disability Insurance Meetings

Explores the difficulties in analysing and handling Child CI claims and look at how providers generally manage their risks via benefit design.

Presentation at the SOA Annual Meeting & Exhibit, October 2008.