What is a two-year contestable clause ?
policy for language for material misrepresentation. - company can deny or contest a claim if a death occures in the first two years if it is subsequently discoversed that the applicant material misrepresented information that would have caused the underwriter to either decline the application or issue at a rate class higher than applied for.
What is material misrepresentation?
a false statement of fact of such significance that had the truth been known at the time of underwriting.
What is the current expectations from reinsurers on the ceding companies in terms of underwriting manuals.
they rely on and hold ceding companies accountable for the use of underwriting manuals and procedures that were established and agreed upon at the time of product pricing.
What types of documentations can be pulled during a claim process?
Tele-phone calls
underwritiers notes
underwriting guidelines
emails
What are the two main types of interim or temporary coverage receipts?
- Conditional receipt:
2. Temporary insurance agreement
Define conditional receipt
creates coverage if the proposed insured dies prior to polucy issuance provided the conditions stated in the receipt were first met: completion of medical requirements and proposed insurability.
Define Temporary insurance agreement (TIA)
providess coverage assuming no material missreprensentation until the u/w either accepts or rejects the risk.
- provides immediate coverage because it is not conditioned on the completion of medical requirements.
Problems in the underwriting process can occur due to sins of omission, which are failures to investigate obvious facts, conditions, or situations. Name 7 examples
- obtain additional details to unanswered questions.
- obtain additional details to answers on sig medical hx
- establish financial justification/economic loss
- establish sufficient insurable interest
- adhere to faculative reinsurance single case and jumbo limits
- resolve conflicting responses.
- document the underwriting file.
Problems can occur thorugh sins of commission, which are imprudent acts that have the effect of ratifying unacceptable behaviour. Name 6 examples
- accepting altered applications
- waiving age and amount requirements
- waiving uw g/l requirements
- making derogatory comments in the underwriting file,
- accepting vague or inaccurate responses.
- delaying the underwriting process
With regards to sins of omission and commission, the two principles of law that should be understoof by every underwriter are the doctrines of waiver and estoppel. Define Waiver and Estoppel
- waiver is the intentional giving up of a known privilege or right either expressed or implied
- Estoppel is an equity principle applied to life insurance contract law. If by your actions, words, or silence, another person has relied or taken action that he would not have otherwise taken, to his detriment, your defense is waived and you are prohibited (Estopped) from her later defending, denying or rescinding your original course of action.
What happens in a living recisions
Claims department is not typically involved.
- usually need to determine material misrepresentation, and involves the legal department and a designated individual in the u/w deparment.
- also occurs with new policy applications, with hx disclosed/received that was not previously disclosed on the older applicatuions.
What is the contestable period ?
period permited to the contestable caluse provision in the life insurance contract.
- usually 2 years.
- conducted to determine whether the company was furnished with truthful and complete answers to every quetion on the application.
In order for a life insurer to rescingf a life insurance policy on the basis of misrepresentation on the application the insurer must show what 4 criterias?
- application contained a false statement or an omission
- statement or omission was knowingly made
- false statement or omission materially affected the risk of the inusrer assumed
- the insurer relied upon the false statement or omission of fact, to its detriment, in assuming the risk and issuing the policy.
Whats the underwriter’s role in the claim process?
determine whether there was material misrepresentation, as well as any u/w factors that could incolve the principles of waiver and estoppel and present this information to the claims area in a way that does not compromise the company’s ability to contest the claim.
Why is replacement activity important to underwriters
- policys are more expensive in their first years in place, when policies are being terminated after the first 1-3 years, it is not profitable.
- MIB created code 035 to help review insurance acitivity.
- helps to avoid churning and over replacement.
What are some simple rules for deposition witnessess
1 tell the truth.
- think before you speak
- answer the question
- do not volunteer information that is not asked.
- do not answer a question you do not understand.
- Speak in full complete sentences.
- questions are often phrased “do you know:,
- do not guess
- be specific or as vague as your memory allows but do not be put in a position contrary to your true recollection
- do not explain your thought process as to how you reached the answer to a question
- in testifying on converstions, make it clear whether you are paraphrasing or quoting directly
- in answering questions calling for a complicated series of events or extensive conversations, summerize there were possible.
- never characterize your own testimony.
- avoid all adjectives and superlatives
- do not testify as to what other poeple known unless you are asked specifically for such a statement
- do not testify as to your state of mind unless you are asked specifically for such a statement.
- if information is in a document that is an exhibit, aske to see the documents unless you are very certain of your answer.
- if information is in a document that is not an exhibit, answer the question if you can recall the awnser.
- do not let the examiner put words in your mouth
- do not answer a compound question unless you are certain that you have all parts of it in your mind
- pay particular attention to the intriductory clauses preceding the heart of the question.,
- use all recesses to follow counsel to a place where you can confer in private
- if you are interrupted, let the lawyer finish the interruption and then firmly but courteously state that you were interrupted.
- if you are caught in an inconsistency, do not collapse.
- do not adopt the examiners’ summary of your prior testimony
- if you are finished with an answer and the answer is complete and truthful, remain quiet and do not expand upon it.
- do not agree to supply any information or documents requested by the examiner
- never express anger, argue, try to outthink or outmaneuver the examiner.
- do not expect to testify without the other side scoring points.
- Avoid any attempt at livity.
- avoid even the midest obscentiy and avoid absolutely any slurs or references to the opposing party that could be considered as personally insulting.
- if you are hit with a flash of insight or recollection when testifying and this has not been previously discussed with counsel, hold this to yourself, if possible, until you have had an oppertunity to go over it,
- most witness make mistakes at some point in their testimony.
NAme examples of sins of commission
- accepting altered applications
- waiving age and amount requirements
- making derogatory comments in the u/w file.
