This dissertation examines several aspects regarding the claims handling practices of life insurance companies within the U.S. insurance industry. Life insurers have some flexibility as to how they process life insurance claims and which settlement options they make available for the beneficiaries. The decisions and choices made by insurers can increase the possibility that the life insurance company can negate coverage which would be paid to beneficiaries and, if paid, may increase the risk to the beneficiary's life insurance proceeds. The first essay examines insurance claims that are denied or resisted by a life insurance company and investigates whether these claims are evidence of a change in underwriting practices. Specifically, it looks to determine if insurers that deny and resist claims are foregoing the standard practice of underwriting a life insurance contract prior to policy issuance and, instead, are utilizing a post-claim underwriting process, whereby the policy is underwritten after a claim has been submitted. If an insurer post-claim underwrites a life insurance claim, the initial underwriting expenses should be reduced and the post-claim investigation expenses should increase. Based on the U.S. company level data for the period of 2003 through 2010, I provide evidence that the insurers that have lower underwriting expenses and those with higher investigation/claim expenses have a greater number and a greater average dollar value of denied and resisted claims. This reduction in expense in the initial underwriting process, coupled with an increased level of investigation/claim expenses, is a clear indication that these insurers are limiting the underwriting of policies during the application process and prior to policy issuance and are, instead, utilizing the post-claim underwriting process. The second essay focuses on insurance companies' utilization of retained asset accounts as a settlement option. Increased competition from banks and other financial institutions has forced life insurers to find new and innovative ways to obtain and retain capital. Retained asset accounts are a newer form of life insurance settlement option in which the insurer holds death proceeds in its general account until the beneficiaries are ready to withdrawal the funds. While beneficiaries are compensated with interest on the accounts, the funds are subject to the financial risk of the insurer and are only partially covered by state guaranty funds. Given the characteristics of the retained accounts, the primary interest of the essay is to examine whether the interest rate paid to the owners of retained asset accounts is positively correlated to the insurer's level of risk. Results show that those insurers associated with greater financial risk compensate the owners of retained asset accounts through the payment of increased interest payment on the funds held in the account. In addition, larger and more financially stable insurers are more likely to utilize retained asset accounts as a life insurance settlement option. / A Dissertation submitted to the Department of Risk Management/Insurance, Real Estate and Legal Studies in partial fulfillment of the requirements for the degree of Doctor of Philosophy. / Spring Semester, 2014. / March 21, 2014. / Capital, Claims, Insurance, Life, Retained, Risk / Includes bibliographical references. / Kathleen A. McCullough, Professor Directing Dissertation; Jeff Paterson, University Representative; Cassandra R. Cole, Committee Member; Charles Nyce, Committee Member.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_185209 |
| Contributors | Bisco, Jill M. (authoraut), McCullough, Kathleen A. (professor directing dissertation), Paterson, Jeff (university representative), Cole, Cassandra R. (committee member), Nyce, Charles (committee member), Department of Risk Management/Insurance, Real Estate and Legal Studies (degree granting department), Florida State University (degree granting institution) |
| Publisher | Florida State University, Florida State University |
| Source Sets | Florida State University |
| Language | English, English |
| Detected Language | English |
| Type | Text, text |
| Format | 1 online resource, computer, application/pdf |
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