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Reinsurance                 Last update February 9, 2007


Underwriting and Claims

A site about running a life insurance company has to discuss underwriting. But before you click to another page, let me assure you we not going to discuss the rules that are covered in the manuals produced by the reinsurance companies. As usual, this page will take a different slant: why you can't beat underwriting, and how to keep it from beating you. Underwriting is clearly one of your biggest expenses, and certainly the biggest frustration to your agents (and to you, because underwriting is all the agents want to talk about when you want to talk about production). Not surprisingly, it is also the area that most executives don't care to learn much about. It is boring, bookish, and takes place in little cubicles. Further, when you talk to most underwriters you get more trees than forest, so it is hard to get any suggestions for improvement. Underwriters tend to view "improvement" as getting more requirements and catching more bad risks, while you may have been thinking of issuing more business, faster.

Although the nature of the new business received varies widely from company to company, in most the underwriting procedures and rules are exactly the same. The criteria come straight out of the reinsurers' manuals, and an underwriter can move from one company to another and feel instantly at home. To the usual underwriter it makes no difference whether the company is getting its business from captive agents who get their prospects knocking on doors, or from brokers who deal with a number of companies. The probability of selection against you is, of course, entirely different. You need to watch carefully what you are getting from the broker, but in theory you could issue all the down-the-street business with no underwriting at all. I say "in theory" because, while the down-the-street agent will normally get you an unbiased selection of business, if he thinks you are not underwriting it won't be long before he is going down-the-street at the local nursing home, and the only thing that will limit his hospital prospects are the visiting hours.

So this discussion is about why you must underwrite, how much you should do, and how you avoid ordering (and paying for) excessive requirements. There are also related items such as advancing systems, which determine how underwriting affects the agents.

Claims administration is essentially a subset of underwriting, checking to see whether the applicant and/or the agent leveled with the underwriter. Beyond that, except for a few fairly straightforward legal questions, claims payment is pretty much a clerical function.



The best practice is to design your underwriting rules considering the nature of your field force (or other channel). Unfortunately, the greatest pressure to limit underwriting arises with the distribution systems that need the most. The purpose of underwriting is to limit selection against the company, and your exposure to selection is primarily determined by your distribution system. It is a truism that the best anti-selection prevention device is the aggressively prospecting agent who sells only for you. His prospects buy because they were sold, not because they thought they were going to beat you on mortality. Likewise when you get all of an agent's sales, you should get an acceptable mix of risk.

If you are fortunate enough to have a captive field force, or one where you are receiving most of the production of a particular line of business, your need to underwrite is much less than if you are trying to make it in the brokerage market. As noted however, the pressure is in the opposite direction. The company with captive agents can underwrite and not lose business, while if the broker company tries to underwrite more than his competition, the applications are likely to be redirected to friendlier terrain.

The best you can do in the brokerage market is to try to make the selection work for you, that is, let the bad business flow to the competition. To do that, you need a slight edge in price or benefits, but tighter underwriting on the impairments that an agent can evaluate in the field. For example, if your competition is using a blended rate on smoker/nonsmoker, you use a more favorable nonsmoker rate, and let the other fellow get all the smokers. It is trickier if your competition is using blended male/female rates, because his blended rate should be lower than your male rate (and higher than your female rate), and the majority of insured lives are male. However, depending on the portion of the brokers' business you are getting, maybe getting a preponderance of females wouldn't be all that bad.

You may be told that you need more underwriting, irrespective of the nature of your distribution, because you are in a market that has generally poorer health or is more prone to unhealthy behavior. That is not a correct approach. When the actuary prices your product, he uses a mortality table that is based upon your own experience, or if your experience is not credible, his judgment of which of the many mortality tables best fits your market.


This is another problem with the homogenizing of underwriting. If the actuary has built in mortality premium suitable to the market, the underwriting standards need to be broadened accordingly. Assume, for example, that if standard underwriting is applied to an average segment of the population, 85% would be issued standard. If those same standards are applied to a segment with a less favorable impairment profile, perhaps only 80% would be standard. If the increased mortality has been offset by the higher premium, you would want to attain the 85%. The mortality of the lower economic sector, with the assortment of untreated impairments such as hypertension, diabetes, and perhaps more hazardous employment, has been priced into the product. That is probably a justification for the "table shaving" approach in those markets. It can be viewed as a way to adjust standard underwriting to the extra mortality built into the premium. It is probably more practical to change the "rule" for a rule driven underwriter than to try to change the underwriter.


One way to accomplish a market adjustment when a product is premiumed for extra mortality is to adjust the screener procedure. For example, the screener may be required to select the best 80% of the cases and to issue them standard immediately, with no information beyond that already on hand, the application, the MIB report, prior coverage files, and any agent watch warnings. Only 20% of the applications would then be referred to the underwriter, who would decide what, if any, further information should be obtained to evaluate the case. Some companies also place a limit on the percentage of cases on which the underwriter may seek additional requirements.

The job of the screener is to evaluate each application quickly and place it in one of two stacks, the cases to be issued and the cases to be referred to the underwriter. An experienced screener can be expected to handle several hundred applications a day. It only takes a minute or two segregate the apps that have no significant impairments listed and meet other company requirements. It is important to not break the rhythm with other clerical duties.

An application will be submitted, i.e. entered into the computer, before it gets to the screener, so some thought should be given to what the submit operator is expected to check, and what should be left to the screener, and perhaps later for the underwriter. For example, the submit operator should be checking only those items that will be keyed, and computer edits should qualify the agent number, license and watch status, zip code matches with city and state, etc. On the other hand, the screener is scanning the questions for yes or no answers, so is the logical person to catch unanswered questions, and the submit operator should NOT be checking that. The screener probably needs a third stack for the later, but if you are receiving a significant number of apps with skipped questions and other omissions, you probably have a defective application form. As popular as it is to blame agent training for such omissions, a reworking of your app to make it easy to complete can be very effective in eliminating completion problems.

"Table shaving" is the willingness to issue standard to persons who would otherwise be rated up several tables. The reasoning is that the additional premium for the extra mortality is small, and is offset by the saving in the expense of gathering the information to distinguish the difference. On a purely underwriting basis, this is a doubtful proposition with most impairments. More important is the savings in agent stress and worry. The possibility that the agent might have to place a rated case (and that the prospect refuse the offer) for a small extra premium is a big thought problem for agents.

See this discussion of expanded standard underwriting from the underwriter prospective, and this from the actuarial prospective.

On the Stories page, "Turning the tables" is about a company that had a product priced to be issued standard through table 4. That means the actuary has set the premium slightly higher to allow "standard" issue not only to the majority that would be standard anyway, but also the smaller number of applicants that would normally be table 2 or table 4. That adds about one table to the usual standard premium. In that instance the underwriters had been told (by top management) to subtract 4 tables from any rating. So the actuary adding one and the underwriter subtracting four is pretty humorous, unless of course, you are a stockholder.

The prospect for covering the extra mortality with expense savings is a more realistic with impairments such as blood pressure. When the application discloses a history of hypertension, with the comment that it is controlled by medication, do you order an APS? If the blood pressure is controlled to normal range, the case is standard. If the control is less effective, it figures to be a table 4. A good portion of those cases are going to come out standard after the company has stood the expense and delay involved with an APS, so most companies with take the applicant's/agent's word for it, and issue standard. In that case, the company has a standard through table 4 practice, at least for hypertension, whether or not it is stated in those terms.

Height and weight represents the other extreme. You have it on the application and the extra mortality is clear. Table shaving clearly reduces the margin to the company.

Oral fluid testing, the dreaded "swab", is another area where agents argue that the expense (and effort on the part of the agent) is not justified by savings in extra mortality. Studies show, however, that there is a positive return to the company even at very low face amounts. This study should be required reading for the officer in charge of that decision.

Something close to "guaranteed issue" or "group underwriting" is considered by many to be a requirement in the workplace market. It is argued that the employer will require every employee to be offered coverage as a condition of access at the workplace and a salary deduction slot. In reality, the requirement comes from the agents, not the employers. Nonetheless, you have to deal with it, and most companies will issue everyone standard if a threshold percentage of the employees apply. On the small groups, and at low percentages, you are clearly exposed to selection.

But you can't stretch the concept. In one company, once the initial enrollment qualified (with 25 apps, regardless of the size of the work force, already nonsensical but not the point here) then anyone who decided to apply at a later time was also guaranteed issue. The chief underwriter had never questioned the practice.

A compromise approach to group underwriting at one company was to require a full app (long form health questions) and MIB on each applicant. Each case was underwritten and the dollar cost (the sum of all ratings above standard) of the total extra mortality was compared to the profit to be expected if all of the policies were standard. If issuing all of the policies at standard left the company at break even or better, all were issued standard. If not, all the cases were issued at the appropriate rating or declined, at which point the agent (and the employer) could place the cases or not, as he chose. Most employee sets were issued standard. In the few instances where policies had to be rated or declined, the agent grumbled, but not the employer. The usual percentage of the rated cases were placed.

The challenge, of course, is getting anything but a clean app from agents who are not accustomed to obtaining any health information at all. One counter is to require a home phone number on the app so you can spot check. Don't be surprised when you get phony phone numbers. At least then you know what your situation is.

If you are so fortunate as to be entering the workplace market with your own agents, or with neophytes, don't bother to offer guaranteed issue.

Preferred underwriting may seem to be the mirror image of table shaving, but it will have a similar effect on the mortality of your standard classification. When your create a preferred class with a rate better than your standard rate, you obviously remove some of the better risks from standard, thereby increasing the average mortality in your standard class. It is common to see the three-two practice: three non smoker and two smoker classes. If you create a preferred and super preferred class, you must increase your standard rates to compensate.

Here is a good discussion of the effects of table shaving, preferred underwriting, and exceptions. Note the certainty that agents will target companies to take advantage of the underwriting programs. Even if the subdivision of the standard class is properly reflected in the rates, a company that does not monitor the percent of issues falling into each division is going to find a disproportionate share falling into the highest preferred, and thus lowest rate, class. Probably agent pressure and underwriter human nature is going to contribute more to this than agent targeting.

The moral: if you price assuming 10% of the (otherwise standard) risks will be super preferred and 30% preferred, with the residual 60% standard, you better make sure that is what happens. As the agents say, expect what you inspect.

If your underwriting rules vary by product, to the extent that the products are interchangeable in the field the agents will select against you. The best practice is to have one set of rules that apply equally to all life products. The most common deviation is for whole life written in the burial insurance market, where guaranteed or graded death benefit issue is considered a requirement imposed by competition (for agents). If a company allows underwritten products to be offered alongside the burial products, some selection is inevitable.

Commission differences can exacerbate the problem. If the company attempts to offset higher expected mortality with a lower commission, the agent will be sure to do careful field underwriting, reserving the guaranteed issue for applicants clearly too impaired to qualify for the higher commission version.

In one extreme case, a company had two level term products which were indistinguishable, other than by the reinsurance arrangements. However, the issue limits, the non med limits, and the APS practices were quite different. One required the oral swab and the other did not. Naturally the agents chose which product to write on a case by case basis according to their expectation of ease of issue and lack of requirements, particularly the unpopular swab. Rationally, you might expect the company to prefer the more liberal requirements on the more heavily reinsured product, but the reverse was true.

While situations that obtuse are rare, it is generally true that reinsurers have a better understanding of underwriting than most companies, and are not subject to the agency pressures. A company has more flexibility in how it handles cases lower than its retention than with ceded cases. The company that exercises that to liberalize underwriting on cases below retention will experience higher mortality, as the agents keep the face amount of the sale just below the threshold.

As is stressed in the Reinsurance page, you are going to pay all of your death claims in the long run, so reinsurance should never be a consideration in establishing your underwriting rules and practices. If you are hoping for a version of the greater fool theory to apply, it may, but it won't be the reinsurance company.

A lot of premiums are lost in underwriting on cases that are approved. A policy is dated the date of the application unless it is delayed for underwriting requirements, and then the common practice is to date it the date of underwriting approval. Even though the company has CWA, and the applicant has coverage, no premium is earned between the app date and the approval date. The delay in starting the bank draft is not what the applicant expected, and he forgets about it and spends the money elsewhere. You can lose the case because of it.

A better practice is to date all policies (except those that are obvious declines on the app) the application date, and start drafting premium on schedule, even if the case is delayed for months in underwriting. If CWA is one month, then the first draft date would be one month after the application date. Drafting probably creates the equivalent of a binding receipt, so mailing a formal binding receipt to the applicants which are delayed past the first draft date adds no risk, and should have a positive effect on retention. The premium drafted is simply added to the CWA on the pending file and not applied until the case is issued. If there is a concern over the added risk of a binding receipt, take a hard look at the your conditional receipt cases where death occurred prior to issue. You will find that you paid most of them, and on the rest you ran up some lawyer bills before paying the face plus some extra for the opposing lawyer. You are on the risk, so why not collect premium for it?

Note: one company was dating the policy the date of issue (instead of the app date) even on cases with weren't delayed. That is the sort of thing you will get unless you go look at what is going on in the cubes!

The first line of defense in underwriting is of course a comprehensive application, accurately completed by the agent at the point of sale. To accomplish this, you need a system that identifies those agents that give you reliable information, and those that don't, and that adjusts the extent of the subsequent underwriting requirements accordingly. Of course the agents need to be fully aware of your system. Again, the distribution system creates nuances. If you have captives, management pressure on the problem agents can get you improved applications. With brokers, the best you can hope for is to get those "clean" apps that "smooth over" health problems sent selectively to your competition. It is a tough balance, as the carrot most often offered is quick unencumbered issue (less underwriting for accurate apps), and that might have the opposite effect.

A system I have used to good affect with captive agents is descriptively named Red Watch-Yellow Watch-Green Carpet. A database is maintained of "hits", where other information turns up false or misleading information on the application. With any single app, you do not know if it was the agent or the applicant doing the concealment, so you are looking for patterns. With a single hit, the agent is on "yellow watch", which means only that he is no longer entitled to whatever sweetener you provide for the "green carpet" agents. But several hits, the exact number depending on how blatant the situation is, and the agent moves to "red watch". That means that every one of his applicants gets a phone call to check on the information. Then one of two things will happen. Either the hits pile up rapidly (because now you are asking the questions directly on the phone), or they don't. Things get obvious quickly, and it is time for agency management to attempt to convert the sinner. In an amazing percentage of the instances, they will be successful. If not, you have to eventually terminate the agent.

For those green carpet folks, you might try a monthly publication like the "Green Carpet Flash". I see if I can dig up some of those to scan. Do it right, and it can be a bit of an embarrassment to be the only agent in the agency not to get one. You know you are winning when you start getting anguished pleas to be added to the mailing list. You will probably hear from the agency guys that the bad agents need the helpful information more than the good ones. Your answer? Let them borrow a copy from the agents that aren't clean apping you.

A good telephone operation is a necessity. It gives you the ability to check on the information you are getting on your applications, and it will provide better information than a commercial inspection report (which is done by phone anyway). Even if you prefer to outsource that, you need the capacity to call the applicant to fill in bits of information, either because it was left off the app or was ambiguous, or because the underwriter is wondering about something. Sending the question to the agent is demonstrably ineffective and leads to incompletes, but that is exactly what the underwriter will do if you don't have telephone capacity yourself.

Be sure your application requests a phone number and/or an email address "where we can reach you during the day if we have any questions". Be sure to go for that email address. Today more people can be reached at work by email than by phone.

Calling the applicant is not something you will be able to get your underwriters to do. If you or I were looking at an app and wondering about something (particularly if it relates to what the applicant wanted), we would automatically pick up the phone. If you have to wait two weeks for an answer to that sort of question you will have either forgotten why you wanted to know, or won't care. For whatever reason, too shy, too busy, too professional, underwriters don't call. I suspect the typical underwriter mentally processes files as they come, and it doesn't matter whether to him whether the file comes back a month from now, or in 5 minutes.

The underwriter generally prefers to write the question on the underwriting worksheet and have someone else call, or email the agent. So the next best thing to an underwriter that makes calls is having someone handy to the underwriter that makes calls and gets the answer back to the underwriter while the file is still sitting there.

Conversely, you don't want your screener making calls. They should be moving too fast to be reflecting on the esoteria of apps. The goal of a screener is to separate out the 70 to 80% of the apps upon which there are no questions, and to issue them on the spot. The chaff goes to the underwriter, who can decide what needs to go to the telephone team, or for the ordering of requirements.

Speaking of applications, the form itself warrants careful work, making it convenient and easy for the agent to complete. Most applications I see are error prone, crowded, and unnecessarily long and complicated. I recently saw one that was 12 pages long. It did have a very nice picture of an eagle on it, but I am not sure why.

A little work will give you a single sheet, two sides, application 8 1/2 by 14, legal size, with the bottom 3 inches the tear off that is left with the applicant. If you have products that require real differences in the app, why not have a second app? What is better, two single sheet apps, or one two sheet app? What do you think the agent has a better shot at, picking the right app, or filling out just the appropriate spaces in that multiple page jumble? Here is a good app I made this years ago, so you will want to make sure the authorization forms are up to date. The agents of the world would like a single page application like this. Note that the tear off language is at the bottom of the front page and the top of the back page. The app turns over end for end, not side by side.

This section may seem like an odd place to discuss agent advancing approaches and agent retention, but most executives would admit that underwriting does more to screw up both than the rest of the company combined. Experience proves that the speed of issue is more important to agent attitude than the actual decisions. The result is the same, however, because ordering requirements is the major source of delay.

The purpose of the agent advance is to get enough money into the agent's pocket quickly enough so that he can make a living. Other things being equal, the more money you can get to him, and the quicker you can do it, the more likely he is to stay with you. Of the list of things that cause agent turnover, right after just not liking the business comes starvation, and next, frustration about pay caused by underwriting and issue delays.

Ideally, you would insulate the agent's pay from underwriting activity. The first obvious step (I will consider the negatives later) is to advance on submit. To avoid weekly cut-off problems, you advance on each case, the day the app arrives. To avoid charge back frustrations with cases that don't get issued, you don't charge back as long as the agent meets percentage of issue standards. Agency professionals often point out that most advancing systems are designed to avoid bad balances on the worst agents, not to encourage and retain the best. They also often seem designed to be self actuating, so that agency management can avoid the hard work of staying on top of the situation, agent by agent.

Most restrictive advance rules can be traced to fixed ideas about renewal commissions. Have you heard "I want my agents to have renewals in the future"? That is a nice sentiment, but the agents (and stockholders) would have preferred the agent make a living today. How about "Charge-offs of bad balances look bad"? That sounds frugal, but penny wise and pound foolish. Reasonable uncollectible balance creation can be very profitable. Turnover is your problem, not balances. And then there is "balances demoralize the agent". That is right up there with "just because" as a reason.

Advancing on submit instead of issue does mean you have to either cut the advance to allow for the difference, or do charge backs. Of course, if you do the former, you can set the percentage to match the experience of the specific agent. That sends your better agents more money and the lesser ones, less money. Sounds like a plan.

Advancing on submit can also lose the attention of the agent if you need him to do anything after submit to support underwriting, like order a medical. In my view exams should be ordered by the home office anyway, and since the days of asking the agent to bother doctors for the APS are long gone, what is left? Delivering amendments and ratings perhaps.

Insulating the agent from underwriting results will can cause balance problems with agents that are dishonest, or just plain bad salesmen. Excessive loss of business is created at the point of sale, nowhere else. That is, if you don't have other mechanisms for getting rid of those agents. There is always letting the agent go, I guess, but that is so unpleasant and stressful. But suppose you had a system that identified the poor or dishonest salesman, and then let the future balances be the responsibility of the manager? We know that doesn't work with the first line manager. His ability to hope, rationalize, or deny is limitless. I was thinking of the top agency person. Cut the CEO in for a little of that, and that will get it done. Impractical, yes, but you get the idea.

Post-claim underwriting is the practice of issuing policies with little or no underwriting, taking the answers on the application at face value, and then doing in depth underwriting when a death claim is received. While it is prohibited in most states on certain types of coverage (such as LTC), the picture is cloudy regarding life insurance. Most insurance professionals consider the practice unsavory, and would deny that their company engages in it. On the other hand, they feel the company should have the right to rely on the statements in the application, and to investigate when there is an early death. How do you resolve this?

In my opinion you should NOT investigate (underwrite) every death claim. There should be some reason, suspicion, or tip off to point to as the reason for the investigation. If your claims manager testifies that it is your practice to investigate every claim regardless of circumstances, that is prima facie post-claim underwriting, with negative implications. Second, if your practice is to issue every case off the app, and to ignore information that a reasonable underwriter would investigate, it is pretty clear what you are doing, and you are going to lose most of your cases in court.


In this case the court characterized the underwriting as "a cursory investigation which involved simply running a check with the Medical Information Bureau and reviewing the application." When the claims administrator testified that "always does a post-death investigation" of the medical history, that was enough for the court.

In Standford v. Veterans Life, the court held for the plaintiff insured, even though material health questions were answered in the negative. The court rejected the claim that the insurer was bound by whatever the records of the doctor reported on the app would have revealed. However, the claims administrator for the company testified that the company always did post- claim underwriting when death occurred in the contestable period. Apparently, the court held for the plaintiff SOLELY for that reason:

"Because the court finds coverage on the basis of post-claim underwriting, it does not have to reach this issue."

The cases in most states do not come down so nakedly on post-claim underwriting, but it is likely the company is losing on that issue. Often the court will say the insurer should have inquired, usually of the doctor shown on the app, ignoring all the times they have said that the doctor information is not imputed to the company just because a doctor is listed on the app.

The internet is full of lawyer sites soliciting claimants who feel they have been the victim of post-claim underwriting. Most sites imply that the law is clearer than it is on such cases, but the lawyers are probably right that it doesn't take anything more to justify a shot at a lawsuit.


This from law free advice: Because some insurers engaged in "post-claim underwriting", a practice in which the insurer would write a policy and take the premium, and only after a claim was submitted look to "find a way out of it", many states have statutes which prohibit "post claims underwriting." In those states an insurer or plan cannot rescind or cancel a policy once an insured has filed a claim for benefits unless the insurer or plan can prove intentional fraud.


Regarding post-claim underwriting on long term care policies, where the legislatures and courts have been active in protecting the interests of seniors, such a practice would probably mean the insurer loses, whether there is a specific statute or not.

Texas Senior Law: In most states, all medical questions, examinations and the decision to issue coverage must now be made "up front." The practice of "post-claim underwriting" is outlawed there. No more selling policies to anyone who can write a check, then looking for excuses not to pay after a claim is made!

Unfortunately, as of October, 1995, there were 16 states, including Florida, Texas, Massachusetts and New Jersey, that had not banned post-claim underwriting.

Suppose the insured is killed in an accident while still in the contestable period. Some claims departments completely underwrite the case to see if they can find any impairment not disclosed on the application. Aside from the questions raised about post claim underwriting, is that a smart way to spend your money? If you don't find anything, you have wasted the effort. If you do find something, and deny the claim, you have a guaranteed lawsuit. If you total up all of your experience in these lawsuits, you will find it would have been cheaper to pay all the claims up front.

The law varies from state to state on whether the cause of death has to be related to the concealed impairment for the later to constitute a defense to the claim. But if you look at your actual results, rather than what the statute says, you may find the "law" is different than you think it is. Most of the cases you defend on this ground end up settled for the amount of the policy plus attorneys fees. Your attorney gets very uneasy when it is time to go in front of the jury with a defense that most laymen will characterize as just digging around to find an excuse not to pay the claim. If you lose the summary judgment motion, you might as well pay up.

The accidental death is the extreme case. There is more disagreement concerning the proper course when an impairment was concealed, but the cause of death is something different that the insured did not know about at the time of the app. If there is no relationship, for example, concealed hypertension but death from cancer, you have a problem similar to the accident situation. You can get some tough ones, like the drug user who gets shot in the street. The key is to have clear rules about what gets reviewed before your claims people precipitate the lawsuit.

A claims committee should review every claim which the claim manager proposes to deny. If you are going to avoid the dumb moves, you need somebody on that committee that thinks that the purpose of a life insurance company is to provide the policy benefits for the beneficiaries when the insured dies. You need to attend some meetings and listen. If what you hear is about saving the company money, get yourself some members that believe in life insurance. If you go broke paying death claims, the problem was back when the top management established the policies for the field and underwriting, not at claim time.

Here is an example of a dumb move. The cause of death was gas inhalation, and the policy had a clear exclusion of death from gas inhalation. So the claims manager denied the claim. Simple, except that the deceased was working at the bottom of a storage tank which had been emptied for cleaning. A little thought will tell you that the "gas" exclusion was there to avoid those probable suicide situations that you can't prove. And why punitive damages should sometimes be awarded.

How about when the applicant is on oxygen when the agent takes the app, you know, with those things in his nose? Nothing on the app about it. How about when the applicant is in a wheel chair because a leg was amputated due to the diabetes that shortly thereafter killed him? How about when the app was taken by an unlicensed new hire?

When a case just doesn't feel right, or when the claims committee has to worry it for 30 minutes, pay the claim. You will save money while doing the right thing. Can't beat that.

Most claim departments (and legal departments) do poorly when dealing with the claims of juvenile beneficiaries. Granted that someone not of legal age cannot give a valid release, and you are not going to send one a $100,000 check until you have evidence of a court appointed guardian of the estate. But what about those small claims? If you can get beyond the legal technicalities for a minute, do you really think that if you pay every such claim under, say, $5,000, that the juvenile is going to make you pay again when they turn 21? You can do this for a long time before you run into the first amoral screwball, you have saved a lot of administrative cost, and you still probably win the case.

The non productive technical requirement issue extends to other beneficiaries as well as juveniles. A quick run through of all the claims that have been processed but not yet paid will reveal a number waiting for some release or statement that should be waived. On most of these you are paying interest on the amount due. If you waive enough of these requirements you will end up paying one or two twice, and still money ahead.