Financial intermediaries verify data to prevent fraud, the life settlements industry affects insurers' costs, and insurance companies use actuarially fair premiums based on risk.
Financial intermediaries play a crucial role in the insurance industry by verifying information on applications to prevent fraud. They make applications part of the financial contract and verify data with third parties to ensure accuracy. For instance, they may conduct medical examinations and call employers to validate information provided.
Life settlements industry has emerged, where healthier policyholders transfer policies to third parties for payment. This practice impacts life insurers' costs, as policies are no longer lapsing frequently.
Insurance companies use actuarially fair premiums based on risks and historical data, aiming to protect against non-catastrophic losses. They underwrite policies by assessing risks and offering coverage that aligns with their profit goals.
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