Whenever you apply for a life or health insurance policy, you have to sign the application form indicating that you allow the insurance company to obtain information from the Medical Information Bureau (MIB). What is the MIB? How does it have your medical history? Is your information safe with it? Continue reading for answers to these and other related questions.
What is the Medical Information Bureau?
MIB Group, Inc. is a non-profit organization based in the US that protects both parties of an insurance policy: the applicant and the insurer. How it does this is simple. When an applicant applies for an insurance policy, information is submitted to the MIB. Such information may consist of the applicant’s medical condition, medical tests, lifestyle and financial information. Information is submitted every time an applicant applies, even if he ends up rejecting the policy. Whenever the applicant next applies for insurance, the underwriter is able to obtain medical information about him from the MIB. The insurance company will be able to detect fraud or misrepresentation if the answers given on the application doesn’t match the data from the MIB.
Fraudulent claims increase costs for the insurance company, which in turn passes these costs on to the consumer. By preventing fraud and misrepresentation, the MIB protects both the consumers and carriers. The MIB helps keep fraudulent claims and premiums low.
Imagine what it would be like if the MIB didn’t exist. Knowing they have poor health, people may apply to multiple insurance companies to increase their maximum coverage, or withhold material information from an application with impunity. Fraudulent claims would run rampant and as a result premiums will also increase by a considerable amount. With MIB and proper underwriting, all of this can be avoided and everybody will be able to purchase insurance at a reasonable price.
What information does the MIB have?
As we mentioned above, aside from medical information, the MIB also collects financial and lifestyle data of the applicant. If there is no previous history, a new file will be created with the applicant’s name, date and place of birth and occupation. While working on the case, the underwriter may discover medical conditions or lifestyle habits that may be detrimental to life expectancy, such as a stroke, participation in hazardous activities or a poor driving history. This information will be ‘coded’ and submitted to the MIB for future reference. Different information is coded for different types of insurance. For example, a life underwriter would not code hip or back problems, but a disability underwriter certainly would.
Data is encrypted using the code system to ensure that it remains confidential and protected. Records stay in the database for seven years, during which time other underwriters will be able to access the data to come up with their own underwriting decision.
It’s important to note that although the MIB has the applicant’s ‘codes’, they do not know the underwriter’s decision. If company ABC offered a rated policy to a customer, this decision stays confidential with company ABC and the MIB will have no knowledge of this. The codes will be there to serve as a flag for when the customer applies to company XYZ, but no underwriting decision will be revealed.
Information kept in the MIB database is not available to anybody besides the subsequent insurance companies that the applicant applies for next. The broker is not privy to the data, and only the applicant can contact the MIB to get a copy of their record. There is a process for correcting erroneous information allowing disputed codes to be removed.
Be careful of what you write on the application form
Whether it is because of embarrassment or shame from their medical history, or deliberately trying to mislead the insurance company, the biggest mistake that people with subpar health can do is withhold, omit or misrepresent information on the application.
From the perspective of the underwriter, information on the application that does not match the information from the MIB will raise a red flag to them. It has a damaging effect on the applicant’s reputation which will be hard to shed. It’s also less likely that the underwriter will offer insurance to the applicant and even if it does, the policy may be rated to offset the risk that the applicant is hiding even more information. As a consumer, knowing that the MIB exists should act as a deterrent for this kind of activity.
For over 100 years the MIB has protected consumers and insurance companies. It will continue to ensure that companies can offer – and consumers can purchase – affordable life and health insurance for years to come.