Let’s face it. Life insurance involves some risk all around. You take the chance just doing business with a company, let alone knowing that you may or may not know if it’s legit until it may be too late for you to do anything. The insurance company also takes risks. It places its reputation on the dealings with its customers. That’s where the MIB comes into play.
Purpose of the MIB, Formerly, the Medical Information Bureau
Founded in 1902, the Medical Information Bureau, now known as the MIB Group, Inc. or simply, MIB, took on the task of protecting insurers from error, omissions, and fraud that may occur during the insurance application process. Insurance companies rely heavily on the ratings they receive from independent analysts regarding the solvency of their businesses.
Proprietary rating systems examine the amount of risk companies take on as well as their ability to pay out claims. They will review all factors that influence its balance sheet. The ratings insurance companies receive directly impact consumer confidence, and thus, the livelihood of these businesses. Therefore, it behooves insurers to assess their risks properly and thoroughly.
The MIB is a cooperative owned and run by members of insurance companies in the United States and Canada. Its purpose to maintain confidential medical information shared between members as a “nationwide specialty consumer reporting agency,” not unlike a credit reporting agency. Insurers rely on information from the MIB during the underwriting to assess their risk.
What the MIB Does
The MIB maintains an information database on individuals who have applied for long-term insurance like individual life, disability income, or health that require underwriting. As you may know, this process requires a health assessment that may include a physical examination with accompanying blood work and tests. This part helps determine your life expectancy.
The MIB part of the process is to share information reported to the organization between its members. This part looks for data that may be misreported or even outright fraudulent. However, an insurance company cannot base a decision on declining coverage for you solely on these findings. They must verify the information. It serves to alert underwriters to potential red flags.
What Does the MIB Collect?
By now, you probably have lots of concerns about what the MIB has on you. First, rest assured that the MIB is subject to HIPAA compliance as a “business associate” of insurers who are duty bound to protect your privacy. The information stored by the MIB is confidential. Second, specific details of medical history are not part of the record. Rather, data is recorded with codes.
For example, a record may flag an individual for hypertension without a specific blood pressure reading. It won’t have copies of medical files or test results in your file. However, its data are not limited to health conditions. It also collects information on lifestyle choices that may impact your insurance risk. These may include data from your driving record and criminal history.
It may also code individual records for participation in high-risk activities like skydiving or even certain behaviors like smoking. Remember, insurance companies operate as businesses. Individuals who smoke, for example, cost the US economy almost $170 billion in direct medical care alone. Clearly, insurance companies have a lot of skin the game.
The MIB operates under a policy of transparency. Your insurer must inform you before any search or disclosure without your authorization. It does not collect credit history other than bankruptcy as it applies to lifestyle. It’s essential to understand the MIB cannot make you uninsurable. Because they use codes without details, further investigation is required.
Using MIB Data
The only reason you’d have a record with MIB is if you have gone through the application process that required individual underwriting. That does not include employer-provided insurance. With group policies like these, individual underwriting isn’t necessary. You also won’t have if you have guaranteed issue life insurance or if the insurer was not an MIB-member.
When you apply for insurance, you promise to provide accurate information. When an underwriter reviews an application, it is simply part of the process of fact checking. Their purpose is to verify the insurability of an applicant. Anything that can affect your likelihood of death is pertinent to the process. It does not, however, collect personal or genetic information.
You will also be given notice asking for your authorization for a MIB search. It’s something you should allow. The underwriter will use the information from the MIB to make sure what you’ve provided jives with what the database turns over. It’s then up to the underwriter/insurer to follow up on these data for verification. In most cases, it is essential anyway given the coding system.
From there, they can determine a proper assessment of your risk and offer you an appropriate policy and premium. Insurance companies share information they obtain with the MIB as part of their database. It’s to their benefit that these data are accurate and verified as well. As a cooperative, their strength lies in their compliance to the mission of the MIB.
Benefits of the MIB
It’s essential to realize that the MIB provides a vital service both to the insurance companies and to the consumers. By reducing fraud, the MIB helps insurance companies provide affordable insurance by ensuring applicants receive the appropriate coverage for their risk. That helps keep insurance companies cost down so that consumers can benefit.
There’s no doubt that the information the MIB holds requires the utmost in confidentiality. That is part of the reason the organization uses proprietary coding without storing any medical records. That also means that they must have robust security measures in place to protect your privacy. Remember, federal regulations demand this compliance.
There is also the closest thing to a national standard on insurance underwriting. Member insurance companies write almost all individual life insurance policies in the United States and Canada. That means a clear policy on how individual data is stored and exchanged. There aren’t any surprises when it comes to the insurance application process.
Obtaining Your MIB Record
The MIB must comply with the Fair Credit Reporting Act requirement as a “nationwide specialty consumer reporting agency” to provide you with a free copy of your own record. You can get this information by calling the MIB at 1-866-692-6901. Be prepared with basic identifiable information.
As with a credit report, it’s within your rights to dispute inaccurate information. Your report will provide additional instructions for the next steps you’ll need to take. As a general guideline, you should review your MIB record annually just as you would a credit report. It will contain the data from its code, the reporting insurance company as well as any others who have received it.
You may find that the MIB has no information on you. If you haven’t applied for insurance, there’s no reason for any data to appear in its database. There’s also a time limit on how long this information may be retained. If it’s been more than seven years since you applied for insurance, there won’t be anything in your record, which only seems reasonable.
The MIB exists to ensure that underwriters receive insurance applications with accurate data. That attention to detail protects both the insurance companies and the consumers. Insurers have a proper assessment of risk, and consumers have the benefit of affordable insurance with companies that comply with federal regulation. For all involved, it is definitely a win-win situation.