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Difficulty: EasySources of Underwriting Information

During the underwriting process for a life insurance policy, an insurer decides to order an Investigative Consumer Report and an Attending Physician's Statement (APS). Which of the following compliance requirements must the insurer and producer follow regarding these sources of information? (Choose two)

  1. The applicant must be provided with a written disclosure stating that an investigative consumer report may be requested.Answer
  2. The applicant must sign a HIPAA-compliant authorization form to permit the release of their medical records for the APS.Answer
  3. C
    If coverage is denied based on the consumer report, the insurer must withhold the name of the reporting agency from the applicant.
  4. D
    The producer is permitted to independently modify the application's health history section to match the findings in the APS.

Answer

The correct compliance requirements are providing the applicant with a written disclosure that an investigative consumer report may be requested, and obtaining a signed HIPAA-compliant authorization form for the release of medical records.
The correct requirements involve providing a written disclosure for the investigative consumer report and obtaining a signed HIPAA-compliant authorization for the APS. The Fair Credit Reporting Act (FCRA) mandates that applicants receive advance written notice when an investigative report based on personal interviews is requested. Additionally, HIPAA regulations strictly require written consent from the applicant before medical professionals can release protected health information to an insurance company.

Step-by-Step Solution

1
Identify the regulatory rule for ordering an Investigative Consumer Report.
The Fair Credit Reporting Act (FCRA) dictates that the applicant must receive advance written notice before an investigative report based on personal interviews is conducted.
To ensure consumer awareness and protect privacy rights regarding background and lifestyle investigations.
2
Identify the privacy rule for obtaining an Attending Physician's Statement (APS).
HIPAA mandates that the applicant must provide a specific, signed authorization allowing their physician to release medical files to the insurer.
To protect the confidentiality of the applicant's health information under federal law.
3
Evaluate the remaining options to identify procedural violations.
Withholding the reporting agency's name upon denial violates FCRA adverse action rules, and a producer unilaterally modifying an application violates legal application procedures.
To eliminate distractors that represent illegal underwriting and application practices.

Key Concept

Compliance Requirements for Sources of Underwriting Information
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Topics

Sources of Underwriting Information

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