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Difficulty: MediumSources of Underwriting Information

An insurance producer is submitting a high-value life insurance application for a prospective client. Due to the face amount and the client's disclosed medical history, the underwriting department requires an Attending Physician's Statement (APS) and an Investigative Consumer Report. Which of the following regulatory compliance actions must be completed regarding these sources of underwriting information? (Select all that apply)

  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 specific authorization outlining how their protected health information will be shared and used.Answer
  3. C
    The producer may correct any discrepancies found in the APS directly on the original application without the applicant's initials.
  4. D
    If the application is declined based on the investigative report, the insurer must conceal the name of the reporting agency to protect confidentiality.
  5. E
    The insurer may substitute the Statement of Good Health in place of a signed medical release form during the initial application process.

Answer

The correct actions are providing a written disclosure for the investigative consumer report and obtaining a signed authorization for the release of protected health information.
Under the Fair Credit Reporting Act (FCRA), an insurer must provide written notification to the consumer that an investigative report may be requested. Additionally, under HIPAA privacy rules, obtaining an Attending Physician's Statement requires a specific, signed authorization from the applicant detailing the use and disclosure of their medical information.

Step-by-Step Solution

1
Identify the required sources of underwriting information requested in the scenario.
The scenario requires an Investigative Consumer Report and an Attending Physician's Statement (APS).
Different sources of underwriting information are governed by different federal privacy and consumer protection laws.
2
Apply the regulatory requirements for obtaining an Investigative Consumer Report.
The Fair Credit Reporting Act (FCRA) requires that the applicant be given written disclosure that such a report may be requested.
Investigative reports gather subjective information through interviews, triggering strict FCRA consumer notification rules.
3
Apply the regulatory requirements for obtaining an Attending Physician's Statement (APS).
The Health Insurance Portability and Accountability Act (HIPAA) requires a signed authorization from the applicant to access their medical records.
An APS contains protected health information (PHI) which cannot be legally shared by a medical provider without explicit patient consent.

Key Concept

Regulatory Compliance for Sources of Underwriting Information
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Topics

Sources of Underwriting Information

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