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Difficulty: HardSources of Underwriting Information

An underwriter is evaluating a complex life insurance application and determines that both an Attending Physician's Statement (APS) and an Investigative Consumer Report are required to properly classify the risk. Under federal regulations and standard underwriting practices, which of the following requirements must the insurer or producer satisfy regarding these specific information sources? (Select all that apply.)

  1. Advise the applicant in writing, typically within 3 days of the request, that an investigation involving interviews with associates regarding their character and lifestyle is being conducted.Answer
  2. Obtain the applicant's signed authorization, containing specific disclosures required by HIPAA, prior to requesting the APS from the applicant's medical provider.Answer
  3. C
    Automatically furnish the applicant with a copy of the Investigative Consumer Report and the reporting agency's contact information at the time the report is ordered.
  4. D
    Instruct the insurance producer to cross out and correct any undisclosed medical conditions on Part II of the application to match the findings in the APS.

Answer

The insurer must advise the applicant in writing within 3 days regarding the Investigative Consumer Report and obtain a HIPAA-compliant authorization before requesting the Attending Physician's Statement.
The correct requirements correctly align with federal law: FCRA mandates a 3-day written notice for Investigative Consumer Reports, and HIPAA mandates written patient authorization prior to releasing medical records for an APS.

Step-by-Step Solution

1
Identify the types of underwriting reports being requested in the scenario.
The insurer is requesting an Attending Physician's Statement (APS) for medical history and an Investigative Consumer Report for character and lifestyle information.
Different federal regulations and industry practices apply depending on the source and nature of the underwriting information.
2
Analyze the regulatory requirements for obtaining an Investigative Consumer Report.
The Fair Credit Reporting Act (FCRA) requires written notification to the consumer within 3 days of requesting an investigative report. However, the insurer is not required to provide the agency details or a copy of the report unless an adverse action is subsequently taken.
The FCRA protects consumers by ensuring they are aware when their friends or associates are being interviewed, while specifying exact triggers for further disclosures.
3
Analyze the regulatory requirements for obtaining an Attending Physician's Statement.
The Health Insurance Portability and Accountability Act (HIPAA) mandates that a patient must sign a specific authorization before a healthcare provider can release their medical records to an insurance company.
HIPAA enforces strict privacy rules regarding an individual's protected health information.
4
Evaluate the rules regarding discrepancies found during the underwriting process.
If the APS reveals information that conflicts with the application, neither the insurer nor the producer has the authority to unilaterally alter the original application.
The application is a legal document representing the applicant's statements, and any changes must be explicitly approved and initialed by the applicant.

Key Concept

Sources of Underwriting Information
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Sources of Underwriting Information

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