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Difficulty: MediumSources of Underwriting Information

A prospective policyholder completes the medical portion of a life insurance application, indicating no prior history of cardiovascular issues. During the risk assessment, the underwriter requests a Medical Information Bureau (MIB) report, which reveals a code from a previous insurer suggesting the applicant may have a cardiovascular condition. According to underwriting guidelines regarding sources of information, which of the following is the appropriate next step for the underwriter?

  1. Order an Attending Physician's Statement (APS) or schedule a medical examination to independently verify the applicant's medical history.Answer
  2. B
    Immediately reject the application because the applicant's medical answers are considered warranties, and the MIB report proves a breach of that absolute guarantee.
  3. C
    Unilaterally correct the cardiovascular question on the application to align with the MIB report, then proceed with policy issuance.
  4. D
    Assign a substandard risk classification and issue the policy with a premium surcharge based solely on the adverse data found in the MIB report.

Answer

The underwriter must order an Attending Physician's Statement (APS) or schedule a medical examination to independently verify the applicant's medical history.
An MIB report acts as a secondary source of underwriting information used to uncover errors, omissions, or misrepresentations. However, strict MIB rules prohibit insurers from using an MIB code as the sole basis for declining an applicant or rating a policy. When a discrepancy arises, the underwriter is required to seek primary, independent verification, which is most commonly achieved by ordering an Attending Physician's Statement (APS) or a medical examination.

Step-by-Step Solution

1
Identify the rules governing the use of Medical Information Bureau (MIB) reports in underwriting.
MIB reports serve as an alert system to flag potential omissions on an application, but they cannot be used as the sole basis for an adverse underwriting decision.
MIB data must be independently verified to protect consumers from being unfairly denied coverage based on a code that may be incomplete or inaccurate.
2
Determine the compliant method to resolve a discrepancy between the application and the MIB report.
The underwriter must obtain independent, primary medical evidence.
Requesting an Attending Physician's Statement (APS) directly from the applicant's doctor, or requiring a new medical exam, provides the necessary verified medical facts to legally and fairly assess the risk.

Key Concept

Proper Utilization of MIB Reports and Independent Medical Verification (APS)
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Topics

Sources of Underwriting Information

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