During the underwriting process for a life insurance policy, a home office underwriter discovers a significant discrepancy between the medical history provided by the applicant on the application and an impairment code received in a Medical Information Bureau (MIB) report. According to standard underwriting guidelines and industry regulations, which of the following actions is the underwriter legally permitted to take?
- Initiate further investigation, such as requesting an Attending Physician's Statement (APS), to independently verify the applicant's medical history.Answer
- BDecline the life insurance application immediately since the MIB report indicates a potential material misrepresentation.
- CUnilaterally amend the applicant's answers on the application to accurately reflect the findings in the MIB report.
- DIssue the policy with a substandard rating and charge a higher premium based exclusively on the MIB impairment code.
Answer
Initiate further investigation, such as requesting an Attending Physician's Statement (APS), to independently verify the applicant's medical history.
The correct answer accurately reflects the procedural limitations placed on the use of Medical Information Bureau (MIB) data. The MIB serves as a clearinghouse of medical information to alert underwriters to potential fraud or omissions. However, MIB guidelines strictly prohibit insurers from using an MIB report as the sole justification for declining an application, rating a policy, or taking any other adverse action. When an impairment code contradicts the application, the underwriter must use that information as a prompt to conduct an independent investigation, which most commonly involves requesting an Attending Physician's Statement (APS) to obtain the applicant's actual medical records.
Step-by-Step Solution
Key Concept
Permissible Use of Medical Information Bureau (MIB) Reports