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Difficulty: MediumSources of Underwriting Information

An underwriter is evaluating a new life insurance application. The applicant's file includes a Medical Information Bureau (MIB) report that shows a code indicating a prior diagnosis of a heart condition. However, the medical history section provided by the applicant on the current application does not list any cardiovascular issues. Based on regulations regarding underwriting information sources, what is the proper course of action for the underwriter?

  1. A
    Reject the application immediately because statements on an application are considered warranties, and any omission automatically guarantees a denial.
  2. B
    Amend the medical history section of the application to include the heart condition and issue the policy with a substandard premium rating.
  3. Request an Attending Physician's Statement (APS) from the applicant's doctor to investigate and verify the medical discrepancy.Answer
  4. D
    Classify the applicant's omission as a physical hazard and decline the coverage using the MIB report as the sole reason for the adverse action.

Answer

Request an Attending Physician's Statement (APS) from the applicant's doctor to investigate and verify the medical discrepancy.
The correct answer accurately reflects industry regulations regarding the Medical Information Bureau (MIB). An MIB report cannot legally be used as the sole basis for an adverse underwriting decision (such as a decline or a premium rating). Instead, it serves as an investigative alert that prompts the underwriter to seek primary sources of medical information, such as an Attending Physician's Statement (APS), to verify the applicant's actual health history.

Step-by-Step Solution

1
Identify the primary conflict in the scenario.
There is a discrepancy between the applicant's self-reported medical history (which is clean) and the MIB report (which indicates a heart condition code).
Understanding the discrepancy is required to determine the next procedural underwriting action.
2
Apply the regulatory rules governing the use of Medical Information Bureau (MIB) reports.
MIB guidelines dictate that an insurer cannot decline an applicant or charge a higher premium based solely on information found in an MIB report.
The MIB serves as a fraud-detection alert system, but independent verification is legally required before taking adverse action against a consumer.
3
Determine the appropriate primary source to verify the medical information.
The underwriter must order an Attending Physician's Statement (APS) to obtain factual, detailed medical records directly from the applicant's treating doctor.
An APS provides the verifiable primary medical data needed to legally confirm or refute the alert generated by the MIB.

Key Concept

Appropriate Use of MIB Reports and the Attending Physician's Statement (APS)
Estimated Time:1m 30s
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Topics

Sources of Underwriting Information

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