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Difficulty: HardSources of Underwriting Information

During the risk selection process for a life insurance policy, an underwriter evaluates several sources of information. Part II of the initial application indicates the applicant has no history of cardiovascular disease. However, a Medical Information Bureau (MIB) report returns a code suggesting a recent heart-related hospitalization. Furthermore, the Agent's Report notes that the applicant was highly evasive when questioned about their lifestyle and engaged in chain-smoking during the interview. Based on these sources of underwriting information, which of the following is the legally compliant action the underwriter must take?

  1. Order an Attending Physician's Statement (APS) to obtain further clinical details, because an adverse underwriting decision cannot be made based solely on information obtained from the MIB.Answer
  2. B
    Immediately void the application and deny coverage, because the answers provided in Part II of the application are considered legal warranties, and the MIB report proves a breach of warranty.
  3. C
    Return the application to the producer with instructions to unilaterally correct the medical history section so that it matches the MIB report before the policy can be processed.
  4. D
    Classify the applicant's evasive behavior as a physical hazard and immediately decline the application by relying entirely on the adverse findings within the MIB report.

Answer

The underwriter must order an Attending Physician's Statement (APS) to verify the medical history, as adverse actions cannot be based solely on MIB reports.
When an underwriter finds a discrepancy between an application and an MIB report, they are required by MIB rules to conduct an independent investigation to verify the facts. They cannot use the MIB report as the sole justification for declining the policy or rating up the premium. The standard procedure for investigating a medical discrepancy is to request an Attending Physician's Statement (APS) from the applicant's doctor.

Step-by-Step Solution

1
Evaluate the discrepancy between Part II of the application and the MIB report.
Identified a conflict regarding the applicant's cardiovascular history.
Underwriters must synthesize data from all sources to accurately classify risk.
2
Apply Medical Information Bureau (MIB) compliance rules to the scenario.
Determined that MIB data alone is insufficient to decline the applicant.
Industry regulations stipulate that MIB reports act as alert systems and cannot be the sole basis for an adverse underwriting action.
3
Identify the proper procedure to resolve the discrepancy.
The underwriter must order an Attending Physician's Statement (APS).
An APS provides direct, detailed medical records from the applicant's doctor to confirm or refute the MIB code.

Key Concept

Sources of Underwriting Information
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Sources of Underwriting Information

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