Every so often an Arizona life insurance applicant will ask why an insurance company requires a driver’s license number, credit report, etc., when applying for coverage. They also ask where the insurance company collects medical history information on the applicant and how detailed this information is.
MIB
Many applicants may not be aware of an organization named the Medical Information Bureau (MIB) which has been inexistence for many years. The MIB is used by life, health, disability, and long-term care insurance companies to possibly collect general medical information on an applicant. The MIB is widely misunderstood by many brokers and applicants alike. Most misunderstood is the fact that if an applicant has never applied for insurance before there will be no MIB record.
The MIB collects medical information from member insurance companies (of which 99.4% of all insurance companies are) during the underwriting phase. If an applicant applies with another insurer down the road this medical information is shared with the new insurer. A common misconception of the MIB is what medical information is reported.
The MIB does not receive actual blood work results or lab reports. In fact, the information they receive is quite vague and in code format. As an example, the MIB may receive a code from an insurer indicating elevated blood pressure of an applicant, but no supporting documentation is provided. It is up to the new insurer to dig further by either asking the applicant detailed questions, or the reporting insurer for more information.
Another misconception is that the MIB gathers information regarding final decisions an insurer makes on an applicant such as no action, a rate-up, or declination. They don’t.
Motor Vehicle Report (MVR)
The MVR has been used by insurance companies for decades and is pretty straight-forward. The report lists dates of any traffic violations along with the date of conviction or acquittal. MVR’s have been known to be inaccurate at times as they are typically maintained on state-run older technology systems. If an insurer makes a determination based solely on a negative MVR it is recommended that the applicant double-check the accuracy of the report.
The next blog post will deal with newer technology reporting tools used in the insurance industry.