The Medical Information Bureau (MIB Group) is a not-for-profit corporation that assists its member corporations with insurance underwriting decisions.
Each member company has access to the Medical Information Bureau’s records on an individual. In return the member insurance company provides relevant information that it comes across in the underwriting process. An accurate assessment of a person’s health or other life hazards allows an insurance company to make an informed decision about whether or not that person is a good risk for the company to insure.
What advantages does this bring to the applying for insurance? It is a way to prevent insurance fraud.
For example, if Bob lies about having Multiple Sclerosis and it’s caught through a check of the MIB, Bob probably won’t get the life insurance policy. At least not at the quoted rate. Which means that the insurance company is not issuing low cost policies to people who more likely to collect on a claim. In turn, that means the insurance company can keep offering cheaper rates to honest people. It also means the company can stay in business to pay out on claims of honest people.
An Overview of the Underwriting Process
Underwriting is the process of reviewing an application and making an offer. When you apply for life insurance the premium on the quote is a guess at what you might pay each month. An underwriter working for the insurance company will review all the information you include with your application, possibly request records, and then make you an offer of coverage.
Many times this offer reflects the price listed on the quote. Sometimes it does not when there are other health issues. One of the most common reasons the prices on the offer do not match the quote is many people are uncomfortable with listing off their health issues to their insurance agent. These issues are normally revealed on the application.
What Happens When the Application Goes to the Underwriter?
When the application first goes to the underwriter, he or she will check two places. The first is the Medical Information Bureau. The second is the Rx Database. These two checks tell the underwriter whether the information on the application is accurate. If there are medical conditions on the application, an additional call for medical records will be made to the hospital to confirm the pre-existing condition and any medical procedures.
When the underwriter has all of this information, she does not arbitrarily assign a health class. She uses tables created by the company’s actuaries. For life insurance these are called Mortality Tables. They reflect how long a person is likely to live in almost every conceivable circumstance. The actuary analyzes data on life span and then creates these tables. It is an ongoing process due to constant advances in medical science. Thus increasing average human lifespan.
When all these factors are combined, a decision is made. The underwriter sends the offer to your insurance agent who presents it to you.
The Medical Information Bureau’s (MIB’s) Role in the Underwriting Process
During the application review, the underwriter makes an MIB check. If you have never applied for insurance before, you will not have a record. Records come from companies offering life, health, disability, critical illness, and long term care insurance. Even if you have previously applied for insurance, you might not have a record. Because they do not have data on the insurance company’s decision to cover you, healthy people often do not have records. Secondly, records only go back seven years. Beyond that, they are no longer considered relevant to hold on to.
The MIB only sends coded information to the underwriter. They do not make an opinion or offer analysis of the data.
Insurance companies do not share information with the MIB without your consent. Part of the life insurance application requests permission to obtain information from the Medical Insurance Bureau. There is another authorization (although sometimes they are part of the same authorization) to share any relevant information with the MIB. If you do not sign this, the company will send your application back to your agent as incomplete.
What Information Does the Medical Information Bureau Have?
Contrary to some rumors, they do not have a person’s medical records. If your life insurance company needs access to your medical records, they will request them directly from the hospital. They will also ask you sign a HIPAA release form as part of your application.
Their information consists of a series of codes. The codes have various general meanings. The MIB did not design the codes to give ultra-specifics about someone applying for insurance. They are designed so the underwriter can match the data the MIB has to what is on the application. If the MIB codes match what is indicated on the life insurance application, everything is fine and the underwriter will proceed. If there is a discrepancy, that’s when problems start.
Types of Information Sent to the Underwriter
The MIB stores more than just medical information about people applying for insurance. While medical information is a primary focus, there are other types of factors that affect an underwriter’s decision on your insurance.
Types of information the Medical Information Bureau collects:
- General medical conditions
- Driving Records (DUIs and the like)
- Hazardous Hobbies (such as motor racing, scuba, and sky diving)
- Hazardous occupations (military service, logging, offshore drilling, underground mining)
Types of information the Medical Information Bureau does not collect:
- Medical Records
- Lab Results
- How a company previously classes your health
- The decision companies have made on your insurance in the past
- Health plan ID numbers
- Driver’s license numbers
All of this information is listed as codes. Both the insurance company and the MIB transfer the information as codes. This helps prevent theft or anyone knowing information they shouldn’t.
Is This Information Secure?
Because the MIB doesn’t collect specific medical data, medical records, or health plan records, there is little point in thieves stealing this data. The coding makes it even more difficult to decipher any information. There is a much longer article going into medical identity theft here.
The MIB, like the rest of the insurance industry, is subject to government regulation. They comply with the Fair Credit Reporting Act (FCRA), Gramm-Leach-Bliley Act (GLBA), and Health Insurance Portability and Accountability Act (HIPAA). They themselves have guidelines which their member companies must follow to remain members.
If you worry about this, you can always request your Medical Information Bureau record and see what is in it. Call (866) 692-6901 Monday thru Friday 6AM to Midnight EST. You can also request your record online.
How Does This Affect My Insurance Application and Rates?
Unless you are trying to defraud your life insurance company, this helps you indirectly. And we don’t recommend trying to defraud your insurance company. It only ends badly.
When insurance companies protect themselves, they are protecting their rates. Protecting their rates protects you as their customer. When insurance companies lose money through paying out more than their they anticipated, they need to raise rates to stay in business. That means raising rates on new customers. Sometimes that includes raising rates on current policies.
Part of the agreement to become a member company of the Medical Information Bureau is to not make decisions solely based on the codes they provide. The codes are general enough that it would be unfair to the person applying for life insurance. The MIB also doesn’t store medical records, lab results, or other specific hospital record type information.
How Does This Have Anything to do with Smoking Weed?
For the most part, it doesn’t. However, since the Medical Information Bureau does not like to specifically reveal what it has codes for, we cannot say for sure whether there is a code for recreational marijuana. We will keep trying to find out and update you when we have more concrete information.
If you have any questions we did not answer, we are happy to help. Just call MJ Life Insurance at (888) 987-8447. Your call is 100% confidential and there is never any obligation to buy.