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  • What agency tracks, detects life insurance fraud?
  • August 1, 2013
  • Tony Steuer

    By Tony Steuer, CLU, LA

    According to most people, the Medical Information Bureau (MIB) is a mysterious component in the life insurance underwriting process. However, if you have ever applied for life, health, or disability insurance, chances are you’re in the MIB database.

    Established in 1902, the MIB serves as a valuable asset to both the life insurance industry and the insurance-buying public. It keeps premiums costs low by helping to detect insurance fraud, which costs the industry millions of dollars every year.

    Insurance fraud runs up claim costs, which are borne by everyone who pays life insurance premiums.

    According to the MIB website, only a small minority of people try to cheat the system, which, unfortunately, affects the majority of people who are honest and upfront with their answers to questions on insurance applications and medical exams.

    By doing this, they are increasing the costs of the insurance company, which is then placed on the existing policyholders and future applicants. This can reduce dividends on in-force policies and increase premiums.

    The Medical Information Bureau (MIB) stores medical information, which member insurance companies can use to underwriter an applicant.

    MIB serves as an information clearinghouse that stores information, gathering by over 500 insurers, in processing and underwriting cases.

    Member companies send an inquiry to the MIB and in return will receive a short, coded report with information on the applicant’s medical history and other relevant underwriting information.

    Since the MIB stores personal information, it is highly guarded on their database, which is only accessible by member companies. All MIB member companies must agree to a strict set of standards before having access to the data.

    An MIB inquiry often guides insurers to information that is valuable in assessing risks. MIB is a taxpaying organization, supported by assessments from member insurance companies based on their total insurance in-force and business written in the previous year.

    Additional revenue comes from user fees based on the number of inquires a member company submits to MIB. It is estimated that over 90 percent of the individual life insurance policies and 80 percent of health and disability policies issued in the U.S. and Canada are subject to the MIB system.

    The MIB can also provide you with an annual record disclosure fee of charge. To request this information, you can either call the MIB’s toll-free phone number at (866) 692-6901 or by submit an online request here.

    A few things to keep in mind requesting a record disclosure:

    If you have not applied and be been underwritten for life, health, or disability insurance during the past seven years, the MIB will not have a record on you.

    They will ask you for personal information to assist in locating your record, if one exists.

    You will be asked to certify under the penalty of perjury that the information you provided about yourself is accurate and complete, and you represent that you are the person that is requesting disclosure.

    Upon receipt of your (a) request for a Record Search and Disclosure, and (b) proper identification, MIB will initiate the disclosure process and provide you with:

    – The nature and substance information, if any, that MIB may have in its files pertaining to you;

    – The name(s) of the MIB member companies, if any, that reported information to MIB; and,

    – The name(s) of the MIB member companies, if any that received a copy of your MIB record during the 12-month period preceding your request for disclosure.

    MIB is committed to the philosophy that every consumer should be entitled to known the contents of his or her records maintained by MIB and has the right to correct any inaccurate or incomplete information in the record.

About Tony Steuer

Noted insurance author Tony Steuer has spent over 25 years in the life insurance industry. Steuer’s leadership roles include serving on the California Department of Insurance Curriculum board and the National Financial Educator's Council Curriculum Advisory Panel as well as having served as President of the San Francisco Chapter of the American Society of CLU & ChFC, President of the leading Life Insurance Producers of Northern California, and as a board member of the San Francisco Life Underwriters Association. Mr. Steuer is the author of Questions and Answers on Life Insurance: The Life Insurance Toolbook, The Questions and Answers on Life Insurance Workbook and The Questions and Answers on Disability Insurance Workbook - the first two were awarded the “Excellence in Financial Literacy (EIFLE) Award from the Institute of Financial Literacy. Steuer holds a Chartered Life Underwriter (CLU) designation and also holds the Life and Disability Insurance Analyst License, a designation that is held by less than thirty people in California.

Creative Commons License
Questions & Answers on Life Insurance by Tony Steuer, CLU, LA, CPFFE is licensed under a Creative Commons Attribution 3.0 Unported License.

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