According to most people, the Medical Information Bureau (MIB) is a mysterious component in the life insurance underwriting process. If you have ever applied for life, health, or disability insurance, chances are you’re in the MIB database. What you may not know, is how the MIB helps detect life insurance fraud.
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.
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 inquiries 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 submitting 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.
By Tony Steuer, CLU, LA, CPFFE
Tony Steuer is an author and advocate for financial preparedness. Tony Steuer, CLU, LA, CPFFE, helps people make sense of the financial world in a way that’s easy for them to understand. His books including, “GET READY!,” “Insurance Made Easy,” and “Questions and Answers on Life Insurance,” have won numerous awards. Tony is the founder of the GET READY! Initiative which includes the GET READY! financial organization system, the GET READY! Financial Preparedness Club, GET READY! Podcast, and the GET READY! Financial Principles, a best practices playbook for the financial services industry. Tony served as long-term member of the California Department of Insurance Curriculum Board. Tony is regularly featured in the media including the New York Times, the Washington Post, Fast Company, and other media. He has also appeared as a guest on television shows, such as ABC’s “Seven on Your Side.” Visit https://tonysteuer.com/ to join the GET READY! Financial Preparedness Club and access free resources.