MIB members contribute and receive underwriting information in the form of
highly confidential and proprietary codes, but only with the applicant's
knowledge and authorization.
The Exchange of Information with the Insurance Applicant's Consent
MIB's business model for Underwriting Services is sometimes described as an "information exchange" because MIB members contribute information of underwriting significance about insurance applicants to the MIB database that may be useful to other members that later search the database with the authorization of the insurance applicant. For instance, when consumers apply for an individually underwritten life, health, disability income, critical illness or long-term care insurance policy, they are asked a number of health questions that help the insurance company determine an appropriate risk classification. MIB's Underwriting Services may provide an alert to the member company if the consumer either forgets to answer an application question correctly and fully, or knowingly omits information that may be relevant to the underwriting process.
MIB Pre-Notice and Authorization
If a member company wishes to search MIB's database and/or report information back to MIB, then it must first provide the applicant with the MIB Pre-Notice, which describes MIB's role in the application and underwriting process. The MIB Pre-Notice notifies the applicant that a report concerning his or her medical conditions and avocations may be made to MIB and further, that if he or she later applies for life or health insurance (or files a claim for benefits) with an MIB member company, then MIB may supply that company with an MIB report. The Pre-Notice also provides the address to contact MIB for Disclosure and correction of an MIB Consumer File, if one exists.
After receiving the MIB Pre-Notice, the applicant is asked to sign an authorization in which MIB is identified as an information source along with others that might have records about the applicant, such as personal physicians. This signed authorization allows the member company to exchange information with MIB. Once the member completes the underwriting process, any conditions that have a material impact on mortality or morbidity are reported to MIB using highly proprietary and confidential codes.
MIB's Secure & Confidential Codes
Created decades ago to protect the privacy of individuals in the MIB database, MIB’s members exchange information with MIB in a coded format. MIB's codes are highly confidential and can be thought of as a simple form of encryption.
MIB's members report information to MIB using these codes, which signify different medical conditions, hazardous avocations or adverse driving records that affect the insurability of the applicant (a person applying for an insurance policy that will cover himself or herself as the insured). MIB's codes are based only on information that is collected by the member insurance company with the applicant's authorization during the course of underwriting the applicant's application for insurance. These codes do not indicate what action another member company took with respect to the application (approval, denial, approved with a substandard rating).
With the exception of data from the Department of Treasury on "Specially Designated Nationals" or "blocked persons" and Canada's Office of the Superintendent of Financial Institutions (OSFI) list, and a code that is generated by MIB to represent an unusually high frequency of life insurance application activity in the previous seven years, MIB receives the information that is incorporated into its Underwriting Services information exchange exclusively from its member life and health insurance companies. In this respect, MIB is far different than other databases and credit bureaus that rely on thousands of data sources over which they have virtually no control.
Because MIB uses these proprietary codes, it does not report or maintain the actual or complete details about a person's medical condition or problem. MIB does not collect, maintain or store any medical records in its database such as medical or paramedical examination reports, attending physician statements, lab test results, prescription histories or x-rays. In addition, MIB does not collect, maintain or store any information from creditors about a person’s payment history or creditworthiness. Also, MIB's Underwriting Services do not use any type of scoring system.
Instead, MIB's codes are brief summaries, which simply act as "alerts" to the fact that information was obtained and then reported by a member company on a particular medical impairment or avocation risk that is significant to an individual's mortality or morbidity. These codes do not provide enough detail for an underwriter to make a decision on whether to approve, deny or rate an application for insurance because they typically depict broad, general categories of medical histories or conditions. In fact, underwriters from MIB member companies are prohibited under MIB's General Rules from making adverse underwriting decisions on the sole basis of a reported code. Instead, members are required to conduct a further investigation to obtain more information about the reported medical histories or conditions before making an adverse underwriting decision.
As a practical matter, MIB codes are not typically reported on individuals in good health whose life and health insurance applications are approved as standard or preferred risks. In addition, to help ensure that MIB only reports relevant and timely information about individuals in its database, MIB's consumer reports only include information (MIB codes) that has been furnished to MIB by a member within the prior 7 years (except as prohibited under applicable law), after which they are removed from your Consumer File. As a result, only individuals who have applied for individually underwritten insurance in the past seven years may have an MIB Consumer File.
MIB's Enterprise Security Program
In addition to MIB's use of codes to protect the privacy of individuals, MIB implements and enforces robust security standards and policies through its Enterprise Security Program that are designed to protect the security and confidentiality of any individually identifiable information in MIB's database. MIB is committed to safeguarding such information (including your MIB Consumer File, if any) in a reasonable manner that reduces the risk of unauthorized disclosure, modification, or destruction, whether accidental or intentional. To accomplish this, MIB employs administrative, physical and technical safeguards that comply with applicable laws. MIB's efforts range from providing a secure, leading edge data center in which to store consumer data to using industry standard Public Key Infrastructure software and encryption technology.