Medical records bureau agrees to open files - Medical Information Bureau will make records available to people whose ability to get insurance may have been affected - Brief Article

Nation's Business, April, 1996 by Milton Zoll

Medical Records Bureau Agrees To Open Files

Just as inaccurate credit-history information can sink a small business's loan application, faulty medical-history information can lead to rejection or higher rates for health, disability, and life insurance for business owners and their employees. For years, loan applicants have had the right to review and correct faulty credit-history information under provisions of the Fair Credit Reporting Act. Now the same right has been extended to those denied or charged higher rates for insurance coverage.

The nation's largest insuranceinformation reporting agency, the Medical Information Bureau (MIB), agreed in October to a Federal Trade Commission request to open its records to the scrutiny of individuals who have been adversely affected by their medical-history information.

"Before this agreement was reached, consumers often complained that they'd been turned down for insurance but weren't told why," says Jody Bernstein, director of the FTC's Consumer Protection Bureau. "Now they will be. If an error has been made, it's in everyone's interest to correct it."

The MIB, based in Westwood, Mass., is a nonprofit organization with approximately 680 member insurance companies. It collects data on individuals from insurance companies and furnishes that information to MIB members, which use it to process insurance applications.

If an insurance applicant has a condition that is significant to health or longevity, MIB member companies are required to send a brief report to the MIB. In addition to information on an individual's medical history, MIB files may include driving records, criminal convictions, and whether an individual participates in hazardous sports. The bureau's member companies account for 99 percent of individual life-insurance policies and 80 percent of the health and disability policies issued in the United States and Canada.

Under the agreement with the FTC, insurance companies using MIB data must notify each applicant who is denied insurance or is charged more for insurance whenever three conditions exist:

* The insurer received information from the MIB pertaining to the applicant;

* The information received from the MIB was used to alert the insurer to the possible need for further investigation of the applicant's insurability; and

* The applicant for insurance was quoted a price or was rejected in whole or in part on the basis of the information obtained from that investigation.

Individuals who receive such notices are entitled to a free copy of their MIB report if the request is made within 30 days, enabling them to verify the correctness of information in the document.

Says MIB's president, Neil Day, "MIB reports are not used as the basis for an underwriting decision but are used to help detect and deter fraud upon insurers and their policyholders."

Under the new agreement, insurance applicants are now assured that if a mistake has occurred, it can be corrected.

The author is a free-lance writer in Silver Spring, Md.