Many advisors and their clients may not be aware that the insurance industry owns an organization that stores medical and risk data on Canadians who apply for insurance, and makes the information available to all member insurers. The records, like those of a credit bureau, can be requested and challenged by the individuals.

Medical Insurance Bureau Inc. is operated by more than 500 Canadian and U.S. insurers, even though the average consumer doesn’t even know about it, says Jim Bullock, registrar of the Peel Institute of Applied Finance in Toronto.

Clients must give permission to hand over information to MIB, which protects insurers, policyholders and applicants by preventing fraud and, hence, keeping down the cost of insurance.

Any time a client applies for insurance, the information is reported to Toronto-based MIB, says Léony de Graaf, an insurance and financial advisor with de Graaf Financial Services in Burlington, Ont. “If a client declares a condition or a risky activity, such as smoking, to one company, another company will find out,” she says.

Information collected during the application
and underwriting process for individual life, health, disability and long-term care insurance is kept in encrypted form, says MIB. The database of encrypted information is available to any of the member life insurance firms that own MIB. (A U.S.
operation based in Westwood, Mass., is called MIB Group Inc. [www.mib.com].)

MIB says it does not have actual medical records. Instead, there are about 230 codes referring to factors that determine insurability, such as height and weight, medical conditions such as high blood pressure and heart conditions, and other risks such as a poor driving record or a high-risk sports activity.

The codes are placed in the client’s record, along with his or her name and date of birth.
The records do not indicate what the
company to which the applicant applied did as a result of receiving the information. They also don’t indicate the identity of the company that reported the information.

Nor do the codes indicate more specific details about the applicant’s medical condition or high-risk behaviour, says Bullock. Nevertheless, the codes can be accessed by other insurers and, therefore, can affect the client’s insurability with a subsequent company. For example, the subsequent company could find out if an applicant has had a heart attack, and follow up with the applicant for further details of the condition.

“An insurer can’t use MIB information to underwrite a policy,” says Bullock.

But it can use it as the basis for further questions. Insurers compare the MIB information with other information provided (with the permission of the applicant) from other sources, such as urine and blood tests, and medical records provided by doctors, hospitals and other medical facilities.

Often, one of the first steps taken by insurance underwriters in determining insurability and, therefore, premium rates is carrying out such a comparison.

MIB says all records are “purged automatically on the seventh anniversary” of the insurance application that initiated the MIB record.

The records are accessible only by authorized personnel from MIB-member companies. Data is never released to credit agencies, insurance agents or brokers.

MIB requires its member companies to do
“self-audits” to ensure client privacy. It also sends in audit teams periodically. Penalties for breaching privacy can range from fines to suspending a member company’s access to the MIB system.

Any insurance client, meanwhile, can check the accuracy of his or her report. Requests for disclosure can be obtained in Canada by calling (416) 597-0590 or writing to MIB at 330 University Ave, Toronto, Ont., M5G 1R7.
MIB says it receives more than 100,000 requests a year from people who want to check their records.

If MIB has a record on a client, the client has the right to review it and correct inaccuracies. A translation of the coded format will be sent to the client for this purpose.

The client will also receive the names of any MIB members that have received a copy of his or her MIB record in the past 12 months.

If the client disagrees with any item, MIB will send him or her a “request for reinvestigation” form. After the client submits the form, MIB will contact the company involved in the dispute. Any inaccuracies will be corrected. MIB says the process takes about 30 days.

@page_break@If the client disagrees with the results of the reinvestigation, the MIB says it will issue a “statement of dispute” that will form part of the client’s MIB record — for its seven-year duration. IE