Field Underwriting Procedures

APS definition

Attending Physician's Statement - a medical practitioner who treated the applicant for a prior medical problem

insurable interest

proven by love and affection (ie. parent, spouse or child) economic or financial loss (financially responsible for person)

representations (definition)

statements believed to be true to the best of one's knowledge

Privacy rule for HIPAA protected information includes:

all "individually identifiable health information" held or transmitted by a covered entity or its business associate, in any form or media, whether electronic, paper, or oral

APS

attending physician's statement

aleatory

exchange of unequal amounts or values, in insurance contracts premium paid by the in insured is small in relation to that paid by insurer in event of loss

investigative consumers reports

similar to consumer reports in the information they provide, yet the information is obtained through investigation and interviews of: 1) associates 2) friends 3) neighbors

Whose responsibility to carefully compare the benefits, limitations, and exclusions found in the current and the proposed replacement policy?

the Agents

during replacement, whose duty is it to evaluate risk and decide whether or not a person is eligible for coverage

the Underwriter

Whose responsibility is it to make sure the current policy is not cancelled before the new policy is issued

the agents

the insured may be under the assumption that a replacing policy is in their best interests, yet

underwriters find where premium and risk are exchanged, an insured may not be paying the same premium or receiving the same benefits

Paramedical report

medical examination completed by a paramedic or registered nurse

4 essential elements for legally binding insurance contracts

1. Agreement (offer and Acceptance) 2. Consideration 3. Competent parties 4. Legal Purpose

submitting application to the company for underwriting the agent checks the application for

1) all questions have been answered/filled out 2) all necessary signatures have been collected 3) when complete, sends the application to the insurer

an underwriter will sometimes request additional information about a particular risk from an outside source, normally fall into 2 categories

1) consumer reports 2) investigative consumer reports

consumer reports collected through reporting agency

1) employment records 2) credit reports 3) other public sources

HIV test consent form must

1) explain purpose of the test 2) inform the applicant about the confidentiality of the results 3) procedures for notifying the applicant about the results 4) cannot be given if it is confirmed in relation to symptoms (not based solely on presence of symptoms)

if policy is issued with any changes or amendments, the agent is required to:

1) explain these changes 2) obtain the insured's signature acknowledgment of these amendments

Premiums with the application

1) initial premium is collected for a health insurance policy 2) initial premium is sent to the insurer with an application 3) A conditional receipt is given to the applicant by the agent *note the agents cannot bind coverage, so the coverage does not begin until the insurer has approved the application and issued

when a policy is issued, a copy of the application (2 parts)

1) is stapled in the back of the policy 2) becomes part of the entire contract

"notice to the applicant"

1) must be issued to all applicants for health insurance coverage 2) informs the applicant that a credit report will be ordered and other health insurance for which they have previously applied 3) must be left with applicant

two options for medical examination of the insured

1) paramedical report 2) attending physician's Statement

reasons underwriter may require a medical examination of the insured

1) policies with higher amounts of coverage 2) application raised additional questions concerning the prospective insured's health

who needs to sign the application

1) proposed insured 2) policy owner (if different than proposed) 3) agent who solicits the insurance

MIB used for

1) receives adverse medical information from insurance companies 2) maintains confidential medical impairment information 3) systematic method for companies to compare the information they have collected on a potential insured with info other insurers may have discovered 4) Used ONLY AS AN AID for what to further investigate 5) cannot prompt a refusal due to MIB information discovered

2 ways to correct an application

1) start over with a fresh application 2) draw a line through the incorrect answer, insert the correct one, and initial the correct answer

Under HIPPA a covered entity must obtain the individual's written authorization to disclose information that is not for:

1) treatment 2) payment 3) health care operations

no initial premium with the application

1) upon delivery of application the agent must collect the premium 2) must obtain a statement of continued good health from the applicant 3) release the policy (after steps 1&2)

time period for investigative consumer reports

1) w/in 3 days of the report requested: the consumer is advised in writing about the report -consumer is advised they have right to request additional information about the report 2) w/in 5 days of consumer request to provide consumer with additional information

Agreement (2 parts)

1. definite offer: in insurance applicant's offer is submitting an application. 2. acceptance: insurance approves the application and issues a policy

Sources of Insurability information

Attending a Physicians report, MIB report, Credit Reports, Medical Exam Report

in addition to an attending physician's report this will also be requested

Medical Information Bureau (MIB)

MIB

Medical Information Bureau is a membership corporation owned by a member insurance companies - nonprofit trade organization

PHI

Protected health information -

Medical Exam Report (when required, who Conducts, who pays)

Required: rarely by insurance company (therefore often only info is from the application. Conducted: by physicians or paramedics Paid by: the Insurance company

Insurability

The ability of an individual to meet an insurance company's underwriting requirements

Pre-existing conditions and replacing a policy

When getting a new policy, pre-existing condition limitations or new waiting periods may be required and so health conditions covered under the current policy may not be covered under the new one.

Pre-existing conditions

a medical condition for which the consumer (insured) sought medical advice or treatment within a specified period of time prior to the policy issue

material misrepresentation

a statement that, if discovered, would alter the underwriting decision of the insurance company

warranty

absolutely true statements where validity of the insurance policy depends - breach can be grounds for voiding the policy/return of premium

APS source of information is best for

accurate information on the applicant's medical history a) explain what treated for b) why the treatment was required c) length of treatment d) length of recovery e) length of the prognosis *note not always necessary, only when underwriter deems it necessary will it be sent*

Fair Credit Reporting Act protects consumers

against the circulation of 1) inaccurate 2) obsolete personal 3) financial information

representations (insurance purposes)

answers the insured gives to the questions on the insurance application

conditional contract

certain conditions must be met by the policy owner and the company for it to be executed before each company fulfills obligations

acceptability of a risk is determined by

checking the individual risk against many factors directly related to the risk's potential for loss

Fair credit reporting act

ext. procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used

intentional material misrepresentations are considered

fraud

example of conditional contract

insured: pay premium and provide proof of loss Insurer: upon receiving covers the claim

examples of aleatory insurance contracts

john purchases life insurance (or homeowners) policy for $100,000. His monthly premium is $100 he pays two months ($200 in total) before he unexpectedly dies (or his home was unexpectedly destroyed) he receives the $100,000 in exchange for the $200 contribution he has already made

competent parties

must be capable of entering into a contract in eyes of law (legal age, mentally competent, and not under influence of substances)

Legal Purpose

must be legal and not against public policy (ie. needs to be insurable interest and consent)

free-look period begins

once the delivery of a policy is made (does not need to be accomplished physically, but should be whenever possible)

Unilateral Contract

only one of the parties to the contract is legally bound to do anything

contract of adhesion

prepared by insurer and accepted/rejected by the insured - it is often a take-it or leave-it basis, not made through negotiations

main source of underwriting information

the application- filled out completely, correctly, and to the best of the applicant's knowledge

misrepresentations

untrue statements on the applications

consumer reports cover

written and/or oral information regarding consumer: 1) credit 2) character 3) reputation 3) habits

an application is the applicant's

written request to the insurance company to issue a policy or contract based upon the information contained in the application