Paul Sanchez
Insurance companies use large amounts of data to evaluate customers and manage risk. They collect data from various sources, including public records, credit reports, and medical records, as well as directly from customers. This data includes contact information, financial information, and medical information such as health history and pre-existing conditions. Insurance companies also use big data to offer ways to reduce risk and provide incentives for policyholders. They must follow regulations and laws to ensure data is used fairly and accurately, and to protect customers' personal information.
| Characteristics | Values |
|---|---|
| How insurance companies gather medical data | By accessing records from various sources, such as healthcare providers and centralized databases |
| Sources | Healthcare providers, centralized databases like the Medical Information Bureau (MIB), prescription databases, credit reporting tools |
| Purpose | Underwriting and risk assessment, fraud prevention, coordinating benefits |
| Data shared without consent | Insurance companies generally do not share personal medical information with each other without consent. However, they may exchange information for fraud prevention and coordinating benefits if multiple policies are held |
| Data protection | HIPAA regulations protect your information from unauthorized sharing |
| Data access | You can request a copy of your MIB report to see the same information insurance companies see |
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What You'll Learn
Data mining of personal and medical information
Insurance companies use data mining to access large amounts of personal and medical information to evaluate and underwrite potential customers. They use this data to separate desirable customers from risky ones. This involves accessing private medical data from healthcare providers and centralized databases like the Medical Information Bureau (MIB). The MIB database uses codes to broadly categorise medical conditions and determine if further information about an applicant is required. Insurance companies may also request medical records directly from doctors or use prescription databases for underwriting and risk assessment.
In the process of data mining, insurance companies may access information such as criminal records, sexual deviations, financial status, and medical impairments. This has raised concerns about security and the potential for fraudulent use of information without the knowledge or consent of the individuals involved. For example, in 2024, a third-party administrator for life insurance companies, Landmark Admin, suffered a ransomware attack where sensitive customer data, including medical information, was stolen.
To address concerns about data privacy and security, regulations such as HIPAA in the United States protect individuals' medical information from unauthorized sharing. Additionally, insurance companies typically cannot access detailed medical records without an individual's consent, and employers generally require consent to access medical history for insurance purposes.
While data mining of personal and medical information by insurance companies can raise concerns, it is important to note that regulations and consent requirements are in place to protect individuals' privacy and security.
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Centralized databases like the Medical Information Bureau (MIB)
The MIB provides medical history information similar to a credit report, and it helps insurance companies mitigate risk by protecting against fraud. Insurance underwriters use the MIB to verify that the information disclosed on a current application is consistent with previous applications, allowing them to set premiums accurately. The MIB report includes information about an individual's life insurance applications over the last three to five years. It is coded and protected by HIPAA regulations, and individuals can request access to their MIB report for free at any time.
The MIB report is just one factor that contributes to an individual's overall profile when applying for insurance. Insurance companies may also consider other sources of information, such as a medical exam, additional physician statements, and a prescription check, to ensure that everything matches up and no pertinent information is missing from the applicant's health history.
MIB member companies account for 99% of individual life insurance policies issued in the US and Canada, according to the Federal Trade Commission. This means that most major insurance companies in these countries are part of the MIB. By being a part of the MIB, insurance companies can access information that other underwriters may already know about a particular applicant. This helps to ensure that insurance companies are not providing lower rates to individuals who may have omitted certain information from their current application.
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Requesting records directly from healthcare providers
HIPAA regulations ensure that an individual's medical information can only be shared when necessary for receiving healthcare services or assistance with insurance payments. In the context of insurance companies, this means that they must request permission from the individual to access their medical information, usually during the application for coverage. This permission grants them access to specific medical information required to perform key functions and provide services. For example, insurance companies will know about treatments for which the medical provider requests reimbursement, such as procedures performed and basic appointment details. However, they will not have access to the medical provider's notes from the visit or procedure.
In addition to requesting records directly from healthcare providers, insurance companies may also obtain medical data from centralized databases like the Medical Information Bureau (MIB). The MIB is a database primarily used for life insurance underwriting, and it does not provide insurers with an individual's complete medical history. Instead, it uses codes to identify key medical data, such as the presence of a chronic medical condition. Healthcare providers cannot submit information to the MIB without an individual's written authorization, and any information provided remains in the system for seven years. Individuals have the right to request a copy of their MIB report to view the same information accessible to insurance companies.
It is important to note that insurance companies may use medical records to their advantage when assessing claims. While they need to confirm that an individual has suffered the claimed injuries, they may also search for previous injuries or accidents that could reduce the compensation they are entitled to. This is a common tactic used by insurance companies, and it is advisable to seek legal advice if facing such a situation.
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Reports from prescription databases
Insurance companies use reports from prescription databases to gather information for underwriting and risk assessment. These reports are also used to determine premium costs and whether to deny or rescind coverage.
Prescription databases are widely used in the United States to study drug safety and effectiveness, inappropriate medication use, medication adherence, health care disparities, clinical guideline adherence, and the effects of policy changes. While pharmacy claims are generally thought to be a good measure of actual drug exposure, there are concerns that prescription medications being used by a patient may not be captured in claims databases. For example, patients could be paying out-of-pocket for inexpensive prescriptions, receiving samples from a physician, or obtaining prescriptions through a dual pharmacy benefit.
In the United States, insurance companies and employer-based health plans are required to submit information about prescription drugs and healthcare spending under the Consolidated Appropriations Act, 2021 (CAA). This data submission is called the RxDC report, which collects information about prescription drugs, spending on healthcare services, and premiums paid by members and employers.
It is important to note that insurance companies typically do not share personal medical information with each other without consent. However, they may exchange information through certain databases for purposes such as fraud prevention and coordinating benefits for individuals with multiple policies. Additionally, HIPAA regulations protect an individual's medical information from unauthorized sharing.
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Third-party breaches of customer data
The insurance industry is responsible for safeguarding sensitive financial and personal information. Insurance companies collect medical data from various sources, including healthcare providers and centralized databases like the Medical Information Bureau (MIB). While this data is essential for insurance operations, it also makes the industry a target for cyberattacks.
These attacks leverage the interconnected network of carriers, reinsurers, brokers, claims processors, and specialized IT providers that insurance companies rely on to deliver their services. The complex supply chain introduces significant cyber risks, which are often challenging to detect and mitigate.
One notable example of a third-party breach in the insurance sector is the MOVEit cyberattack. New York Life Insurance Company (NYLIC) confirmed a data breach through a third-party vendor, impacting 25,685 clients. The compromised data included sensitive information such as customers' Social Security numbers. Another incident involved Fidelity Investments Life Insurance Co., where a third-party service provider, Infosys McCamish Systems, was hacked, resulting in the compromise of over 28,000 customers' personal information.
To strengthen their defence against third-party breaches, insurance companies should focus on enhancing their third-party risk management, particularly for carriers, due to their dependencies on low-scoring industry segments like IT vendors and brokers. Additionally, ensuring that vendors have robust TPRM processes and encouraging the implementation of effective TPRM programs by vendors' suppliers can help close supply chain gaps and prevent breaches.
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Frequently asked questions
Insurance companies use massive amounts of data to evaluate customers. They access medical records from various sources, including healthcare providers and centralized databases like the Medical Information Bureau (MIB). They may also request records directly from doctors or use prescription databases.
Insurance companies collect a range of medical data, including information on pre-existing conditions, medical examinations, lab tests, and x-rays. They use this data to determine the risk associated with insuring an individual.
Insurance companies generally do not share personal medical information without consent. However, they may exchange information through certain databases for fraud prevention and coordinating benefits if an individual has multiple policies.
To protect your medical data, you can review your MIB report, which contains the same information accessible to insurance companies. You can also withhold written authorization for your doctor to send information to the MIB. Additionally, HIPAA regulations protect your medical information from unauthorized sharing.
