How effective is the MIB, Inc. suite of product in saving money for its corporate clients? The MIB, Inc. marketing materials offer the following description:

“Life Insurers Save Over $46 Dollars for Every Dollar They Invest with MIB
That’s the return life companies receive from MIB’s protective value as documented by Milliman, Inc. (, a leading global actuarial consulting firm. The MIB Checking Service creates transparency for North American life, health, disability, critical illness and LTC underwriters so they can better understand the health of their applicants. Every policyholder pays for errors, misstatements, omissions and fraud on insurance applications — items that cause underwriters to improperly assess risk. MIB reports provide underwriters with confidential, brief coded medical resumes to compare against insurance medical questionnaires, and in this way provide an “alert” for further investigation. MIB saves the industry over a billion dollars annually and keeps the cost of insurance affordable for honest protection seeking consumers.

A Protective Value Study of the MIB Inquiry Service
Richard L. Bergstrom, FSA, MAAA, Consulting Actuary, Milliman & Robertson, Inc. and Stephen A. Freitas, Senior Developer, MIB, Solutions, Inc., December 1999

Executive Summary
A protective value study of the MIB Inquiry Service was performed by examining applications for life insurance from one representative company over a period of one month. Protective value exists whenever the estimated mortality savings of using the MIB Inquiry Service exceeds the cost of the service. ‘Savings’ is a function of excess impaired mortality, amount applied for, impairment prevalence, test sensitivity, and exclusivity factor of the MIB information.

The year-to-year savings was calculated in today’s dollars by discounting future excess mortality at 8%, and taking into account reasonable anticipated lapse rates of the policies over time. Conservative assumptions were made in calculating the present value of savings. This was done to reduce any potential “favorable” bias in the savings element. Overall, for all cases examined, the present value of savings was $0.18 per thousand, which yielded a savings-to-cost ratio of $46:1 for the portfolio reviewed.

History of the Medical Information Bureau
Concerned with the undisclosed risk posed by fraudulent applicants, 15 Medical Directors organized in 1890 to ensure the livelihood of their businesses, the solvency of the insurance industry, and the fair and equitable pricing of policies. That organization would become MIB. These MIB member companies quickly realized that they already possessed the best resources for determining the accuracy of applicants’ health – their current and former applications. Agreeing to share and analyze this information afforded valuable insights into the true risks they were carrying. More than a century later, this integral information exchange is still at work protecting the life, health and disability income insurance industries.

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