Select Committee on Science and Technology Appendices to the Minutes of Evidence



Author: Social Policy Board—Genetics Group Date: April 2000 (Version 2)

  The Public Relations Committee, in association with the profession's Practice Boards, produces from time to time various briefing statements to enable its officers, members of its Council and senior members of staff to respond to questions from the profession, the public and the media about important topical issues and developments.

  These statements may be used as background for public pronouncements. They are not formal guidance, neither are they a definitive expression of the views of the profession as a whole on the subject.

  There is a contact name for enquiries at the end of each statement. Please feel free to speak to this person if you would like more information.


  One of the roles of the Actuarial profession is to inform public debate. On subjects such as the interaction between Genetics and Insurance, the profession wishes to ensure that public policy is determined in full knowledge of the facts by making available its technical insights, including an analysis of the possible outcomes of specific policy decisions. The profession aims to evaluate the financial impact on all groups which are likely to be affected, but does not advocate the interests of any particular group.

  Advances in understanding of genetics have the potential to provide more specific predictions about the mortality and morbidity prospects of individuals (and perhaps other risk factors). However, many people are worried about the prospects of insurance companies using such information for pricing and fear discriminatory underwriting practices. Insurance companies, for their part, are concerned about the possibility of adverse selection if genetic information is available to their customers but not to them and wonder what effect this may have on the price of insurance and equity between different groups of policyholders.


  Rapid progress is being made in our understanding of genetics. Observation of particular genetic mutations or characteristics may indicate a higher than normal probability of contracting a given condition and experiencing correspondingly higher morbidity and/or reduced expectation of life. There has been pressure on insurers from many quarters not to require genetic tests to be carried out, nor to request to see the results of any such tests that have been carried out. The ABI's members do not ask applicants to undergo genetic testing.

  The ABI has also published a mandatory code of practice (revised August 1999) whereby, for life assurance policies with sums assured of up to £100,000 issued in connection with a mortgage, its members have agreed not to require applicants to disclose the results of genetic tests which have been carried out. In other cases insurers will take the results of past genetic tests into account only when the reliability and relevance of the test to the insurance product has been established.

  In November 1998 the Government published its response to the December 1997 report on Genetics and Insurance of the Human Genetics Advisory Commission (HGAC). The Government did not insist on a general moratorium on requiring disclosure of genetic tests. However, it has established an independent evaluation mechanism (the Genetics and Insurance Committee) which will evaluate the applicability of the results of specific genetic tests for underwriting purposes. David Muiry is a member of this Committee, as a nominee of the Faculty and Institute of Actuaries.

  Interest in genetic issues is not confined to insurance companies and their existing and potential customers. Wider implications, for example for the provision of medical and long-term care services, may have to be considered by Government in planning how these should be funded. The medical profession wants to ensure that genetic testing is available when it would benefit patients, and that concerns about insurability do not interfere with clinical decisions. The actuarial profession is aware of these broader issues and believes that actuarial research will make a positive contribution to their discussion.


  Nothwithstanding the underwriting requirements of life insurance companies, it is estimated that over 95 per cent of applicants for life insurance in the UK are accepted at standard rates. Life insurance operates on a principle of risk-sharing, sometimes known as mutuality, whereby reasonably large risk groups pay premiums appropriate for the whole risk group, even though there will inevitably be differences in risk propensity between people in the group. However, unlike social insurance, there is no deliberate attempt to share risk between groups with widely differing risk characteristics, as people expect to pay a premium appropriate for their own risk and not to cross-subsidise others.

  Much of the information that might be provided by genetic tests is already available to insurers through conventional questions on medical and family history, and, at this stage in the development of genetic knowledge, there are relatively few genetic tests that have real predictive value for insurance purposes. This is in part because of the evolving status of fundamental research and in part because of the difficulty of applying the results of fundamental research to adjust mortality tables.


  The relationship between genetic status and future mortality is extremely complex and it is likely to be some time before the relationships are better understood and before any tests with real predictive value can be developed, other than for a few monogenic (single gene) disorders.

  At the present time, knowledge of the relationship between genes and insurance risk is limited, and there are only a few asymptomatic adults with autosomal dominant conditions for whom knowledge of their genetic make-up might affect the appraisal of an application for life assurance or related policies, and this is expected to be the position for many years to come.

  Actuaries will work with Government, geneticists, insurers and others to interpret the complex statistics arising from scientific studies, and it seems likely that increasing understanding of multi-factorial conditions will eventually enable health counsellors, insurance underwriters and others to predict and manage increased risk in such cases. However, for the vast majority of individuals, habits such as smoking and lifestyle are expected to remain much more useful predictors of life span and health than genetic makeup.


  There is no evidence at present that proposers would take advantage of the situation to any significant extent. Assuming that there were no such propensity, or that large sums assured continued to be fully underwritten, the impact on temporary insurance premium rates is likely to be small, possibly involving increases of no more than 10 per cent.

  However, the risks of a small minority of policyholders taking advantage of genetic information when applying for products such as critical illness, disability, individual private medical and long-term care insurance are likely to be considerably greater. Little research has been done so far in this area, which could be regarded as an urgent priority, since, until a better understanding is gained of the potential impact, insurance companies are likely to want to maintain their underwriting requirements.


  Both commercial concerns and wider social considerations need to be taken into account. Actuarial analysis is required to support applications for using some genetic test results in underwriting. Actuarial modelling should also be used to explore what the magnitude of the effects of anti-selection might be, so that judgements can be made regarding an appropriate risk classification.

  The profession accepts that the ABI has gone some way towards meeting public concerns by not requiring genetic tests to be carried out for insurance underwriting purposes. The profession does not advocate restrictions on insurance companies' ability to underwrite, but believes that the insurance industry needs to be alert to society's views on the degree of mutualisation of risk that is appropriate. The profession supports the principle that the results of genetic tests must be shown to have reasonable predictive properties before they are adopted for underwriting purposes. It will work through its active membership of the UK Forum for Genetics and Insurance to assist the recently established Genetics and Insurance Committee to carry out this task.

  As knowledge of genetics increases, it is likely to become possible to draw more robust conclusions about insurability from the results of at least some genetic tests, and opportunities for anti-selection against insurance companies will increase, in which case continuing to ignore genetic test results could cause financial problems for insurance companies. However, at the present time, the profession believes that the moratorium on the use of test results for mortgage-related life products with sums assured of less than £100,000 could, without too much difficulty, be extended to all life insurance products with sums assured of less than £100,000, or even a somewhat higher figure.


  The profession actively supports research and discussion on questions concerning the applicability to insurance of the results of genetic tests. A major route for achieving this will be through the UK Genetics and Insurance Forum, the establishment of which has been promoted by the actuarial profession. The Forum will also provide a mechanism for informing the public about the relevance of the results of genetic tests and exploring concerns about the reactions of insurance companies and the nature of the insurance business.

  The results of this research will be posted on the genetics page of the profession's website.

22 January 2001

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 3 April 2001