GENETICS AND INSURANCE BRIEFING STATEMENT
Author: Social Policy BoardGenetics
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
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
The results of this research will be posted
on the genetics page of the profession's website.
22 January 2001