Life insurance and genetic tests: Risks for insurers and society

Abstract

The uncertainties surrounding the rapid advances being made in genetic testing and its subsequent use in the life insurance underwriting process has caused much consternation and apprehension throughout society and the insurance industry in recent years. The diagnostic and predictive power of genetic testing has introduced a new variable for insurers to select and classify applicants for life insurance. However, such use by insurers present many complex social, ethical and regulatory questions. This paper explores life insurers' use of genetic test results and the consequences for insurers should they be denied access to this actuarially relevant material. In addition, the risks posed for society from insurers' use of this information is analysed from the results of a survey and case study conducted in the Republic of Ireland in 2007. Given that the future use of genetic test results by life insurance companies depends heavily on public acceptance, it is important to understand reactions of the public, in relation to their risk perception and acceptance of this particular commercial use of genetic testing. To conclude, the paper briefly explores general international reaction to the risks posed by the use of genetic test results in underwriting life insurance applicants.

Keywords:

• risk
• risk perception
• risk management
• insurance
• life insurance
• genetic tests

Notes

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1. Actuarial research based upon the UK insurance market suggests that multifactorial disorders are unlikely to be of much significance for life insurance. Even under quite extreme assumptions, premium increases caused by adverse selection are unlikely to be significant (Macdonald 1997, 1999). The more serious aspect of adverse selection is any tendency to take out unusually large amounts of insurance (Macdonald 1997, 1999). In a large life insurance market, a ban on using genetic test results for severe single-gene disorders would be unlikely to lead to significant adverse selection costs, provided excessive sums assured were controlled (Macdonald 2001).

2. If a restriction of genetic data is based upon a broad definition of genetic information, including genetic test results and family history information, the consequences of adverse selection may be even more severe for life insurers. If it is considered unfairly discriminatory for insurers to use genetic test results, it may be deemed unfair to use family history information also, as both factors discriminate individuals based upon their genetic heritage. Society's opinion regarding life insurers' use of family history information and the consequences upon restricted usage of this underwriting factor is not examined as part of this research as it is considered beyond the scope of the present study.

3. Lemmens (2000) argues that cases where a genetic condition is only mildly expressed and yet the individual is excluded solely on the basis of a genetic test can also be considered genetic discrimination, although the genetic condition is perceptible and the individual is mildly symptomatic.

4. For example, a genetic mutation, most often found in people descended from Ashkenazi Jews, can double or even triple the risk of colorectal cancer. While persons of Celtic origin, such as Irish and Scottish individuals, have a genetic trait commonly associated with (haemochromatosis) heamchromatosis.

5. The insurance statutes of Austria, Belgium and Norway clearly reflect this idea. In addition, the Convention on Human Rights and Biomedicine which declares that any form of discrimination against a person on grounds of his or her genetic heritage is prohibited and that predictive genetic tests shall only be carried out for health or scientific research purposes, and requires that any person undergoing such testing must be subject to non-directive counselling has been ratified by 18 of the Council's 45 member states. These signatories include: Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Georgia, Greece, Hungary, Lithuania, Moldova, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain and Turkey.

6. For example, a 40 year old woman may test positive for BRCA1 gene and opt for prophylactic bilateral mastectomy and oophorectomy surgery. After such treatment, all pathology results may indicate a lower risk of both breast and ovarian cancer than an average healthy woman of the same age. It could therefore be argued that a woman at average risk who does not go for mammograms has a higher chance of dying from breast/ovarian cancer than a woman who tested positive for BRCA1 and has undergone successful treatment.

7. See Case Study 2/99 involving the retention, by an ex-employee of a life insurance company in the Republic of Ireland, of customer data. This was considered unauthorised access by the Data Protection Commissioner, http://www.dataprivacy.ie/docs/Case_Study_2/99_Life_Insurance_Company/137.htm Sweeney, S. (3/1/06) Interview response ‘The Data Protection Agency is not aware of any cases specifically involving unlawful access to medical records held by underwriters.’