Evidence-based underwriting in the molecular age: the politics of reinsurance companies towards the genetics issue

Abstract

One of the most contentious topics in public policy debates on genetics has been the use of genetic information by private insurance companies. Confronted with legislation prohibiting the use of genetics in private insurance, the insurance industry has been prompted to deal proactively with the issue. One central feature of this change in tactics is the investment in “evidence-based underwriting”, currently promoted by transnational reinsurance companies. This strategy should contribute to de-politicizing the genetics issue in insurance. Drawing on fieldwork in reinsurance companies and in the broader field of insurance, this article analyzes how reinsurance companies deal with this strategy of evidence-based underwriting and whether it has delivered on its promises. Making use of the theoretical work of Barry and others on the politics of calculation in transnational technical zones, we show how the explicit goal of evidence-based underwriting by reinsurance companies helps to reveal uncertainty in life underwriting, which in turn stimulates new contestation and discussion over the issue of genetics and, more generally, the life underwriting process. In fact, it seems that the turn towards evidence-based underwriting standards has provoked new sources of politicization. While the intentions of evidence-based underwriting strategies are to de-politicize the genetics issue, the effects of this politics of calculation may appear to be political (again).

Keywords:

• governance of genetics
• evidence-based underwriting
• technological zone
• (re-)insurance
• politics of calculation
• public accountability

Introduction

Over the past years, one of the most contentious topics in public policy debates on genetics has been the use of genetic testing by private insurance companies. The rise of DNA technology to diagnose genetic risks has prompted some urgent questions. Will the introduction of genetics render some people uninsurable leading to a “genetic underclass”? Do we need a legal prohibition on genetic information in insurance? Insurers, in their turn, argue that such a prohibition would be detrimental for their business. If they are denied access to genetic information, the consumer will use this information to abuse the insurance system, they say.

The above is the thrust of ongoing discussions in the public realm, expert panels and parliaments throughout Europe. In addressing this controversy, regulatory bodies and policymakers struggle with the intricate question trying to adapt the traditional governance frameworks to the developments of genetics and insurance. In the same vein, insurance companies face public accountability and reputational issues in the context of genetics. The latter can foster negative public perceptions of “organized irresponsibility” (Beck 1999, p. 148) in respect of the insurance industry.

In previous research we recorded strategies by insurance companies to increase their public accountability in the context of the genetics issue (Van Hoyweghen et al. 2005). When in the early 1990s the genetics and insurance issue became a topic of heated debate, the insurance industry initially reacted in a classic defensive approach, by educating the public and lobbying to regulatory bodies. But this strategy has not returned them great benefits. On the contrary, over the past years, most European states have passed some form of genetics-specific legislation or policies preventing “genetic discrimination” in private insurance.1 The insurance industry has considered the latter developments with great concern. Evidently for the threat of banning the use of genetic information in their business, but most importantly, because the definitions of genetics used in these laws are so broad and vague that many other prognostic insurance instruments run the risk of being banned as well.2 So these legislative procedures clearly put the general “right to underwrite” and the continuation of the system of private insurance to the test. This has stimulated the insurance industry to “change tactics” (Jones 1999, p. 62) while moving towards a more proactive approach, via the development of codes of practices, moratoria and other self-regulative initiatives. One common feature of these proactive strategies is a strengthened focus on an input from the medico-actuarial logic that is the calculative base of life underwriting. While the industry usually resorts to medico-actuarial techniques to provide the risk ratings (e.g. actuarial quantitative modeling), recently the industry has explicitly reinforced and formalized these medico-actuarial bases, via the development of “evidence-based-rating” guidelines and techniques, in order to provide “evidence-based” solutions to public dilemmas of insurance and genetics, and more widely issues of insurability. The availability of these newly developed evidence-based techniques should provide assurance to regulators that the industry undertakes the life underwriting process fairly and responsibly.

In literature on public accountability, there has been a tendency to promote a scientific technocratic approach in order to neutralize political conflicts and to increase public accountability (Jasanoff 1990, Callon et al. 2001, Power 2007). So we see the rise of experts, testing and monitoring activities and the installation of evidence-based guidelines and quality standards in the policy field. The basic idea is that scientific, politically neutral facts can serve as foundation for compromises and consensus in political conflicts. Scientific expertise and calculative technologies may help to limit the scope of conflict and as such be used as anti-political devices or to de-politicize controversial issues (Barry 2001, 2002, Callon 2004, Barry and Slater 2005). Calculation and measurement techniques are thought to reduce the space of the political and to limit the possibility for disagreement. This politics of calculation often takes the form of statistics and practices of monitoring and testing (Alonso and Starr 1987, Porter 1995) and, as such, it has become quite dominant in western political culture. The same “mantra” we can find today in the insurance field. While the issue of genetics leads to public scrutiny, the turn towards evidence-based medico-actuarial underwriting is expected to solve the issue and to de-politicize the field of life underwriting in insurance.

Within this change of tactics, it is above all the reinsurance industry that appears to be involved. While the focus in policy debates on the issue of genetics and insurance has been primarily on a national level, we argue that this is not always the most appropriate “place” to study the issue (Van Hoyweghen 2007). An analysis of the landscape of insurance demonstrates how national insurance agents (e.g. insurance companies, professional insurance associations, patient organizations) are in close interaction with transnational entities, in this case, reinsurance companies. The role of reinsurance companies is to take on the share of large risks that an insurance company cannot carry alone, while spreading risks globally and over longer time periods (Brackenridge and Elder 1992, Swiss Re 2004). To some extent, a reinsurance company is thus the insurer of an insurance company. These companies have a global database of insurance portfolios, providing medico-actuarial know-how and a general “steering” capacity on the transnational insurance market. Considering that reinsurers are usually multinational organizations and that they determine the procedures for medical underwriting, medical risk selection has been a massive international activity usually overlooked. In this paper, we take a closer look at these reinsurance companies and the evidence-based underwriting strategies they recently have developed to respond to the reputational issue of genetics and to increase public accountability in the context of genetics. How did the reinsurance industry endorse these strategies and have they been successful? In other words, did these reinsurance strategies help in taking off the heat around genetics and insurance? We will argue that this has not always been the case. On the contrary, these evidence-based underwriting strategies may create, in their turn, new political effects. Instead of rebuilding public trust, evidence-based underwriting seems to politicize the genetics issue and – with that – the general business of medical underwriting again and maybe even more.

In order to analyze this, fieldwork was done by the first author in two reinsurance companies, both effective in the European insurance market. Roughly, one can speak of a top 10 of reinsurance companies that are performing globally.3 We studied two companies of the highest ranking. During 2005–2006, the first author visited for a short period the local and global offices of these reinsurance companies, where she observed the life underwriting process and interviewed underwriters, actuaries, medical advisors and managers. Furthermore, written sources were collected and in-depth interviews were held with key informants from the insurance policy field.

Before moving on to the analysis, we will first discuss these reinsurance companies in more detail. What types of organizations are they and what is their specific role in the European insurance market? Then we will describe the evidence-based underwriting strategies that they recently have developed in the context of the genetics issue, and more broadly, to protect their “right to underwrite”. From there, we will go into the question whether these strategies have delivered on their promises. We will show how the explicit goal of evidence-based underwriting helps to reveal uncertainty in life underwriting, which in turn may stimulate again new contestation over the issue of genetics and, more general, life underwriting. In the last section we will go into the question how we can evaluate these politics of calculation by reinsurers.

Reinsurance and the making of a transnational technological zone in Europe

In general, reinsurance companies are highly relevant players in the European life insurance market. Most insurance companies are “in treaty” with a reinsurance company, in order to cede the risk to the reinsurance company. This contract between insurers and reinsurers establishes the conditions under which risks can be ceded and accepted. One of these conditions is that insurance companies have to follow the underwriting manuals and guidelines established by the reinsurance company. These guidelines are developed at the reinsurance global headquarters. Based on the reinsurance portfolio, a statistical database collecting information of all insurance policies received, reinsurers’ experts calculate the excess mortality for particular mortality risks and inscribe these results (risk categories and risk rates) in reinsurance best-practice manuals. The knowledge that underlies these manuals permeates down to the local insurance companies who will have to base decisions on what the underwriting manual tells them. Local insurance players in this way are exposed to the audit procedures and medico-actuarial technologies that will enable their participation in the wider global economy. But even in cases where the insurance company is not obliged to cede the risk to the reinsurance company, insurance companies may use these reinsurance guidelines and follow the advice on modeling and risk rating. This is because most local insurance companies do not have the necessary R&D (and money) to invest in medico-actuarial research themselves. This makes apparent how insurance companies are heavily dependent on multinational reinsurance know-how for their life underwriting (Van Hoyweghen 2007).4 Reinsurers’ decisions made in Munich, Zurich, London or New York have thus impacts on the rates given by local life companies, making the governance of insurance underwriting explicitly a transnational affair. In this regard, we can define the European insurance world, along with Barry (2001, 2006), as a “technological zone”.

Barry demonstrates how the spaces of government of technological economies cannot simply be defined by geographies of territorial and national space. They increasingly cut across national borders. They can be conceptualized in terms of “zones formed through the circulation of technical practices and devices” (2001, p. 3). Barry gives three main characteristics to these technological zones (2006, p. 240). First, as metrological zones, where measurement standards are developed in order to make, in principle, information comparable between different locations. Secondly, the development of information and communication technologies allows integration of systems of production and communication. This construction of connection standards establishes infrastructural zones. Thirdly, these zones can be useful for the development of common regulatory or quality standards. We may speak of the existence of a zone of qualification when the qualities of practices are assessed in order that they meet more or less common regulatory standards or criteria. Environmental standards, for example, governing matters such as beach water quality or meatpacking, have played an important part in the historical formation and development of the European Union (Barry 2001). Zones of qualification then are used for the “framing” (Callon 1998, Callon et al. 2002) or “the politics” (Callon 2004) of a specific market or technological zone. Common qualification standards are developed here as anti-political technologies to de-politicize the potential space of political conflicts in a particular market or technological zone (Callon 2004).

We can see how the field of European insurance and the role of reinsurance in it fit well into this definition of a transnational technological zone. First, as a metrological zone, transnational reinsurance companies provide to local insurance companies metrological measures in order to compare and assess insurance ratings. With their global statistical databases and medico-actuarial expertise, reinsurance companies have extremely powerful calculative devices at hand as compared to other agents in the zone (Van Hoyweghen 2007). These highly specialized knowledge structures (in the global headquarters) forge complex linkages between reinsurance and insurance clients, national insurance associations and other intermediaries. Just as only a few specialists are likely to be able to understand and assess what might be produced within a specialized scientific laboratory, only a few insiders in the reinsurance company are likely to be knowledgeable about the various specialized technical practices that are critical to the operation of life underwriting. This results in a great dependency of (local) insurance companies on reinsurance and explains the competitive advantage of reinsurance companies in having transnational sophisticated metrological measures. As Callon has argued: “The probability of gain is on the side of the agency with the greatest powers of calculation, that is to say, whose tools enable it to perform, to make visible and to take into account the greatest numbers of relations and entities” (1998, p. 45). At the same time, this explains the commercial necessity for insurance companies to have the availability of reinsurance underwriting guidelines in ensuring risks are adequately pooled and profit margins are stable and in gaining competitive advantage.5 Secondly, in developing and outlining software programs and electronic guidelines to communicate between the global and local offices, reinsurance plays an important role as an infrastructural zone in the European insurance market. And finally, but most importantly, in defining common regulatory and quality standards, reinsurance companies may have an essential role in qualifying medical underwriting in the European insurance market (Callon et al. 2002, Barry and Slater 2005). So besides their commercial value in providing transnational metrological measures, reinsurance may also have an important “governance” role in providing quality or regulatory standards in order to respond to reputational issues in the zone of insurance. Seen in these terms, we consider that reinsurance companies occupy a unique position as governor of the European transnational insurance zone.

The above makes it understandable why reinsurance companies currently play an important role in dealing with the genetics issue. As overall “centres of calculation” (Latour 1987) in the zone of insurance, they have been asked by local insurers to provide solutions for the genetics issue. At the same time, given their “steering” function in the zone of insurance, it is exactly one of their competitive edges to be able to respond to such reputational risk demands, like the genetics issue, and to present themselves in the market as the best provider of this type of service.

Investing in evidence-based underwriting for dealing with the genetics issue on a transnational level

So how did the reinsurance industry respond to the genetics issue? The tactical move of the insurance industry from a defensive to a proactive approach implies that, recently, reinsurance companies have explicitly reinforced and formalized their medico-actuarial scientific bases, by installing “evidence-based underwriting rating” research and guidelines. If the “right to underwrite” should be preserved, the insurance industry should make explicitly clear to the public that they are using “fair” data and are working in an “actuarially sound” way. In this regard, the reinsurance companies we studied all recently started to invest in evidence-based medico-actuarial research on their risk rating approach.

What we've done is, we thought, well, a lot of these ratings that we have in our reinsurance manual are historic. They've just been passed from one manual to the next and again to the next. And nobody has ever really looked into them and tried to work out whether there is any scientific basis behind them at all, or whether they are just good old underwriting gut feelings. So what we started to do five years ago is that we developed some basic reliable, accurate, up-to-date and peer reviewed systematic research for our risk ratings. We do this by collecting and reviewing the evidence presented in both clinical and insurance literature, along with our experience studies, on the long- and short-term prognosis of diseases and associated clinical risk factors. That way, we are producing a base of up-to-date evidence upon which insurers can make risk rating decisions. (Re1, global office, manager3, int2)

While reinsurance companies have for a long time collected medico-actuarial statistics, they want now with this evidence-based underwriting research to explicitly justify that they are doing their medical risk selection in a “fair” way. Swiss Re (2007), for example, recently published the report Life risk selection at a fair price: reinforcing the actuarial basis, where it makes this proactive strategy explicit. As we can read in the press communication:

In the ongoing debate on the “right to underwrite”, Swiss Re anticipates that the publication will provide a useful contribution in helping the life and health insurance industry demonstrate to regulators and government that its risk-selection process is fair. (Swiss Re 2007)

In other words, reinsurers’ medico-actuarial know-how has now explicitly been reinforced as ways to respond to reputational issues and to increase the insurance zone's public accountability. The genetics issue can be seen in this regard as a “catalyst” (Van Hoyweghen 2007, p. 157). It has forced reinsurance companies to further establish as a metrological zone and to further invest in their master-tools of medico-actuarial research. So linking “evidence-based” standards with “fairness” is the strategy currently deployed to respond to reputational issues, like the genetics issue. “Fair” standards are being provided in the zone of insurance via “evidence-based” data from the reinsurance industry.6

Basically, in the current climate, insurance companies and well every organization in general are being asked to justify the decisions that they make. So from an insurance perspective this means that when we would be challenged by the public on the risk ratings, we should be able to justify that with evidence-based research. (Re1, global office, manager2, int1)

You have to make clear and transparent what you are doing in risk assessment. That you have defined criteria which are elaborated on the base of sound clinical medicine, on the base of clinical trials and, of course, on the base of our own portfolio experiments. (Re2, global office, manager1, int2)

The process of evidence-based underwriting requires […] reliable, up-to-date, fully researched and peer reviewed guidelines that are suitable for the purposes of fair risk assessment. Without such a formalised approach to data collection and standardised analytical methods, the rating guidelines used by (re)insurers could be questioned as to their fairness, accuracy and validity. (Swiss Re 2007, p. 64)

In order to do this, the industry has explicitly reinforced the distinction between “fair” and “unfair” discrimination. The term “discrimination” in its original sense means separation or classification. If risk classification and selection are based on sound actuarial principles, only then could one speak of “fair discrimination”, insurers argue (see e.g. Brockett et al. 1999, Swiss Re 2007). “Unfair discrimination” can be defined as a denial of insurance coverage that is not justified by the facts presented. By focusing on their approach of “fair discrimination”, reinsurance companies thus emphasize a clear division between their own operations and other “unfair discrimination” approaches. As we can read for example in the Swiss Re publication:

In the ongoing debate on the “right to underwrite”, Swiss Re agrees with the industry's position which is to oppose unfair discrimination but to support the use of objective, relevant and reliable data for insurance rating purposes. A number of processes and services are in our toolbox to address the issue of actuarial fairness, and to assure a fair risk classification process for the ultimate benefit for our clients’ end customers. (Swiss Re 2007, p. 5)

In line with Barry (2006), we see here that a border is established between the zone of insurance, which now seeks to demonstrate that it is governed according to common quality standards of “fair discrimination”, and other industries or society, which lie outside these borders.7

What then does this investment in evidence-based underwriting rating look like? How was this strategy developed in reinsurance companies? In one reinsurance company, they recently established a new specific “Evidence-Based Rating (EBR) Department”.

More recently, because of the pressure on what we are calling “the right to underwrite”, our own desire to do some decent research and a whole bunch of other good reasons, we have begun the EBR-process, the evidence-based rating process, which is designed to produce some proper statistical supporting evidence for all the ratings that we recommend in our underwriting manuals. Now our objective is to make sure that for everything we say, we have some sort of justification for why we are saying it. (Re1, global office, chief medical officer, int1)

In practice, this is a department in the reinsurance global office where underwriters, actuaries and medical advisors are involved in collecting data for the insurance ratings for particular risks via peer reviewing of clinical and insurance literature, along with data from available insured lives datasets (“experience studies”). The department has a separate database, the “Evidence-Based Risk” (EBR) database, which is open (only readable) for all local clients to follow the EBR process.

Observation EBR department:

So we set up an entry here [IVH: in the EBR database]. This reports there is actually some research going on. So this [IVH: shows screen] is basically on: “Who is doing the review? Why is it being reviewed? What is the review status? And what are the guidelines that are being reviewed?” […] And then basically what we do is: we use search engines: we use PubMed, because then you're up-to-date and we use any books we have. [IVH: clicks on articles in PubMed]. And we will probably go through it all and spend maybe a day, maybe a month, it depends on the topic. And it's a question of picking the things which are relevant. And sometimes it is the trouble to find anything relevant at all because it just depends on how much research there is and how much money there is thrown at it. […] And after the reviews and analysis I start putting together a background paper. […] And what we try to do is to make it a bit like, you know, to make it as much a scientific paper as we can. The paper is formalized into sections like: “introduction”, “final conclusions” … and, most importantly, “the implications from an underwriting perspective”. (Re1, global office, EBR department, chief medical officer, int2)

Afterwards, the background paper forms the basis to receive feedback from the local offices on the topic. At the end of the process, this (revised) background paper is also sent to global peer reviewers.

So it goes to Europe, it goes to South Africa, to Australia, it comes to America, obviously to the UK. So it's everywhere and we say: “We've reviewed these topics, this is what we found, these are the changes we've made, here is our background paper. Can you please review it and have your feedback within two months?” (Re1, global office, EBR department, chief medical officer, int2)

In the end, the background paper will be summarized into an extract as a service to the local clients to be updated about the new evidence-based ratings. These newly developed EBR guidelines produced from the EBR database form the basis of the risk classification system provided by the reinsurance underwriting manual.

So in reaction to public scrutiny, the reinsurance industry has resorted to the further “metrologization” and intensification of their medico-actuarial devices in order to be able to define transnational quality standards for the zone. This means that evidence-based standards are developed to qualify life underwriting in the transnational zone of insurance as a fair business. That way, reinsurers want to prove that they are doing the rating in a “fair” way in order to demonstrate public accountability and to de-politicize the issue of life underwriting.

Investing in transnational genetics expertise centers

The same strategy of developing evidence-based quality standards has also been deployed to genetic information in particular. In this regard, the reinsurance companies we studied recently installed “genetics expertise centers” in their global offices. Above all, these centers are established to demonstrate to their clients that the reinsurance company has the necessary and appropriate expertise to deal with genetic information in insurance. Within these centers, geneticists have been employed who are involved with genetic data collection, storage and monitoring. These reinsurance genetics expertise centers have multiple functions.

First of all, the center provides advice on genetic underwriting to the local offices via their infrastructural devices. A computer program, “the electronic medical advisor assistant” has been developed for enabling direct communication between the genetics expertise center and the local offices. The geneticists at the global office daily serve here as a help-desk in advising on genetic underwriting.

Here [IVH: shows screen] we have this question from the office in London: [reads] “We have received data from a client with a family history of breast cancer, but the person has gone for a genetic test and now it is stated in the medical questionnaire that the person has a positive family history but the test is negative. Can we now apply that person a rating that neglects the family history?” (Re2, global office, geneticist, int2)

In addition, these geneticists offer training services to the local underwriters on dealing with genetic information. At the same time, the computer system enables the reinsurance global office to monitor the global insurance zone's quality of genetic underwriting. So besides advice and training, the genetics expertise center also provides strict electronic guidelines on genetic case underwriting that are submitted to the local underwriters. This is another way of qualifying the regime of insurance underwriting. Again, these devices are put in place in order to make sure that the zone of insurance is acting “fairly”, as a way to protect the right to underwrite genetic information, in order to maintain the status quo. As this geneticist explains:

I think I have to give them [IVH: local offices] my best advice and guidelines on how to deal with genetic information, as careful as possible, and to protect them in order to use that information in the future too. Because if they mess it up now and if they don't use it in a fair way, we won't be able to use it in 10 years from now when it really will be a major issue. (Re2, global office, geneticist, int3)

While providing these advising and monitoring services to their clients, the genetics expertise centers are also able to collect data and cases of genetic underwriting as a way to improve future genetic underwriting. That is, based on the genetic cases that trickle in from the local offices to the reinsurance database, medico-actuarial research on genetics can be established. However, this data collection is rather “embryonic” (Re2, geneticist, int3) at the current stage. But on a small scale, research based on clinical genetic studies is developed in the genetics expertise center in order to apply this knowledge for insurance underwriting.

Finally, the genetics expertise center is involved in advising on and monitoring the legal and ethical policy procedures with respect to genetic information. In the center, they therefore recently installed a regulatory policy database on genetics (and more generally, “right to underwrite” issues), including a collection of regulative policy initiatives of different national and supranational political entities. In collecting these regulative policy data, reinsurance companies are able to provide a global steering view to local offices by offering advice in these matters. Again, reinsurers offer this service to insurance clients in order to maintain the overall reputation of the zone of insurance, to monitor the zone of insurance, and to prevent it from “doing wrong”.

So we provide a good service to our clients with this regulative database. Because if they do bad business, they get punished for that, resulting in high costs, legal challenges, and most importantly, distrust and bad reputation. So we do them a favor in making sure that they comply with the local legal setting to the highest sense. (Re1, global office, geneticist, int3)

Besides acting as “centres of calculation” (Latour 1987) in providing transnational metrological standards for life underwriting, we see here how reinsurance companies are deployed as well as centers of “qualculating ethics” (Callon and Law 2003). As a matter of fact, based on the “qualculation” of ethical and legislative policy initiatives, reinsurance companies are able to provide transnational ethical quality standards as well. This has for example resulted in the development of a global code of conduct, the “global best practice guideline” for dealing with genetics, which is currently provided to the local insurance companies.

Based on the information in our regulative database, we were able to build a general best practice guideline for genetics, the “global best practice guideline”. So we have really set ethical standards. We have assembled those guidelines from UNESCO and WHO on genetic information and we have these international rules now implemented in our company guideline. [IVH: reads from guideline]: So that's how we handle with it: “what are the minimal ethical standards every office has to use when dealing with genetics?” And we say to our clients: “If you don't comply to this you can not be into our thing. So you have to set the ethical standards within your local company, otherwise we won't do business with you”. (Re1, global office, geneticist, int3)

Apart from simply advising on local legal policy initiatives, reinsurance also acts here as a disciplinary and monitoring agent for local insurance companies in providing these transnational ethical guidelines with which local insurance companies have to conform. So in regard to genetic information we see again how reinsurance companies, by monitoring and qualifying local insurance companies, want to show proof that the zone of insurance is being “fair”, by providing genetic underwriting standards and by providing standards of “minimal ethical guidelines” or transnational codes of conduct.

Evidence-based underwriting strategies put to test

As we have illustrated above, the proactive strategy of reinsurance companies in managing the reputational risk of the zone of insurance in the light of genetics implies that they develop an evidence-based style of underwriting. Recently, they have produced EBR quality standards and have reinforced and strengthened their practices of calculation, measuring and monitoring of risk rating. Experts are recruited (e.g. the establishment of the genetics expertise center) and infrastructural systems are developed (e.g. the regulative database) to demonstrate to the public that the insurance zone is dealing with the issue in a “fair” way. This politics of calculation is chosen because use of evidence-based rating is supposed to reduce the possibility of political conflict over the genetics issue in the zone of insurance. Evidence-based underwriting strategies thus bear the promise of taking the heat off the genetics issue in the zone of insurance.

But does the strategy of evidence-based underwriting deliver on these promises? In other words, is it indeed an effective way to (re-)build public accountability with respect to the genetics issue and to de-politicize the life underwriting field? As Barry (2002) asserts, calculative technologies of economies intend to be “anti-political” in their consequences, seemingly solving disagreements and thereby limiting the scope for “political action” which “opens up the possibility for disagreement” (2002, p. 270). And yet, as Barry also contends, the politics of calculation may not always and everywhere close down the political (2002, p. 279), but in fact may be a source itself for further politicization. A closer inspection of the reinsurance companies and – more widely – the zone of insurance demonstrates that this is the case here and that the evidence-based strategy might be a risky strategy in itself with respect to public accountability. In fact, this politics of calculation by reinsurance helps to reveal uncertainty in underwriting, which in turn may stimulate new explicit discussion and public controversy of the life underwriting process. The strategy of evidence-based underwriting seems to create here its own expectations, thereby making uncertainty and points of discussion in underwriting more explicit than already was the case. In other words, this politics of calculation may – in effect – result in an even stronger politicization of the field of life underwriting. In the following, we will discuss this in more detail.

First of all, a closer look at this strategy in the reinsurance companies shows how the global EBR department is confronted with a lot of scientific uncertainty in developing these evidence-based guidelines. This has to do with the lack of available insurance data to make the ratings “evidence-based”, problems in the translation of clinical data to the insurance context and, more generally, the weak data collection (as well as methodological errors) in the history of underwriting.

For most of the impairments there is very few statistical evidence and so it's gonna be very difficult in terms of circumstances to say: “Yes these are the ratings for impairment X and this is the statistical evidence”. This is just very difficult. (Re1, EBR department, manager1, int1)

But in general it is more or less impossible to get studies on insured lives. So we have to take the next best, which are the studies on the general population. And then we can compare that with the data that we get from the clinical studies. And that's how we produce the ratings. But with disability it is even more difficult, it is more of a judgment than a science. (Re1, EBR department, chief medical officer, int3)

With the history of life insurance in mind, this comes not so much as a surprise. For life insurance has always been dealing with uncertainty (Ericson and Doyle 2004). In this regard, uncertainty is no deterrent to underwriting. Rather, life insurers have always turned to local markets and innovations for commercial interests to lay their bets (Van Hoyweghen 2007).8 So insurers may decide to insure as much as they do, regardless of whether or not they have detailed knowledge of risk. Yet this uncertainty surrounding knowledge of risk may become a problem indeed in the context of an explicit politics of calculation as a strategy for public accountability. For it is exactly the cry for public accountability that has forced the reinsurance business to turn now to this strategy of evidence-based standards. However, these standardized procedures may not be able to capture the complexity of insurance objects in practice. For example, the EBR process is above all based on clinical studies (derived from medicine) because of the lack of significant actuarial data. This means that the EBR underwriters can only work with some general actuarial assumptions while producing the “evidence-based rates”.

The genetics expertise centers that are involved in medico-actuarial research on genetic information similarly face uncertainty issues. Again, these have to do with the shortage of insurance studies on genetics, the shortage of respondents in clinical genetics studies, and again the translation of clinical studies into insurance actuarial relevancy.

At the moment we have probably 1000 genetic conditions, at the test, the market and the pre-market stage. But here [IVH: in insurance] we're not dealing with these 1000 genetic conditions, because they are frequently rare, where we know. And you don't even have data, sophistic actuarial data. So we have to assess it in another way, which is to evaluate how a medical doctor would assess that genetic risk at the time of application. And from there we decide: “Ok, we have to give this person a sort of rating that is about the risk that he probably carries for insurance.” (Re1, global office, geneticist, int1)

In other words, the EBR strategy may identify the weaknesses in the vast exercise of routine life underwriting. This intensification of scientific calculation may, in fact, far from restricting the space of contestation on life underwriting, open it further up. So the work of EBR scientists can have here political, rather than anti-political effects (Barry 2002).

Another problem of the evidence-based strategy is concerned with difficulties in the transfer of the global reinsurance EBR standards to the local offices. As is known from many studies on the implementation of technologies or standards (Latour 1987, Lakoff 2005), processes of transfer are not self-evident and have no “natural” course, but it requires considerable work to make standards operative and effective in other places. Consider this example of the development of reinsurance EBR standards:

What happens is, once we [IVH: global office EBR department] have decided on a particular risk rating, we send it to the local offices. And then sometimes that's not the final decision. Because they [IVH: local offices] say: “Yeah that's fine, but actually we still really don't like this bit.” And then usually what happens is, we discuss it and we try to come to some sort of neutral conclusion. Because it does happen sometimes that although the evidence suggests that we may want to rate somebody a certain amount, the evidence that you would need to be able to apply that rating is too specific. In the real world, local underwriters do not have access to that level of information. (Re1, EBR department, chief medical officer, int3)

Despite the considerable amount of work that has been done to make the EBR work, like the installment of software packages from the global to the local offices and the development of more sophisticated calibration techniques, the reinsurance EBR standards are often questioned by the local offices.

So we have to do some sort of maneuvring to try and come up with the best fit that will fit in with the information that they [IVH: local offices] got. This means that in some cases, we have to give a higher rating than what the local office would have suggested. But it's because we don't have the specific information to be able to apply. You know, this is the problem. In an ideal world it would be lovely to have all this information but actually in reality it doesn't happen. So the evidence may actually suggest that we can do one thing, but when the actual manual comes out that actually says something slightly different. But we justify that by saying: “If you have the evidence you could do this. But if this is unlikely in the normal scheme of things, then we have to do this.” So even if we get a challenge on it [IVH: e.g. from insurance clients], we can say: “We just don't have that information and therefore we're not, you know, we can't take the extra risk. (Re1, EBR department, underwriter2, int2)

Besides this interrogation by the local offices in respect of medico-actuarial considerations, discussion might also take place in respect of local market considerations or what the business calls “commercial considerations”. Consider for example this extract from a global EBR officer:

IVH: Do you always have to follow this? [EBR review by the UK local office]

EBR officer: Not absolutely, I don't have to take everything, because obviously the UK team might say: “We don't like this bit”, but the Australian team said: “We like this bit, but we don't like that bit.” So we just try and bring together all sources and I read it all and come to some kind of conclusion and I have a discussion with K [IVH: manager local UK office] afterwards. We'll come to some sort of conclusion and once we've done that, it's my job to email L [IVH: head EBR] back and say: “I recommended this, with regard of this and this, etc.” We don't always follow what they say; we don't do everything they say. If it makes sense then yes we do. (Re1, EBR department, chief medical officer, int2)

Again we see here the limitations of the EBR transferability to the local offices because the standardized global rating approach does not always fit the specificities of local insurance markets. This means that the underwriting evidence that may be found as an alleviating solution for, for instance, the Dutch insurance market, may result in interrogation and even controversy in another local market. Read for example how this UK local office manager stresses the specifics of the UK life insurance market vis-à-vis the Dutch life insurance market in coming to terms with the genetics issue:

Well I think the first major difference is when you compare the UK market with the Dutch market. So you can understand why certain markets are more protective of people's basic entitlements. In the UK, it doesn't apply; we are an entirely commercial market. From the UK we were worried about a pan European solution if you like, designed to protect citizens’ basic rights, but also to be applied to the commercial setting in the UK. That's what I mean by recognizing the differences between local insurance markets and the role that private insurance plays in such local specific markets. (Re1, local UKoffice, manager1, int2)

This friction between global reinsurance standards and local insurance considerations also becomes apparent in recent discussions between reinsurance and national insurance associations. In developing solutions to the genetics issue, reinsurance companies establish evidence-based underwriting guidelines but national insurance associations may also – in the context of national self-regulation – offer solutions that may not be in line with these reinsurance standards. Moreover, these reinsurance guidelines may be contested by national insurance agents and vice versa. For example, in March 2005, the Dutch Association of Insurers published a study on the insurability of HIV life insurance applicants (Dutch Association of Insurers 2005). This research was made possible thanks to the data collection (and personal investment) of an internal work group of Dutch actuaries, in reaction to the reigning conservative reinsurance policies towards HIV-positive persons. The study arrived at the conclusion that it was possible for HIV-positive persons to take out life insurance on certain conditions. What followed were some quite intense reactions from the reinsurance industry. In fact, the latter were afraid this new data and evidence would now be transferred to all insurance markets, a situation that reinsurers did not consider viable. In a letter to the Dutch Association of Insurers, one reinsurance company stated: “In view of the short follow up periods of all available studies on this topic and the above noted imponderables, it is in our view still too early to offer life insurance cover to HIV-positive persons on a large scale” (reinsurance letter to the Dutch Association of Insurers, 12 April 2005).

Again we see how the work of establishing transnational underwriting quality standards may have political, rather than anti-political potential. Ironically, while the reinsurance EBR approach has precisely been built as “a service to their clients” (see e.g. Swiss Re 2007), these clients (local reinsurance offices, local insurance companies, national associations of insurers) may actually query, and even contest it. But in what way do we have to understand this political potential of reinsurance EBR standards? The above examples demonstrate how these controversies in regard to EBR are contained within a small group of insiders (experts from reinsurance, insurance, national insurance associations). This may prevent them from provoking an excessive politicization (Barry 2002, Callon 2004). As long as these controversies remain internal, e.g. by awarding medico-actuarial research contracts to bodies that can be trusted, there seems to be no major risk of excessive politicization. This may also explain the industry's relatively internal “openness” about the instability and uncertainty of risk rating. But towards the public the industry has pulled the card of “evidence-based underwriting”. This may hold the risk that there will be some “leaking points” in this evidence-based strategy, possibly opening again the space for political contestation. In this regard, the reinsurance managers we spoke to, being the EBR “spin heads”, expressed their doubts on whether this strategy would be the best way to effectively satisfy public scrutiny. In fact, they worried about future scenarios of court cases, where insurers would show proof with their EBR ratings vis-à-vis patient organizations with their own research and ratings. So what these managers feared is that patient organizations, as a kind of Popperian science, will arrive with their own “evidence-based complaints” (Re1, manager2, int1), resulting in public controversy.

In the Netherlands, this already appeared to be the case. Although there has been a Dutch moratorium and legislation on genetics and insurance in use since 1990, there was a revival of public debate in 2000 on the insurability of familiar hypercholesterolemia (FH) patients, after a study done by the FH patients’ association (see e.g. Van Maarle 2000). Insurance companies were accused here of violating the law by excluding patients with FH from insurance. This study has set in motion new public controversy on the issue of genetics and insurance, whereby the Dutch Health Council urged the insurance industry to demonstrate that insurers base their risk assessment on accepted clinical knowledge by using up-to-date medico-actuarial data (Gezondheidsraad 2001, p. 17). Up till now, this has resulted in self-regulation of the stakeholders involved but it remains to be seen whether the issue really has been settled by now.

Moreover, the turn towards evidence-based underwriting may lead in addition to increasing differentiation and competition in between patient groups or within one and the same patient group while these new constructed (sub)groups may turn their insurability concerns into public issues. For example, in the context of genetics, a reinsurance spokesman argued that in his experience some of the strongest proponents of risk selection based on genetic factors have in fact been people with milder forms of genetic disorders, such as Gaucher's disease or cystic fibrosis. “They have refused to be classified with applicants having more severe manifestations of the same diseases and insisted that insurance premiums reflect their more favourable risk status” (Pokorski 1997, p. 110). In the future, he argues, these applicants will certainly be joined by individuals whose genetic mutations are less serious, those with negative genetic tests, people with genetic characteristics that confer health or survival advantages or applicants whose risk of genetic disease is markedly reduced by proper medical care. In the same way, Dicke (1999, p. 31) gives the example of people with haemachromatosis:

Left untreated, this condition can result in liver damage and can be fatal. However, control of this disease consists of merely having blood drawn on a regularly scheduled basis. Persons with this condition who have been meticulous in carrying out this regime are resentful if an insurer groups them with others who have allowed the condition to become serious.

These then are signals that the reinsurance EBR strategies may result again in public controversy, indicating how evidence-based strategies may result in a further politicization or “mise en politique” (Callon 2004) of the process of life underwriting.

The politics of calculation by reinsurance companies in the context of the genetics issue

As indicated in the introduction to this article, there may be several good reasons for the insurance industry to worry about the issue of genetics. One simply involves the concern that behavior considered to be bad by the public may provoke costly litigation or the enacting of legislation with clear side-effects for the insurance business as a whole. The other is damaged trust. A company that lacks the confidence of its stakeholders is likely to suffer. This is all the more the case in an industry in which consumer trust is paramount. As the CEO of an international insurance company asserted: “We sometimes say we are in the ‘risk management’ business, but I submit that we are as much in the ‘trust management’ business” (Van Rossum 2004, p. 55). The creation and maintenance of public trust in the insurance industry is fully a responsibility of the companies in this technological zone. Clearly, as we have seen, reinsurance companies are working to raise the insurance zone's public accountability towards the issue of genetics. But how to evaluate these public accountability strategies?

In answer to the effects of the genetics issue on their business, the reinsurance industry has moved towards a proactive strategy of “evidence-based underwriting”. The instigation of transnational quality standards for life underwriting can be seen as typical anti-political devices to neutralize the overflowings of the genetics issue. For the insurance industry, then, “genetics is not the issue”, but the preservation of their “right to underwrite” is. Their first concern to do with genetics is thus, first and foremost, to maintain the status quo of life underwriting by installing this politics of calculation. So rather than taking up the specifics of genetics, insurers have done a politics of repetition and not of invention (Barry 2001, Callon 2004). In this regard, the advent of genetics has reinforced pre-existing political facts, like the issue of eligibility for insurance of many European citizens-at-risk.

But has this politics of calculation via evidence-based underwriting – in practice – indeed resulted in a “business as usual”, in a de-politicization of the life underwriting field? As we have demonstrated in this article, the evidence-based underwriting strategy appears not to completely manage to satisfy public scrutiny. In fact, it seems that the turn towards standardization and intensification of calculation in insurance has provoked (itself) new sources of politicization. So this politics of calculation of reinsurers might create in effect new conditions for the political. As we have seen, the technological zone of insurance generates here its own forms of failure and resistance (Lakoff 2005): its intensification of medico-actuarial investments makes it vulnerable to further interrogation and to possible politicization. In other words, while the intentions of the EBR strategy of reinsurance were to de-politicize the issue, its effects may appear to be political (again). So far from a decline of contestation, these politics of calculation of reinsurance companies may intensify political contestation. Instead of dispersing the political in the zone of insurance, then, the politics of calculation of reinsurance companies via evidence-based underwriting may in fact reincarnate the political.

Finally, the above urges us to redefine the agenda of public accountability with respect to the genetics and insurance issue. As Barry (2002, pp. 275–276) asserts, if technological zones are in controversy, they can intensify/enforce standardization or open up their zone to scrutiny. As we have seen, the evidence-based underwriting strategy of reinsurance is exactly the first type of technological zone's public accountability strategies, where more calculations and more standardization have been installed in order to convince the public that insurers make fair risk decisions. This may be called a post-hoc crisis management strategy of “doing well by not doing wrong” by reinsurance companies. But as we have demonstrated, it is not guaranteed that this evidence-based underwriting strategy is effective in satisfying public scrutiny for the genetics issue – “Are organizations publically accountable by giving evidence?”. The second strategy would be to open up the zone of insurance to wider scrutiny, while acknowledging the weaknesses of measurement and the uncertainty inherent in medico-actuarial calculations. As we have seen, for the world of insurance itself this is hardly news: since its beginnings it has been involved in taking on risks for the long-term future, thereby accepting uncertainty. In 1921, the economist Knight celebrated radical uncertainty in effect as a position that inspires and motivates the entrepreneurial behavior that is required for profit-making – capitalist innovation, in other words, is essentially governed by a lack of certain knowledge. In everyday language, we would call this “risk-taking” behavior. In political science, Wildavsky (1988) similarly used uncertainty to argue against “excessive” caution, his point being that “searching for safety” precludes the possibility of learning about risk – knowledge that can only be obtained from practical experience.9 Risk-taking, then, implies for the insurance industry that it experiments with dealing with genetic information in the practices of insurance, as a process of trial and error. It asks for an experimental learning approach, whereby emerging groups are involved in the politics of insurance, in a setting characterized by plurality, vulnerability and uncertainty (Van Hoyweghen 2007, de Vries and Horstman 2008). This new type of public accountability might take the form of collective exploration and experimenting in the politics of insurance, while looking for creative solutions to deal with the issue of insurability in our society.

Acknowledgements

This paper has benefited from the generous comments of Michel Callon and Fabian Muniesa during a visiting fellowship at The Centre for the Sociology of Innovation (CSI), Ecole des Mines, Paris (2006–2007). An earlier version of this paper was discussed during the workshop session Organizing to Shape and Create Markets at the 2007 EGOS Colloquium (Vienna), as well as at the 2007 CSI Colloque Expérimenter, Eprouver, Assembler (Paris). This research was made possible through the Dutch Science Foundation (NWO) program “Societal Aspects of Genomics” (2004–2008).

Notes

A thorough description of this legislation can be found elsewhere; see e.g. Knoppers et al. (2004), Nys et al. (2004). To summarize, currently most European countries have enacted some form of genetics-specific legislation or other (self-) regulative genetics-specific policies since 1990, dealing with “genetic” discrimination, “genetic” privacy and “genetic testing” in private insurance. In the US, the Genetic Information Nondiscrimination Act (GINA) was recently brought into force to provide protection against genetic discrimination for employment and health insurance. For a critical account of the effects of genetics anti-discrimination legislation in life insurance, see Van Hoyweghen et al. (2007), Van Hoyweghen and Horstman (2008).

For instance, the US state laws that were prepared relied on such a broad definition of genetic testing that routinely performed tests, such as for cholesterol, would be prohibited. In Europe, the first bills did not even give a definition of what constitutes a genetic test or genetic information.

Via Standard & Poor's AA ranking (www.standardandpoors.com).

For a detailed empirical description and analysis of the relation between insurance and reinsurance in the process of underwriting life insurance risks, see Van Hoyweghen (2007).

However, on the competitive advantage of local insurance “experience studies” vis-à-vis reinsurance guidelines, see Van Hoyweghen (2007).

Note thereby that this idea of linking “fairness” with scientific evidence has originated from related parts of the insurance zone and even from other, closely related, technological zones (Collier and Ong 2004). For example, an evidence-based approach has long been proclaimed in the medical field in order to face public trust issues. In addition, calls for “sound actuarial data” and “actuarial fairness” originate as well from the policy field in the European insurance zone. For example, the Genetics and Insurance Committee (GAIC) in the UK was one of the first countries where the definition of “actuarial relevancy” has been developed in the context of genetics, followed by many other national and international policy makers (see e.g. Mittra 2006, Van Hoyweghen 2007).

Note hereby that alternative and critical approaches to this commercial distinction of “fair” vs. “unfair” discrimination have been developed (see e.g. Baker 2003, Mittra 2007, Van Hoyweghen 2007).

For example, risk pooling and spreading efforts can appear flawed in retrospect, as insurers discover unforeseen problems of moral risk, adverse selection and aggregation risk. Or the innovation of turning a particular risk insurable may have uncertain outcomes, as there appear to be no exact data available at the time of innovation (Ericson and Doyle 2004, Van Hoyweghen 2007).

This second type of public accountability strategy thus requires the explicit acknowledgement of the uncertain character of life underwriting, while taking into account that the practice of categorizing insurance risks is always inherently value-laden (Hacking 1990, Bowker and Star 1999, Van Hoyweghen 2007). In the same line, the French philosopher Ewald has stressed the relevance of practical experience in coming to terms with underwriting insurance risks. “La science actuarielle n'a pas précédé la pratique de l'assurance, elle l'a bien plutôt suivie. L'histoire de l'assurance est aussi politique que technique et scientifique” (Ewald 1986, p. 114).