2.2.1 Genetics and insurance
The life assurance industry is currently engaged in a debate surrounding the issue of genetic testing. This debate has intensified as scientists have made progress in our ability to detect the likely predisposition to certain conditions. To some extent, this capability has existed for many years – take the example of Huntington’s disease below.
Huntington’s disease is caused by a faulty gene, which leads to damage of the nerve cells in areas of the brain. This leads to gradual physical, mental and emotional changes. A parent who has Huntington’s disease has a 50 per cent chance of passing the faulty gene on to their child. Anyone who inherits the faulty gene will, given time, develop the disease. A genetic test is available which will usually be able to show whether someone has inherited the faulty gene, but it will not indicate the age at which they will develop the disease. The symptoms of Huntington’s disease usually develop when people are between 30 and 50 years old, although they can start much earlier or much later. In the later stages of the disease, full nursing care will be needed. Secondary illnesses, such as pneumonia, are often the actual cause of death (Huntington Disease Association, 2008).
The genetic test for Huntington’s disease has existed for some time, but more recently other genetic tests have emerged which are slightly different in nature. In the case of Huntington’s disease, the test results provide a clear result one way or the other. Many tests for other types of disease only predict an increased likelihood of developing a certain condition – there is still a chance that this development will not happen. For example, in a small number of cases there is an inherited predisposition among women for contracting breast cancer. If you have the genetic predisposition identified by at least two close family members having contracted the disease, it increases the likelihood you will contract the disease but it does not make it a certainty (unlike the certainty of the genetic test for Huntington’s disease).
Nevertheless, there is an attraction to insurance firms of knowing someone’s predisposition to certain conditions, even if the tests involved do not provide a clear result. This is because the principle of insurance is that each individual should pay a premium according to the level of risk they bring. However, if genetic screening meant that certain people were excluded from life assurance, there would be implications for a whole range of areas, such as individuals not being able to purchase life assurance for mortgages. This would have a wide-reaching impact upon society (Cunningham, 2003).
Because of the concerns raised by genetic testing, life assurance firms have come under increasing pressure to be regulated in this area. As a result, the Association of British Insurers agreed to a voluntary code of practice for all their members. This code came into force in 1997 and runs until at least 2017.
The following are the key features of the code that all insurers must follow:
- customers will not be asked, nor will they be put under pressure, to take a predictive genetic test to obtain insurance cover
- customers who have taken a predictive test before the date of the code will be treated in the same way as customers taking tests under the terms of the code
- customers will not be required to disclose any of the following:
- a predictive genetic test result from a test taken after the insurance cover has started, for as long as that cover is in force
- the predictive test result of another person, such as a blood relative
- a predictive or diagnostic test result acquired as part of clinical research.
Note, though, that those who have taken a genetics test for Huntington’s Disease must disclose the test results if they are seeking life insurance cover of more than £500,000, critical illness cover of more than £300,000 or income protection cover of more than £30,000 per annum.
Like many other issues involving insurance, changes in society have the potential to have an impact upon the insurance industry, and vice versa. Time will tell how this issue develops, although it is likely to be a hotly debated area for some years (Cook, 1999).
What impact could genetic testing have on the pricing of life assurance products?
The possibility is that insurers could apply what is known as ‘price discrimination’ in respect of the insurance premiums they charge customers. The premiums would be reflective of the risks the insurers are taking in the light of the information provided by genetic testing about the risks of customers contracting certain medical conditions. Customers deemed to be at high risk of contracting life-threatening medical conditions would be required to pay higher premiums than those with no genetic predisposition to such conditions.