David King reports on the dilemma facing the insurance industry as genetic tests that can predict susceptibility to disease pit insurers against the insured.
Put yourself in the following position: your mother and your aunt both died from breast cancer, so you know that it may be genetic. And now the insurance form you are trying to fill in wants to know whether you have had a genetic test, and, if so, what the result was. What do you do? Do you let the insurer know the family history and risk rejection or a huge premium? Do you simply keep quiet and hope to get away with it? Do you take a test in the hope that you will get a good result? If you get a bad result do you ask your doctor not to put it in your medical records? Do you lie on the form and apply for a large amount of insurance?
These are not abstract dilemmas taken from some television show, but reality for thousands of women in the United States, and it is certain that all these options are being actively pursued. In a few years, as the relentless march of human genetics continues, anyone who wants to buy life insurance will have to deal with the dilemma, because we all have a few "bad" genes. Last week assorted geneticists and actuaries (the people who do the maths for the insurance industry) gathered at the Royal Society to see what could be done about the problem.
As has happened before in the history of insurance, a new and powerful predictive technology is pitting insurers and their clients against each other, by raising the stakes in the insurance game. Both sides fear that the other will use the new predictive power to take advantage: clients fear that insurance companies may suddenly make them uninsurable, or massively raise their premiums because of genes which they can do nothing about; insurers, for their part are worried about the possibility that clients, knowing they have a bad genetic test result, will take out large policies imposing potentially ruinous costs on the whole industry. This latter phenomenon is known in insurance jargon as "adverse selection".
If we want to see what might happen if both sides remain entrenched in their positions of distrust, we only have to look to the United States. There have been many well publicised cases of people being denied insurance on genetic grounds, and examples are beginning to crop up in Britain as well. Many of these cases seem particularly cruel in that the insurers have clearly discriminated unfairly, denying insurance to healthy or nearly-healthy people with normal life expectancy, simply on the basis of a genetic label. This happens because insurance companies are often ill-informed about the variability in the severity of the symptoms of genetic diseases. Even in the so-called "simple" genetic diseases, caused by a single gene, there can be great variation. Some commentators argue that these mistakes are simply a function of insurers being on an early stage of the genetics learning curve. More jaundiced observers point to the experience of the industry's response to HIV, where for a long time it discriminated against anyone who had taken an HIV test, whatever the result. There is little doubt that insurers are naturally predisposed to overcaution, and are rarely willing to admit their mistakes. It also seems likely that the learning process will take quite a few years, during which time many people will suffer unfair discrimination.
In the United States, the publicity surrounding these cases, and the resulting unwillingness of many people to take genetic tests that might benefit their health, has led to the creation of a coalition of campaigning groups, scientists, and crucially, the biotechnology industry, committed to legislation banning insurers from using genetic information. For the biotechnology industry, of course, it is essential that people do not fear being rejected by insurers, otherwise they will simply not buy the tests which the industry wants to sell.
There are seven bills before the US Congress which would ban insurers from using genetic information and one bill, which affects only health insurance, has already been passed. Several European countries already have moratoria or legal bans on the use by insurers of genetic information. It may yet be that the US insurance industry can fight off the bills through sheer lobbying muscle. But in the medium term it would seem that history is against it, for life insurance is a central part of the lifestyle of middle-class voters. Genetic bad luck can strike anyone, and such voters will not accept the possibility of not being able to get insurance for long.
It is probably safe to say that the British insurance industry's priority is to avoid a repeat of the US experience, and the main political function of the Royal Society conference, which was jointly organised with the Institute and Faculty of Actuaries, was to pour oil on troubled waters. All the insurance industry speakers were at pains to emphasise that at present in Britain 95 per cent of policies are issued at a standard rate. Among those people, there are many with higher than average risks, who are being subsidised by the rest. Insurers base their predictions on the very partial information that comes from the individual's age, sex, smoking habits and medical and family histories; a process called underwriting. About 5 per cent of the time, this throws up really serious risks, in which case the person is either refused cover, or, more often, given a higher premium.
The general message from all speakers at the conference was one of reassurance. Not only has the industry agreed not to demand genetic tests from life insurance applicants, but as several speakers were at pains to point out, there is little likelihood that this will change in the foreseeable future.
There are a number of reasons for this. The first is that there is a rather small number of genetic diseases that are actually relevant to life insurance. (This is not true of health insurance, and the absence of speakers from the health insurance industry was the least satisfactory aspect of the conference.) Those which are relevant are mainly the "late-onset" diseases, of which the classic example is Huntington's disease, which strikes in a person's forties or fifties. There was consensus that although genetic predispositions to major killers like heart disease could one day be important in insurance, the accuracy of genetic predictions for these diseases currently makes use of such information a nonstarter. Insurers only change premiums when they have very firm statistics, which can take decades to compile, and, furthermore, it seems unlikely in most cases that the predispositions will be large enough to affect premiums under the current system.
The crucial point, however, is insurers' professed desire to maintain the practice of insuring 95 per cent of people at standard rates. As Desmond Le Grys of the Munich Reinsurance company pointed out, although simple medical tests such as blood pressure and cholesterol level can reveal a fourfold difference in mortality from heart disease, insurers rarely demand these tests. Instead, the bad risks are absorbed into the 95 per cent pool, since the companies can deal with this level of risk, and do not want to scare off business. If existing and simple tests are ignored, why should insurers bother with genetic tests?
The other side of the coin, however, is that the insurers' arguments that they face severe potential losses from adverse selection begin to look much less plausible. Both Peter Harper, head of the Welsh Medical Genetics Service, and Angus McDonald, of Heriot Watt University, made this point forcefully. Dr McDonald backed it up with mathematical models showing that, even with worst case assumptions, the industry was likely to face no more than an easily-absorbable 10 per cent loss from adverse selection if it did not ask for any genetic information. This conclusion holds as long as a ceiling is imposed on the size of the policy: above a certain sum, say Pounds 100,000, known genetic test results would need to be revealed.
Here, then, seems a compromise which could satisfy both insurers and their clients: no questions would be asked about genetic tests, provided that the policy was below a certain limit.
The compromise does not cover people who are already known from family histories to have a high risk of late-onset diseases. Such people would probably continue to be uninsurable by private insurance and more thinking needs to be done about how to help them. When pressed, industry representatives suggest that the state should take over responsibility for such people, a prospect which, though just imaginable in the UK context, is surely outlandish in the US. But the suggestion would cover the many people who may take genetic tests as part of national genetic screening programmes, or in order to inform their reproductive decisions. The issue of how to deal with the impact of genetics on health insurance and insurance to cover the costs of long-term care remains unresolved.
While appealing in its simplicity, there are still important barriers to the acceptance of such a deal by the insurance industry, some of which are issues of principle, and some questions of culture. Undoubtedly the hardest pill for the industry to swallow is that consciously eschewing relevant information, on the basis of external policy considerations, is a first step to restriction of the underwriting process. The attitude of most actuaries to such a possibility is summed up in the title of a recent paper on the subject by Spencer Leigh of the Royal Insurance company, entitled "The Freedom to Underwrite". As one participant at the Royal Society put it, there may be a slippery slope to exclusion of other medical tests and ultimately to an undermining of underwriting, and hence the whole industry. Put simply, it smacks of external regulation, and the insurance industry does not like outsiders interfering in its affairs.
Last week's Royal Society meeting was interesting as the start of a transitional period in which the insurance industry may be forced to accommodate itself to the political reality that if it does not come to some compromise with the public, it will face a severe backlash. But the defensive comments of many actuaries at the meeting indicated that there is still a long way to go. To be fair, the Association of British Insurers tried to say many of the things it said a year ago in its evidence to the House of Commons Science and Technology Committee enquiry into human genetics. But perhaps because of poor presentation, it succeeded only in conveying an impression of complacency and of dragging its feet on the issue of self-regulation. This was rammed home forcefully at the Royal Society by Peter Harper, who, after five years of fruitless solo attempts to get the industry to consider self-regulation, understandably expressed his frustration.
The rules of the insurance game arise from a social contract between the industry and society at large. On the one hand, for most of the 20th century the predictive ability of medical information has been at a level of accuracy that has made life insurance a reasonable gamble for both insurers and the public. On the other hand, the social consensus has favoured a social democratic distribution of premiums, under which 95 per cent of people pay the same rate. At the end of the century the system is coming under pressure, from genetics, which is changing the technical rules, at least to some extent, and from liberal ideological and economic pressures which point in the direction of a more stratified system, with more extensive underwriting. But whatever the outcome, those involved in debates over insurance need to maintain the perspective that insurance rules are social rules, produced by consensus and negotiation rather than laws of nature which cannot be changed without destroying the insurance system entirely.
David King is editor, GenEthics News.