Putting the record straight

Research carried out by GE Frankona Re at this year's COVER Protection Forum in London showed that 66% of advisers are against insurers having access to genetic test data.

It would be interesting to discover why such a high percentage of advisers should take this view. Is it because they feel that this is the way to protect their clients? Is it a reflection of their personal, rather than professional, views? Or is it simply a misunderstanding and concern about how insurers might use such genetic data?

With these questions in mind it is time insurers presented their case with much more clarity. What we do have to remember is that we are discussing insurance, which is a commercial practice in an open, non-compulsory market. If we wanted a debate on whether or not society should subsidise those individuals who are genetically, or for that matter otherwise disadvantaged, when applying for insurance then such a debate should take place in the public sector as a discussion for society ' not in the private sector where the debate should be about insurance practice.

In any event, it is worth spending some time looking at some of the common myths and misunderstandings.

Unfair discrimination

'Insurers want to use genetic testing to 'cherry-pick' and unfairly discriminate'

This is a widespread and fundamental misunderstanding. Insurers are not seeking to ask applicants to undergo genetic testing as a requirement for being granted insurance. In fact, the ABI Code of Practice expressly forbids this. All insurers are asking for is to have access to the same knowledge as the applicant. This principle of uberrima fides is important in insurance contracts, without which the contract cannot function. Furthermore, insurers are stating that they only require to be notified of genetic test results that are reliable and actuarially relevant to the risk being insured.

The reason insurers require access to this information is so they can uphold the principle of equity. This concept of equity is the situation where a fair approach is taken to all policyholders and applicants, whereby each person is charged the rating appropriate to the known risk they are bringing to the fund.

To ignore relevant genetic test results would be to enforce all other policyholders to subsidise the costs of those affected by the adverse genetic test result. This subsidy would have to be paid by those accepted at the normal rate of premium, as well as those who had already paid an extra premium in respect of their own medical issue.

So, what about this issue of unfair discrimination?

This subject is addressed by Dr Tony McGleenan in his report Insurance and Genetic Information. McGleenan reports on two studies on insurance discrimination.

First, a survey of US genetics counsellors by Hall & Rich reported that: 'When asked about instances of insurance discrimination with their own clients, or those of their colleagues, almost every counsellor and every patient advocate said he or she knew of no actual cases of health insurance discrimination.'

The second, a study by Morrison et al, claims to document six instances of genetic discrimination in insurance in the UK. However, McGleenan questions the methodology and conclusions of the report, which, in his opinion, are based on a flawed questionnaire, circulated to clinical genetics professionals at six UK centres. Of the six cases identified, detail is available on only four. We cannot cover the full detail here, but McGleenan concludes that, at best, these instances indicate the application of standard and widely accepted existing underwriting techniques, rather than widespread genetic discrimination. From the detail available none of the applicants were asked to undergo, nor had already undergone, genetic testing for insurance purposes.

This suggests there is some confusion over the use of fair discrimination and unfair discrimination which is at best immoral and in some instances illegal.

Fair differentiation is part of the approach to underwriting and relates to the principle of equity already discussed. Unfair discrimination should not be allowed and is part of the reason that the ABI Genetics Code of Practice exists and is applied by the industry.

Getting a result

'Adverse genetic test results will have little impact on life insurers'

This is another common myth and one that has little data supporting it. There is also, however, no data to show actual genetic anti-selection taking place against insurers, because the sample having tests to date is too small and we do not know who has actually been tested, so cannot check. However, a study on altered patterns of insurance purchase, which was made by the American Council of Life Insurance in 1998, had some interesting findings. The study showed:

• 44% of those surveyed would be likely to buy a life insurance policy in the next 12 months on finding they were genetically predisposed to a life threatening condition.

• Without such a test result this figure was just 11%.

• Faced with an unfavourable genetic test 15% would apply for a sum assured of $1m.

• Without such a test result the figure was only 3%.

This concept of anti-selection would be even more obvious with products such as critical illness (CI) and disability income protection.

This suggests that there is a potential for the withholding of genetic test results to have a significant impact on insurers and their policyholders.

At best, we would end up with significant cross-subsidy and, at worst, premium increases that would create an economic underclass who could not afford some insurance products.

Genetic underclass

'Genetic tests are different and allowing insurers access to the results will lead to a genetic underclass'

Perhaps the most contentious point is whether or not genetic test information is somehow different to other medical test information.

Commercial insurance works on the principle that both parties enter the contract with an equal understanding of the risks being covered.

Obviously, the underwriter is at a disadvantage here as he relies on uberrimae fides, with the applicant disclosing all relevant facts. Relevant facts are those that would give an indication of the risk profile of the applicant and may include things such as occupation, sex, medical history, family history and smoker status. The underwriter uses this information to pool individual risks with other similar risks by charging an appropriate premium.

If, as was the case until recently, genetic testing were not available, then the status quo would be maintained because both parties would be operating from the same knowledge base. However, genetic testing reveals whether an individual has a predisposition to a particular disorder and therefore is actuarially relevant facts. As such, there is no justification in excluding them from the insurance underwriting process.

However, as McGleenan states in his report, perhaps it is not important whether genetic data is different ' the fact is that people perceive it as different. This does not mean that it should be excluded from the underwriting process, but that there should be a more considered approach to its use.

Again, the industry has responded to this through its Code of Practice, which addresses issues such as confidentiality and fairness in the use of data and the application of ratings.

The question of creating a genetic underclass is an interesting one. There is no evidence that this will happen, any more than there is a diabetic or hypertensive underclass.

A number of individuals with adverse genetic test results have been able to obtain life assurance, some at the normal rate of premium. Others have been charged a higher premium, but we should not forget that there is evidence that applicants with an apparent genetic predisposition can and do obtain more favourable terms for life assurance when their genetic test results are taken into account.

Test turn off

'Allowing insurers the right to access test results will discourage individuals from seeking medical advice/taking tests secondary to insurance worries'

The issue of potential impediments to uptake of genetic diagnostic services is one of the most sensitive points in the debate. Assertions are repeatedly made suggesting that concerns about insurability are deterring patients from taking genetic tests.

A study by Aktan-Collan is based on European data and also has one of the largest sample sizes. This study attempted to differentiate between those who accepted the offer of a hereditary nonpolyposis colon carcinoma test (HNPCC ' those with this gene have a lifetime risk of between 70%-80% ' Petersen et al, 1999) and those who declined.

The analysis suggests that those who accepted differed from those who declined in that they had a spouse or partner, were more often employed and had the benefit of a higher education. Of those who took the test, only 2% mentioned concerns about insurance as being an argument against testing. After adjusting the results for socio-demographic variables it was found the acceptance was positively related only to employment.

There does not appear to be any convincing evidence that individuals are being discouraged from taking genetic tests because of the potential impact on insurance.

Ultimately, this is a complex debate, with many issues and some entrenched views on all sides. It is a good time for good communication and discussion to resolve the issues and to find a way forward, which will benefit everyone. With this in mind the insurance industry has put in place a moratorium on the use of genetic tests in the underwriting of insurance applications.

In broad terms, this allows individuals the right not to disclose adverse genetic test results for applications for life assurance for up to £500,000 and for disability ' including CI products of up to £300,000.

This should cater for something in excess of 95% of applicants. This moratorium is expected to last for five years with a review at three years and is intended to allow some breathing space so that an informed debate on the best way forward can take place.

The industry should take this opportunity to explain its position, listen to the views of all stakeholders and help promote an outcome that will be in the best interests of the public, insurers, policyholders advisers and their clients.