Legislation could affect the way insurers use family history to calculate premiums
Legislation that would affect the way insurers can use family history to determine premiums for life assurance and critical illness (CI) cover could be proposed, following a Commons debate on the use of genetic testing due to take place on October 25.
The debate will look at the recommendations of the Human Genetics Commission (HGC) which were put to the Government in May this year. The commission has called for an immediate moratorium on the use of genetic test results by insurers for no less than three years for policies with a value of less than £500,000. Taking the view that family history is genetic information, the HGC has also recommended how clients' family histories are handled by insurers should also be addressed.
Matt Rann, head of underwriting and claims at Scottish Equitable, said that although the moratorium would have little effect on life business or CI, if legislation is brought in to stop insurers using family histories, CI premiums in particular are likely to increase.
'The Association of British Insurers has determined that even if the policy value included in the moratorium was reduced to £300,000, a total of 95% of customers would fall below this figure for life business. Only a small percentage of CI policies would also land above that cover level. But if the use of information regarding family history is banned, there will be major repercussions for the CI industry. In this case, there would have to be an impact on pricing structure. Everyone is waiting for the outcome of the debate, but there is a chance premiums could rise,' he said.
In its recommendations, the HGC said it was pushing for legislation as it believes the existing system of self-regulation in the insurance industry has failed. Rann said the introduction of additional regulation would not be a good move for the industry.
'We do not want to go down the route of regulation. It is also hard to implement and alter over a short period of time. If the recommendations are approved, even insurers would prefer legislation,' he said.
Charlotte Grant, press officer at the HGC, said the Commission was feeling optimistic about the outcome of the debate. 'We have been awaiting a response from the Government since first publishing the recommendations in May. The Commission is hopeful the Government will agree with what we have recommended,' she said.
