Use of Genetics in Insurance and Impliations

In recent years scientific discoveries have opened the door to many areas of research people thought to be impossible. One of these areas that have made giant leaps is the study of genetics. As scientists find and map new genetic alterations that cause human diseases, treatments and cures become readily available. Genetic testing is often used to detect genetic defects in individuals who have no symptoms of disease and predict risks of future disease. Genetics is also used to predict the presence of the same genetic defects in relatives of the individuals with diseases. The same discoveries that have helped find many cures have also intoroduced complicated issues in the insurance field based on the misuse of genetic information to discriminate against insureds. Since the importance of genetics was realized, actuaries have tried to study the impact genetic testing will have on insurance providers as well as the people they will insure. These new genetic discoveries have increased medical research allowing better predictions on the mortality and morbidity of people. Most people are unsure of the implications related to genetic information. They fear information will be used against them to increase prices or deny coverage altogether. This uncertainty has caused some people to forgo testing that could possibly save their lives, placing a strain on the medical field by interfering with patients’ decisions.

As scientists have discovered new genes, they have also discovered mutations that show higher than normal probabilities of a person having or developing certain diseases. Insurance companies and government officials have tried to ease people’s concerns and ensure everyone trying to get insurance will not be discriminated against because of a genetic test result. The use of genetic testing to calculate mortality is very complex; relationships between genetics and diseases are not understood and are limited to only a few cases where genetics would affect a person’s application for insurance. The development of a way to relate tests to a number that predicts how long a person will live will take some time. Meanwhile, a person’s habits and lifestyle are a much better indicator of risk. Factors like smoking and activities as well as jobs are much more useful in the prediction of the lifespan or health of a person. As more genetic tests become available, insurers will be interested in how accurately the tests will be and the effects they will have on the actuarial fair premiums.

Another very important issue in genetic testing is adverse selection against the insurance companies. Adverse selection occurs when persons that are high risk seek insurance at standard rates resulting in higher than expected losses. If losses are higher than expected, costs increase, and low risks exit causing the group to become full of higher risks. Adverse selection is most likely to take place in life insurance. Unless people are required to turn over genetic information, adverse selection may place a strain on insurance companies. One example of adverse selection and its impact is adverse caused by AIDS/HIV in the 80’s: “when individuals with HIV/AIDS, and who knew this, took out insurance cover that they would not normally have taken out without disclosing their HIV status or incurring any extra premium (Collins 4).” The effect of the HIV/AIDS was absorbed by the industry without much trouble. Most research “concluded that if life insurance companies do not use genetic test results in underwriting, the industry will face additional costs but they will only be 10% greater than current losses (Collins 8).” This means the industry could currently take losses from adverse selection due to withholding of genetic test results. Information that is closely related to genetic testing is already used in underwriting. Medical and family history are commonly assessed by insurance companies to determine the level of risk a person presents when a policy is written. One needs to consider if the results of genetic testing are that much different from other medical tests.

A second issue arising from genetic testing is the adverse selection/discrimination against persons seeking insurance or the use of test results to frequently increase premiums. Like racism, sexism, and other forms of prejudice genetic testing could cause limitations based on an uncontrollable characteristic. Genetic information has been used to discriminate in the past. African-Americans have been denied insurance coverage because some people were found to be carrying sickle cell anemia. Even though these people were in good health and would never become ill, they were denied coverage. Some uses of discrimination are illegal such as using racial background as a factor. There are some uncontrollable factors that are used in insurance. Differences in age, sex, and marital status are risk factors that are used to determine actuarial fair premiums. As long as the factors are not used unfairly or unreasonably and have some actuarial basis, they should be included. Unless some genetic testing information is regulated to prevent misuse, insurance companies may use results to drop or deny coverage. For example, a person who carries a defective gene that causes cancer and has relatives with cancer has an increased risk of development. Once a person knows of the genetic alteration, they can work to prevent development. The same information that could help prevent the disease could prevent this person or their children from obtaining or switching health insurance. In recent survey, “22 percent indicated, they or a member of their family, had been refused health insurance on the basis of their genetic information (Dept of Health and Human Services).” There is a large concern insurance companies will use test result to hand-pick people who have perfect genes and place them into a special pool. All other people would be placed into an uninsurable class that would prevent them from gaining insurance. Care must be taken to prevent discrimination based on genetic information. If people are discriminated against in health insurance because of genetics, new genetic technologies that could be used to understand and treat genetic diseases would be desuetude. Many insurers argue that persons are protected from discrimination by a highly competitive market. However, most people are unable to determine whether policies and terms are priced reasonably (Renn 125).

Most people who have had genetic tests performed or considered having them performed expressed concern in the level of privacy insurers have with results. In most cases, records of family members are not used when an application is filed, only when a double application is submitted. If genetic testing becomes mandatory, insurance companies could access multiple family records and price an entire family out of insurance. There have been considerable steps taken to guard personal information of all types. The Data Protection Registrar (DPR) actively works with protecting personal information. The DPR suggested “test results obtained from individuals but not used for underwriting purposes should not be retained (Brocket 35).” This would prevent insurance companies from mishandling the information while preventing them from using it unfairly.

Technology has taken us to places people once only dreamed of. Since most genetic tests do not accurately predict common causes of death at this time, they hold an important area for research but should not yet be considered in the determination of rates. I feel the requirement of a genetic test before purchasing an insurance policy would be irrelevant. There has not been enough testing done to accurately use genetic tests with exactness in prediction of most major diseases. Until research can find ways to use genetics more precisely, I believe genetic information should not be considered or required for any insurance.

Bibliography

Works Cited

1. Brockett, Patrick L. Carter, Maureen and MacMinn, Richard. Genetic Testing, Insurance Economics, and Societal Responsibility, North American Journal Of Actuaries, Volume 3, Number 1 January 1999.

2. Cambell, Sir Colin, The Implications of Genetic Testing for Insurance. Available online at www.actuaries.org.uk December 1997.

3. Renn, Derek “Life, Death and Money : Actuaries and the Creation of Financial Security” June 1998

4. Department of Health and Human Services, Health Insurance in the Age of Genetics. Available online at www.soa.org, July 1997.

Works Cited

1. Brockett, Patrick L. Carter, Maureen and MacMinn, Richard. Genetic Testing, Insurance Economics, and Societal Responsibility, North American Journal Of Actuaries, Volume 3, Number 1 January 1999.

2. Cambell, Sir Colin, The Implications of Genetic Testing for Insurance. Available online at www.actuaries.org.uk December 1997.

3. Renn, Derek “Life, Death and Money : Actuaries and the Creation of Financial Security” June 1998

4. Department of Health and Human Services, Health Insurance in the Age of Genetics. Available online at www.soa.org, July 1997.

Word Count: 1258