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Insurers grapple with increasing genetic testing

A New Zealand insurer says there's merit in considering limiting the ability for insurance companies to take the results of genetic tests into account in underwriting up to certain sum assured thresholds.

Monday, November 12th 2018, 9:00AM

It is something that Australia is currently discussing. Family history would still be required and underwritten for.

"I think this approach makes a lot of sense, as long as the limits apply in the aggregate across the industry so consumers cannot purchase maximum non-genetic test limits from a number of companies, bypassing the limits in order to anti-select," Partners Life managing director Naomi Ballantyne said.

She said it meant incidental genetic findings would not impact underwriting for smaller covers, but for larger covers anti-selection by the consumer could be identified, "as can significant increased genetic risks which other customers should not be subsidising".

It comes as researchers in Australia released the results of a survey of Australian life insurers.

The survey by Strategic Insight covered the impact of genetic testing on customer issues, new retail life policies (advised sales), new direct life policies, group life policies and actuarial issues including mortality, trauma and disability risk.

The major customer issues of genetic testing availability by order of importance were ranked by insurers as perceived disadvantage, distrust, expectation of mandatory genetic testing, complexity and privacy.

Half said they expected that new applicants would not be required to provide genetic test results but half were undecided.

The insurers said some possible ways to modify insurance cover for monogenetic disease were to limit term length, limit benefits, consider individual cases and apply continuous underwriting and annual reviews.

When they encountered positive test results, 40 per cent said they would offer insurance with a special premium loading and 20 per cent would offer insurance with exclusions relating to the cover of the disease.

Ballantyne said close family history was used as a factor in underwriting at present.

"In other words we already underwrite for hereditary risk but only when it has manifested itself in the actual disorder – either in the client themselves or in their immediate family.

"Legally at present we cannot ask a client to undergo a genetic test for underwriting purposes. We can ask for the results if the client has already undertaken a genetic test. - before we underwrite a client we are entitled to know what they know about their health.

"This means we can apply underwriting to the fact that a client has a positive family history and/or a genetic test result. Historically people undergoing test results would be people with either a family history of a disorder or where other family members who don’t have the disorder have had positive gene tests – i.e. people of higher risk of genetic disorders.

"By applying underwriting to their family history and/or known genetic results and either charging them extra or excluding covers, the rest of the clients would not effectively be subsidising these clients for their increased genetic risk."

She said genetic testing was becoming more common, which brought attention to the issue.

"People who would previously not have had any genetic underwriting applied, but who have an incidental finding of a gene for a particular disorder, would now have to disclose this finding to their insurer and be underwritten for it. This is not something those people who have DNA testing done out of curiosity alone would expect to be a consequence. 

"On the other hand it would be disastrous if insurers were selected against by people who discovered they had positive tests for hereditary disorders and bought insurance (or more insurance) as a result without the insurer understanding the risk in the same way as the client does. The cost of this selection risk would then have to be worn by all other clients, making insurance increasingly expensive - and therefore less likely to be bought - by clients who do not have a higher risk of genetic disorders.

"On the other hand if insurers could insist on obtaining the results of any genetic testing, irrespective of why the test was undertaken, consumers might instead be encouraged take out insurance before they undertake any genetic tests and then cancel or reduce covers should the test results be negative – a huge waste of time and money for the industry."

Tags: Income Protection Partners Life

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