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LIFE UNDERWRITING HUB

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Will the increasing availability of genetic testing results impact life insurers?

genetics

This week we are exploring another newsworthy topic that will impact the life insurance industry: genetic testing

Why is genetic testing an important topic for life underwriters?

As genetic testing becomes increasingly more available, life underwriters should be aware of how to handle a client’s genetic test results during a case. Before we dive into why, let’s explore the history behind genetic testing.

The history of genetic testing

The Human Genome Project (HGP) formally began in 1990, taking 23 years to fully complete and costing about $2.7 billion over the course of a decade. The first draft of the HGP was produced in 2001 though, and it was shortly after this that the idea of the “$1000 genome” was coined. That price ticket would become a goal-defining aspiration for many companies over the next 15 years, fueling further research and technological development and bringing us to today.

The current state of genetic testing

In recent years, several companies – such as Illumina and Veritas – have purported to have met the benchmark of sequencing the entire human genome for $1000 – a measly expense compared to the initial cost of the project mentioned above. While there is still discussion over how much it will cost for customers, genetic testing has come a long way and test results are just about at our fingertips for the consumer. Or, perhaps, not just yet for insurance companies.

Use of genetic testing data in insurance

The idea of third parties gaining access to a person’s genetic test results, and how that data might be used, has sparked a heated debate amidst the insurance industry, lobbying groups, and federal levels of government. Of course, it’s easy to see why, as the topic is ripe for sensualizing in the media.

The possibility for genetic discrimination

Just look back at the movie Gattaca that depicted a ‘utopian’ world driven by eugenics, in which children are conceived through a process of genetic manipulation that selected the best hereditary traits to pass on. Individuals conceived outside of the eugenics program (i.e. children born through ‘natural’ means) were discriminated against, in both their private lives and in the workforce. While the movie may have blown discrimination out of proportion, the propensity for genetic discrimination is still a possibility. That being said,  there is a lot of benevolent usage to be had from the data, so there is a fine line to tread.

Bill S-201: Canada’s Genetic Non-Discrimination Act

In Canada, Bill S-201 has been a long time coming. Also known as the Genetic Non-Discrimination Act, it was introduced by the Senate in 2016 and came under debate in the House of Commons in March 2017. It has since passed, overwhelmingly, and was given the royal assent in May 2017 following amendments. The full text of the bill can be read here, but we’ve identified some of the prohibitions and limitations below.

The impact of Bill S-201 on life and health insurance companies

For life and health insurance companies, the impact is simple and resounding: an applicant cannot be made required to undergo a genetic test for life insurance purposes, nor can specific terms or conditions be made contingent on an applicant having a genetic test done. Further, if an applicant has not had a genetic test done or has refused to have one done, this cannot be used as reason for refusing to enter into an insurance contract (i.e. declining or postponing their insurance). In cases where an applicant has had genetic testing done in the past, that applicant cannot be required to disclose the results as a condition of a life insurance offer.

According to this Bill S-201 no insurance applicant or family member can be asked to undergo a genetic test as condition for eligibility of life insurance coverage.

Possible exposure to anti-selection

As with any heavy-handed legislation, there is expected to be both a positive and a negative impact. In the one hand, the field has been leveled for the consumer to give those who choose to undergo genetic testing as fair a chance at obtaining insurance coverage as those who do not. On the other hand, insurance companies may be exposed to what we call anti-selection – that is the tendency of those with high-risk jobs, avocations, or poor health to seek out insurance coverage. In this case, it could provoke an influx of applicants who have had unfavorable genetic testing results to pursue coverage, knowing that they have protection under the aforementioned legislation. While not necessarily harmful in the short-term, over time this may increase the observed mortality rates of any given insured population.

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Written by: Elliott Dickson and Garen Markarian

Elliott is Lead Underwriting Consultant at RGAX, supporting the RGAX Underwriting Solution Services team. He leads consulting projects, offering his expertise to advise clients on underwriting best practices and supporting them as they define and implement solutions. Elliott supports production underwriting and continuously mentors RGAX underwriters with guidance on technical and business inquiries. A graduate from University of Toronto, Elliott holds degrees in both the life sciences and philosophy. Garen is a Senior Underwriter at RGAX. He supports the RGAX Underwriting Solution Services team in providing comprehensive life insurance underwriting solutions to help carriers optimize risk management outcomes and better compete now and into the future. In addition to more than a decade of industry experience, Garen has an undergraduate degree in Neuroscience from The University of Toronto, and a post-grad diploma as a CRA from The Michener Institute.