The Economic Stakes Involved in Genetic Testing for Insurance Companies

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The Economic Stakes Involved in Genetic Testing
for Insurance Companies
Dr. Christoph Nabholz CDBI Seminar on
predictivity, genetic tests and
insurance Strasbourg, 3/4 December 2007
2
Private insurance is complementary to social
insurance and is tailored to individual need
Group
Social
Private
Government Compulsory
Individual Free Choice
Employer Compulsory
Who
Health
Life
Health
Life
G Life
Life
Medex
Health Care
Social Care
Product
G DI
DI
CI
No
Complete
Simplified
UW
Note UW Underwriting DI Disability
Insurance CI Critical Illness
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Underwriting reduces the risk of anti-selection
and keeps the system in balance
4
Because of underwriting, the vast majority of
applicants can be accepted at standard rates
5
Private life insurance is far cheaper today than
in previous decades
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Information considered in the underwriting
process is diverse

• Medical risk factors
• Age, gender, build, medical history, family
  history, body-fluid tests
• Non-medical risk factors
• Financial occupation, income, sum assured,
  insurable interest
• Behaviour sports, travel, alcohol, drugs, fitness

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Few risk factors exist to assess cancer risk and
the new ones investigated are of a genetic nature
Traditional risk factors
Future potential risk factors
Symptomatic
Tumour markers Expression profile Past
history of cancer Diagnostic genetic test
Disease-free
Family history Predictive genetic
test Smoker status Body mass index
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In the USA premature mortality due to genetic
predisposition is considerable
McGinnis et al. Health Affairs 2002 21 78-93
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A key challenge for life insurers in the future
is whether new laws restrict use of traditional
risk factors

• The issue of whether life insurers have access to
  genetic data is further complicated by the
  argument that all diseases are influenced by our
  genetic make-up
• Could any medical test result that relates to a
  possible future health outcome reveal information
  of a genetic nature?
• This question may create issues for life insurers
  about the overall medical risk assessment
  process, including challenges over the use of
  family history information

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Life insurers have a long tradition of
requesting, and responsibly using, family history
information

• The life insurance industry has a good track
  record of handling medical and other personal
  data with great care and professionalism
• For over 150 years life insurers have asked
  questions about the occurrence of disease in
  close family members
• 1848 Canada Life Assurance Companys medical exam
  form asksHas he, in your opinion, any
  hereditary predisposition to any disease and if
  so, to what?Can you state anything respecting
  the health of his parents or relatives, with
  which the Directors of this Company should be
  made acquainted? If so, what?
• 2006 medical examination form of the Swiss
  Insurance Association Has any one of your
  parents, brothers, sisters, or grandparents,
  before age 55, developed neurological
  disturbances, heart diseases, stroke, diabetes
  mellitus, cancer or hereditary diseases? Which
  disease(s) and how many had developed the
  disease?

Canada Life Assurance Company
Caplan CMAJ 2003 169 1331
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Insurance-based family history data are
statistically sound and fulfil strict data
protection standards

• Today's family history question fulfils privacy
  requirements and is different from a more
  systematic family anamnesis used by the genetic
  consultant in that
• it is less systematic e.g. does not extend to
  cousins
• the direct relation to the applicant is not
  revealed, but the group is large enough that the
  information can be considered non-identifiable
• The data used in underwriting is statistically
  relevant for the diseases in question
• Written consent is given by the applicant

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Family history is a risk factor for most common
complex diseases
Disease Relative Risk
Heart disease 2.0 5.4
Breast cancer 2.1 3.9
Colorectal cancer 1.7 4.9
Prostate cancer 3.2 11.0
Melanoma 2.7 4.3
Type II diabetes 2.4 4.0
Osteoporosis 2.0 2.4
Asthma 3.0 7.0
Am J Prev Med Feb 2003
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Rating guidelines for underwriting family history
of breast and ovarian cancer
Risk classification Life rating
Male applicant Std
Female applicant
1 first degree relative only with breast and/or ovarian cancer Std
2 first degree relatives with breast and/or ovarian cancer, both with diagnosis gt age 50 Std
gt 2 first degree relatives with breast and/or ovarian cancer, at least one of which diagnosed lt age 50
Following prophylactic bilateral mastectomies
Years since surgery
lt 1 50 EM
gt 1 Std
No prophylactic mastectomy 75 EM
Note Std Standard and EM Extra Mortality
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Family history provides a proxy for genetic risk
and is key to life insurance underwriting
Family history is a common clinical marker used
as a proxy for genetic risk The probability of
contracting breast cancer increases with a
positive family history and even more with BRCA
mutations associated with higher incidence of
disease
Ponder Science 1997 278 1050
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The current growth rate of clinical genetic
testing in Europe and the USA is about 30 p.a.
Estimated growth in genetic testing activity
since 1997
In 2002 in Europe 700,000 genetic tests were
performed in clinical practice
1997 activity was taken as baseline index of 100
Ibarreta et al. EC Sep 2003 EUR 20977 EN
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Growth rate of disclosed genetic test results to
life insurers in the UK and Australia is about
35 p.a.
UK ABI survey
Australia IFSA survey
genetic test results disclosed p.a.
ABI Code of Practice on Genetic Testing
Compliance Reports 1999 to 2005 Total of 3421
test disclosed in 6 years 0.05 of all
applications in 2004
IFSA Genetic Testing Survey Reports 2001 to
2005 Total of 667 tests disclosed in 4
years 0.06 of all applications in 2004
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In the UK about 4 of the genetic tests done in
clinical practice are disclosed to life insurers
Condition Gene ABI2004 GTN2003
Haemochromatosis HFE 139 2854 4.9
Huntington's Disease HD 127 1239 10.2
Thrombophilia (Factor V / Prothrombin) F5, F2 106 2805 3.8
Breast/Ovarian Cancer (BRCA1/2) BRCA1, BRCA2 95 3141 3.0
Myotonic Dystrophy (MD) DMPK 70 1244 6.2
Hereditary Non-Polyposis Colorectal Cancer (HNPCC) MSH2, MLH1, PMS1, PMS2, MSH6, TFGBR2, MLH3 35 1229 2.7
Familial Adenomatous Polyposis (FAP) APC 28 471 5.9
Alpha 1 Antitrypsin Deficiency PI 22 75 29.3
Charcot Marie Tooth disease PMP22 21 2461 0.9
Polycystic Kidney Disease (PKD) PKD1, PKD2, PKD3 19 45 42.2
Multiple Endocrine Neoplasia (MEN) RET 13 357 3.6
Total 677 15921 4.3
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About 70 of disclosed results to life insurers
in the UK are predictive genetic tests
Condition Total Diagnostic Predictive Don't know
Haemochromatosis 139 35 79 25
Huntington's Disease 127 2 117 8
Thrombophilia (Factor V Leiden / Prothrombin) 106 41 46 19
Breast/Ovarian Cancer (BRCA1/2) 95 7 81 7
Myotonic Dystrophy (MD) 70 7 54 9
Hereditary Non-Polyposis Colorectal Cancer (HNPCC) 35 0 29 6
Familial Adenomatous Polyposis (FAP) 28 2 22 4
Alpha 1 Antitrypsin Deficiency 22 4 12 6
Charcot Marie Tooth disease 21 10 8 3
Polycystic Kidney Disease (PKD) 19 0 17 2
Multiple Endocrine Neoplasia (MEN) 13 2 10 1
Total 675 110 475 90
ABI Code of Practice on Genetic Testing Compliance Reports 2004 100 16.3 70.4 13.3
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In the UK about 75 of the disclosed predictive
genetic test results are negative
Condition Predictive Adverse Normal - Ambiguous
Huntington's Disease 117 25 91 1
Breast/Ovarian Cancer (BRCA1/2) 79 21 53 5
Myotonic Dystrophy (MD) 54 9 44 1
Familial Adenomatous Polyposis (FAP) 22 1 21 0
Multiple Endocrine Neoplasia (MEN) 10 6 4 0
Total 282 62 213 7
ABI Code of Practice on Genetic Testing Compliance Reports 2004 100 22 75.5 2.5
Note In the UK the only genetic test allowed to
rate is for Huntingtons disease Negative
genetic test results may be used in favour of the
applicant to wave family history ratings
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Summary of exposure of genetic information to
life insurers

• A significant part of today's health determinants
  is due to genetic pre-disposition
• the clinical genetic testing arena is growing at
  about 30 p.a.
• In the UK only a small percentage of genetic
  tests used in clinical practice are disclosed to
  private insurers
• 70 of disclosed results are pre-symptomatic
  tests and 75 are negative
• Family history is a key life insurance risk
  factor which allows to reduce anti-selection due
  to non-disclosure of genetic test results
• statistical evidence exists for family history
  ratings

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Conclusions

• The freedom to price and underwrite according to
  the risk presented is the fairest way to cover
  the maximum number of people at a competitive low
  price
• Concern for insurers is information asymmetry
  which could lead to potential anti-selection
• the cost of which must be cross-subsidised by the
  pool which may cause premiums to go up, or
  products to be withdrawn
• Life insurers want fair access to risk relevant
  information but do not require applicants to
  undergo genetic testing
• diagnostic genetic tests confirm present disease
  and therefore should be treated different from
  predictive tests
• genetic test results will only be taken into
  account when their reliability and relevance is
  established

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The Economic Stakes Involved in Genetic Testing
for Insurance Companies
Dr. Christoph Nabholz CDBI Seminar on
predictivity, genetic tests and
insurance Strasbourg, 3/4 December 2007