Should genetic information be disclosed to insurers? No

Abstract

UK insurers have said that they may seek approval to use the results of genetic tests for cancer from next year. Søren Holm believes they should have to pass the results on to insurance companies, but Richard Ashcroft argues that the risks of disclosure justify privacy in most cases

A strong case can be made for requiring people who have had genetic tests to disclose that fact to insurers when they purchase life, critical illness, or health insurance policies. There are essentially three arguments for this position: that genetic information is not essentially different from other kinds of health information, that non-compulsory insurance depends on full and truthful disclosure by the applicant to protect the integrity of insurance underwriting and risk pooling, and that because insurance is a private arrangement between freely contracting parties, each party is entitled to set the terms of the contract in negotiation.

I would accept all of this. Indeed, it is the consensus in both the academic and the policy literature that under ideal conditions we have no reason to treat genetic information differently from any other kind of health information.¹ Nevertheless, most jurisdictions do impose restrictions on insurers' power to request and use genetic test information, and I think this is justified.²

Risk of discrimination

The central issue here is unfair discrimination. Two forms of unfair discrimination should concern us. Firstly, we have the irrational discrimination that arises from false beliefs about genetic information. The insurance industry has occasionally been guilty of this sort of discrimination, and there have been important controversies about insurance sales, underwriting, and management of claims in HIV and, subsequently, in relation to genetic information.^{3 4 5}

As with the use and abuse of genetic information in employment, it is important to note how genetic information can be misunderstood, or its importance overestimated, and therefore used in discriminatory ways that would not be justified on sound actuarial grounds.⁶ For instance, if a woman were to test positive for a mutation in the BRCA1 gene, a naive insurance salesperson might think that she represented a poor risk for life insurance, even though the actuarial advice might be that this made little difference to her life expectancy.⁷ The point is sometimes neglected in the defence of “freedom to underwrite” that what is theoretically justified may be undermined by the less than perfect behaviour of people working under pressure. The moratorium on use of genetic test information apart from in carefully regulated exceptions may not be justified on actuarial grounds, but it can be justified on the grounds of protecting consumers from irrational discrimination.

Social justice

The second form of discrimination is more troubling. Use of complete information (including genetic information) in underwriting could lead to a situation that is actuarially fair but socially unfair.^{8 9} Actuaries are, reasonably enough, concerned that if they are barred from using genetic test information they will misprice risks. The result could be that the premiums collected would not cover the payments made and, in particular, that people would have an incentive to buy policies to cover risks known to them but unknown to the insurer (adverse selection). This could potentially lead to the collapse of life insurance companies, or even the industry itself. Not only would this be unfortunate for the insurance companies it would arguably be unfair to the other consumers of insurance products, who would be paying higher premiums to subsidise people whose policies were artificially cheap and, in the worst case, would not receive pay-outs they were due because the insurer was insolvent (although because of reinsurance this is unlikely).

All of this is true and important, and actuarial fairness therefore matters morally as well as commercially. But it is not the whole of fairness. If the point of insurance is to cover the costs of ill luck, the only sort of ill luck you could not insure against would be the misfortune to have a late onset serious genetic disorder.¹⁰ Arguably such people would need insurance more than most yet would be less able than most to get it. There are various ways around this—for instance, ensuring adequate welfare state support or making some insurance compulsory for all. But these are only partial remedies and would arguably not cover all the economic losses many people with inherited disorders would face.

This raises an important question of policy. Insurers could argue that it is not fair to them to have to carry the burden of the social problem of genetic ill luck. However, in the face of the scientific uncertainties of interpreting genetic information (especially for complex disorders), the occasionally discriminatory practice of insurance workers, and the lack of readymade solutions to the social justice problem, it is reasonable in the medium term to maintain the current UK moratorium on the use of genetic information in underwriting, save in those exceptional cases licensed by the Genetics and Insurance Committee.¹¹