Are these tests putting insurers at a disadvantage?

Your client can know how much at risk they may be – but you can’t have that information

Are these tests putting insurers at a disadvantage?

Life & Health

By Terry Gangcuangco

They say what you don’t know won’t hurt you. In insurance, what you don’t know can potentially bite you.

The Economist has reported on predictive genetic tests and said they could be a significant disruptor to the industry. Let’s look at two scenarios:
  1. A prospective policyholder orders a predictive genetic test to find out his or her health risks – possibly gaining advantage over the insurance provider who is not given the information, since it’s not a diagnostic test that has to be disclosed.
  2. Insurers are granted access to results of predictive genetic testing, and they decide (unfairly, as feared by consumer groups) based on those results whether or not to provide cover for those with increased risk.
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That’s where the dilemma lies – with predictive genetic testing poised to become more common, the question is whether there should be equal access to the information. What happens in either case? 
According to The Economist, insurance firms are worried about adverse selection while the insured are concerned about discrimination. Understandably, someone at increased risk of dying early might want to get life cover, just as an insurer is likely to think twice about a riskier potential client. 

The report cited a California-based company which has obtained regulatory approval to screen for risk factors connected to diseases and genetic conditions, with the tests easily ordered online – a potential precedent for more accessible tests.

While regulations generally do not allow mandatory disclosure of predictive tests, the rules vary depending on where you are. The report said there are countries where life insurers may ask clients to disclose predictive genetic tests for policies valued above a certain amount.

In the UK, a renewable blanket moratorium exists except in the case of Huntington’s chorea. Health insurers in America are prohibited from using predictive genetic information, but the same can’t be said for other types of insurers.

Where do you stand on the issue of insurers having access to genetic testing information? Leave a comment below with your thoughts.

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