the economic stakes involved in genetic testing for insurance companies

The Economic Stakes Involved in Genetic Testing for Insurance Companies

Dr. Christoph NabholzCDBI Seminar on predictivity, genetic tests and insuranceStrasbourg, 3/4 December 2007

Private insurance is complementary to social insurance and is tailored to individual need

Social Private

Government

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Individual

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Group

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Note: UW = Underwriting; DI = Disability Insurance; CI = Critical Illness

Underwriting reduces the risk of anti-selection and keeps the system in balance

Because of underwriting, the vast majority of applicants can be accepted at standard rates

Private life insurance is far cheaper today than in previous decades

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

Few risk factors exist to assess cancer risk and the new ones investigated are of a genetic nature

Family history Predictive genetic testSmoker statusBody mass index

Disease-free

Symptomatic

Tumour markers Expression profile Past history of cancer Diagnostic genetic test

Traditional risk factorsFuture potential risk factors

In the USA premature mortality due to genetic predisposition is considerable

McGinnis et al.Health Affairs2002; 21: 78-93

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

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 Company’s medical exam form asks:

“Has 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?”

CaplanCMAJ 2003; 169: 1331

Canada Life Assurance Company

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

Family history is a risk factor for most common complex diseases

Am J Prev MedFeb 2003

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

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 > age 50 Std

> 2 first degree relatives with breast and/or ovarian cancer, at least one of which diagnosed < age 50:

Following prophylactic bilateral mastectomies:

Years since surgery:

< 1 +50 EM

> 1 Std

No prophylactic mastectomy +75 EMNote: Std = Standard and EM = Extra Mortality

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

The current growth rate of clinical genetic testing in Europe and the USA is about 30% p.a.

Ibarreta et al.EC Sep 2003EUR 20977 EN

In 2002 in Europe 700,000 genetic tests were performed in clinical practice

1997 activity was taken as baseline index of 100%

Estimated % growth in genetic testing activity since 1997

Growth rate of disclosed genetic test results to life insurers in the UK and Australia is about 35% 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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.a. UK – ABI survey Australia – IFSA survey

In the UK about 4% of the genetic tests done in clinical practice are disclosed to life insurers

ConditionGene

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 15’921 4.3

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%

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 Huntington’s disease

Negative genetic test results may be used in favour of the applicant to wave family history ratings

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

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

The Economic Stakes Involved in Genetic Testing for Insurance Companies

Dr. Christoph NabholzCDBI Seminar on predictivity, genetic tests and insuranceStrasbourg, 3/4 December 2007

the economic stakes involved in genetic testing for insurance companies

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