The Economic Stakes Involved in Genetic Testing for Insurance Companies

1. 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. Health Life G Medex 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 Medex Life Health Care Social Care Product G DI DI CI No Complete UW Simplified Note: UW = Underwriting; DI = Disability Insurance; CI = Critical Illness

3. 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

6. 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

7. 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 markersExpression profile Past history of cancer Diagnostic genetic test Disease-free Family history Predictive genetic test Smoker status Body mass index

8. In the USA premature mortality due to genetic predisposition is considerable McGinnis et al. Health Affairs 2002; 21: 78-93

9. 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

10. 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?” Canada Life Assurance Company Caplan CMAJ 2003; 169: 1331

11. 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

12. Family history is a risk factor for most common complex diseases Am J Prev Med Feb 2003

13. Rating guidelines for underwriting family history of breast and ovarian cancer Note: Std = Standard and EM = Extra Mortality

14. 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

15. 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

16. 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

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

18. About 70% of disclosed results to life insurers in the UK are predictive genetic tests

19. In the UK about 75% of the disclosed predictive genetic test results are “negative” 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

20. 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

21. 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

22. 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