State genetic information bans not necessary, life insurance lobbyists say

Fallout from a 2020 Florida law banning life insurers from using genetic information is a classic good-news, bad-news situation for the industry.

The good: no additional states adopted similar laws in the years since.

The bad news is that Florida passed a bad bill that mischaracterizes how life insurers use genetic information, said Curt Leonard, regional vice president, state relations, for the American Council of Life Insurers.

Leonard spoke Wednesday during the final day of the LIMRA Life Insurance and Annuity Conference in San Antonio.

ACLI is busy traveling around the country to meet with and educate lawmakers considering genetic testing bills, Leonard said. Roughly half of the states have some form of a genetic information privacy bill under consideration, he added.

“We have to explain how we use genetic test results in the applicant's medical record,” Leonard explained. “We have to discuss life insurance, why we do what we do. How for 150 years, the transparency, and us knowing what the applicant knows at the time of application is the critical foundation of the issuance of individually underwritten life insurance policies.”

Florida’s genetic use ban

The Florida law bars life insurers from requiring or asking for genetic information or using genetic test results in any manner. A person can volunteer DNA information from a genetic test— such as BRCA or another mutation — to insurers, but they are not required to do so.

If genetic information is voluntarily given, the insurers still cannot deny coverage, limit or cancel insurance coverage, or set different premiums based on genetic information or DNA.

Health insurers have long been banned from using genetic information under the Genetic Information Nondiscrimination Act, signed into law on May 21, 2008.

“They have had a tendency to conflate, particularly lawmakers, to conflate us with health insurance, and our business model and our underwriting is completely different,” Leonard said. “One of the assumptions that was made was that we are … trying to find people's genetic information without their knowledge of it.”

Dr. Dave Rengachary is senior vice president and head of underwriting, U.S Mortality Markets for RGA. Prior to joining the insurance industry, Rengachary was a general neurologist in Missouri.

Lawmakers often have little clue about how life insurance underwriting works, he said, and education needs to be a big component of any lobbying effort.

“They believe very often that we don't need risk factors. That if we just have the diagnoses that are already in the chart, that should be sufficient,” he said. “No, we're trying to make predictions. Hopefully about 30 to 40 years in the future. You don't do that based off current diagnoses. You do that off current risk factors.”

SOA study

A 2018 study by the Society of Actuaries found that prohibiting the use of genetic information by life insurers would cost the industry, said Jan Graeber, senior health actuary, American Council of Life Insurers.

Where only the applicant knows the results of genetic testing but both the applicant and the insurance company know the family history at time of underwriting, future increases in expected new business claim cost range from 4% to 8% overall, the SOA study found.

Where only the applicant knows the result of genetic testing and family history, and the insurance company knows neither, future increases in expected new business claim cost range from 5% to 10%.

“What is the impact of that 4% to 8% mortality increase on the cost of insurance for the next group of applicants, and the one after that?” Graeber asked. “What we show is people in that low- to middle-income area, consumers are pretty price sensitive.”

ACLI will continue visiting state capitals and meeting with lawmakers to explain how life insurance works, the panelists agreed. And efforts continue to get the Florida law amended.

“A key point here is there's a difference between aggressively honoring well-protected, well-accepted protected class standards and creating new ones specifically for life insurance underwriting and that's the line that we've drawn here,” Rengachary said.

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.