Our society’s ever-increasing emphasis on healthy living and longevity has rapidly sparked an interest in direct-to-consumer genetic testing kits such as 23andMe and Ancestry. Also, recent scientific breakthroughs have encouraged the use of genetic testing in the medical field, especially in the treatment of patients who may have an increased genetic predisposition to certain diseases.
While knowledge is power, and these new technologies may ultimately assist physicians in minimizing their patients’ future risk of developing certain ailments, there are also drawbacks to genetic testing that may not be readily apparent. One of the most important factors to consider is how the results of genetic testing may affect the ability to obtain life insurance coverage at a competitive rate. Before people apply for life insurance coverage, they must understand both the positive and negative ramifications of submitting to genetic testing.
In 2007, 23andMe became the first company to offer D2C genetic testing, and dozens of similar companies have since sprung up in its wake. However, the reliability of D2C genetic testing has come into question. Traditionally, genetic testing has only been available through health care providers who have the experience and medical training to accurately interpret results. A National Institutes of Health study of D2C testing showed an alarmingly high false-positive rate of 40%.
Another factor to consider is that there is currently little oversight or regulation of D2C testing companies. Although the popularity of D2C testing is on the rise, the main source of genetic testing information used by life insurers when underwriting a client largely consists of testing conducted by the client’s physician and is located in the proposed insured’s medical records.
To address the various issues faced by a life insurer when underwriting a client who has had genetic testing, let’s use the “Five W’s and an H” approach.
Who at the carrier ultimately decides what risk class is assigned to a client who has had genetic testing?
Some carriers follow the guidelines outlined in their respective underwriting manuals, and the final medical decision is made by the underwriter assigned to the file. Depending on the type of disorder, the test result and the manual used, the manual may advise the underwriter to refer the file to the medical director for a final decision. Other carriers advised that they will automatically send the file to their medical director for input or a final decision.
One carrier advised that they send all files that include genetic testing results to a specialty risk management team for review. Several carriers advised that these files are regularly run by their legal department for review from a regulatory compliance standpoint, especially when adverse action is likely to occur.
What other factors come into play in the decision-making process when a carrier is faced with genetic results in an individual’s medical records?
The majority of the carriers polled said they look at each file in the context of the client’s overall medical history. Although genetic test results are an important factor in life insurance underwriting, they are still just a piece of a larger puzzle. Several components are considered when underwriting a client who has had genetic testing completed.
In other words, the genetic test result itself is not the only factor examined when rendering the final risk assessment of a client. Other factors can include but are not limited to age, gender, smoking history, family history, personal medical history, lifestyle choices, frequency of follow-up with a physician and the results of any diagnostic testing.
I can’t speak to how medical directors would decide what underwriting action to take on a file, but I believe we can safely assume that they would take a holistic approach to each file and consider all of the pertinent available medical information before rendering a decision. If the carrier uses a manual approach, the manuals used can vary depending on the particular company.
Carriers can use one manual, several manuals or even their proprietary manual to make an underwriting decision.
When do carriers ask for genetic testing results or additional medical information?
The majority of life insurance carriers do not have a specific question regarding genetic testing on their applications or nonmedical or paramedical exams. However, some carriers do have wording on their nonmedical and paramedical exams that could potentially lead an applicant to disclose information about doctors or specialists who have conducted genetic testing.
Most carriers will ask if a life insurance applicant has “seen a specialist” or “received a recommendation to see a doctor or specialist” within a certain number of years. Further, nonmedical and paramedical wording can include questions about “pending medical tests or follow-up for medical concerns,” “any diagnostic tests” or “screening tests for family history.” In reading the fine print on the “authorization” page on some carrier applications, the phrasing can permit the insurance company to gather information from medical professionals or specialists to include “genetic information and genetic test results, to the extent permitted by law.”
Finally, some carriers are now expanding their paramedical exams to include not only the usual family histories of cancer, cardiac disease and diabetes but also any family history of Huntington’s disease, Alzheimer’s disease or polycystic kidney disease diagnosed at any age.
There are state regulations in place to limit the ability of life insurers to use clients’ genetic testing results when underwriting a file, but these regulations are not all encompassing and often only focus on the underwriting of a specific disease. While the majority of life insurers do not directly ask about genetic testing on their applications or medical forms at this time, they do often have access to this information through the procurement of clients’ medical records.
At present, most carriers choose to limit their underwriting to genetic testing results ordered in a clinical setting. However, some carriers, when polled, advised that if they are made aware of genetic testing having been completed through a D2C company, they will ask for the results.
When faced with a client who has had genetic testing completed, life insurance carriers will ask for additional information to include any diagnostic testing or lab results done in relation to the particular impairment. Subsequently, carriers will often credit a client for proactive physician follow-up, normal test results or positive lifestyle modifications.
Where was the testing completed?
In 2008, Congress enacted the Genetic Information Nondiscrimination Act. This regulation protects Americans from “discrimination based on their genetic information in both health insurance (Title I) and employment (Title II).” While federal regulations protect discrimination based on genetic results in health insurance, GINA does not extend to life insurers. In response, several states have enacted their own laws restricting the use of genetic test results in life insurance underwriting, but to date, no state has enacted a complete ban on the use of genetic test information for the purposes of life insurance underwriting.
It is important to note that carriers must walk a fine line when determining whether they can use genetic testing for underwriting purposes depending on the applicant’s state of sale.
Why are life insurance carriers interested in expanding the use of genetic testing?
The accurate assessment of risk and the ability to predict mortality is at the heart of life insurance underwriting. Life insurance products and pricing are based on actuarial models that group insureds into “pools” based on underwriting classifications assigned to applicants. The accuracy of these pools is only as good as the underwriting information used to assess each proposed insured’s mortality risk.
Adverse genetic testing results can potentially pose threats to the accuracy of insurance pools. Hypothetically speaking, there are three ways in which life insurance carriers may not be aware of a client’s genetic testing results:
1. The carrier does not directly inquire about the results of genetic testing on their application, nonmedical form or paramedical exam, and therefore, the client does not feel it is necessary to divulge information regarding their genetic testing results.
2. The carrier does ask about genetic testing, but the client deliberately withholds the information, otherwise known as a “material misrepresentation.”
3. State regulation prohibits the life insurer from using the results of genetic testing when making an underwriting decision.
Forcing life insurers to make underwriting decisions without information relevant to the client’s overall risk classification can threaten the accuracy of insurance pools in two ways. The first is adverse selection. Adverse selection is the tendency of clients who are at a higher-than-average mortality risk to purchase life insurance coverage. The second is an increase in the rate of persistence of those who already have life insurance coverage to keep it in force after learning of an adverse medical finding.
One of the main reasons that life insurance was not covered under GINA is that life insurers are at a greater disadvantage than health insurers when it comes to risk assessment. This disadvantage is because the life insurer does not have the same opportunity as a health insurer to reprice coverage when new information is revealed. In other words, the long-term nature of life insurance coverage results in a greater impact on mortality experience because, unlike health insurance, the life insurer has one shot to evaluate a client’s potential mortality and price the policy accordingly. Health insurance carriers can increase premiums in response to inflation, increased cost of diagnostic testing and other factors.
Adverse selection and increased persistence by individuals who are at a higher mortality risk are a primary concern for life insurance carriers. Both of these factors can potentially cause an increase in premium rates for new insureds or even insolvency due to an abnormally high claims experience.
It must be said, however, that there is also an upside to genetic testing where life insurance companies are concerned. As previously stated, life insurers have a vested interest in accurately pricing their insurance pools. This also includes rewarding clients who have a below-average medical risk with more competitive rates.
As the field of genetics and the availability of genetic testing continues to evolve, so too will the carriers’ responses to the impact that genetic testing has on their ability to address the concerns of the consumer while also making sure that their product pricing continues to reflect both the positive and negative factors inherent in this type of testing.