According to academic research from Heriot-Watt
University published in the journal Astin Bulletin, "We quantify the
overall impact of genetic information on the insurance industry using the
bottom-up approach, in which detailed models are constructed of representative
major genetic disorders. We consider six such disorders, namely adult
polycystic kidney disease, early-onset Alzheimer's disease, Huntington's disease,
myotonic dystrophy, hereditary non-polyposis colorectal cancer; and
breast/ovarian cancer."
"Actuarial models based on the
epidemiological literature exist for all these except MD. We parameterise a
suitable model of MD, then synthesize the results from all six models to
estimate the adverse selection costs arising from restrictions on insurers' use
of genetic information. These are all very small, only in the most extreme
cases rising above 1% of premiums. In the worst case - females displaying extreme
adverse selection in a 'small' critical illness insurance market, with the use
of family history banned - the cost is about 3% of premiums. Our model includes
the most common single-gene disorders relevant to insurance, and includes
representatives of most important classes of these disorders .While the
bottom-up approach could be continued by modelling more and more diseases, we
suggest that our model is adequate to draw robust conclusions."
There are problems with the study:
- Insurers are mostly banned from taking genetic
information into account
- No insurer ever writes business as on an
actuarial model
- The model assumes a spread of risk, that
individual insurers do not get
- The model ignores the EU laws on gender
equality – so whether or not the customer is female can no longer be taken into
account
- The model assumes that insurers do not decline
any proposal.
The reason that there is a ban on insurers using
genetic information is that it prevents their knee-jerk reaction to what they
believe is higher risk, despite the absence of any such proof, of either
refusing to offer any cover, charging higher premiums, or restricting cover.
