Genes and Insurance: Ethical, Legal and Economic Issues (review)

Predicting future scientific developments is always risky. Predicting the future of a scientific development and its impact on public opinion, public policy, and private industry is nearly impossible. This does not mean, however, that such predictions should not be attempted. At the very least, they help us anticipate, frame, and perhaps even prepare for possible future problems. In Genes and Insurance: Ethical, Legal and Economic Issues, Marcus Radetzki, Marian Radetzki, and Niklas Juth attempt to predict the results of the likely expansion of genetic testing on personal insurance in Western developed market-driven economies.

The book focuses on the relative effectiveness and likely results of either total (no use of any genetic test–derived information) or partial (insurance companies may use existing genetic test results but cannot require testing) prohibitive regulation of the use of predictive health information uncovered by genetic testing. The authors argue that governmental regulation, either total or partial, of the use of genetic testing information will inevitably fail to achieve the goal of protecting individuals who purchase insurance in the personal insurance market from inappropriate discrimination. Therefore, no new restrictive legislation should be enacted, and the regulation that currently exists should be repealed. This conclusion clearly flies in the face of the current legislative and regulatory trend to restrict the use of genetic testing information in risk-rating private health and disability income insurance. Thus, if persuasive and correct, their analysis would have extremely important policy implications for personal insurance (purchased by individuals in the private insurance market) and derivatively for social insurance (supported and guaranteed by governments).

The authors base their conclusion on two assumptions—assumptions that are controversial and even if true may offer only limited support for their conclusion. The first assumption is that genetic testing will become much more widespread, accurate, and affordable, and that it will be able to provide actuarially useful predictive information to insurance companies. It is no doubt true that for some genetically linked diseases testing will be more available and affordable and will offer some predictive value. Eventually, with enough clinical correlation, these genetic tests may even provide some actuarially useful information. It is unlikely, however, that pre-symptomatic genetic testing will offer a quantum leap in regards to actuarial usefulness over currently collected family medical history information.

The authors assume, further, that insurance companies will not only want to use genetic information, but that they will believe it is necessary to use this information in order to remain competitive with companies that do use it. In order for a company to have a competitive edge using genetic information, that information must not only have better predictive power but also it must be collected at an economic cost that will more than be covered by the value of additional information. This is likely to be the case in the foreseeable future only in niche insurance markets, such as high-value life insurance. It should be remembered that most health insurance and a great deal of life and disability insurance is offered through employment and relies on community risk rating, not individual risk rating. The information necessary for community risk rating is relatively inexpensive to acquire.

Additionally, and more importantly, the authors believe that adverse selection (where the consumer uses risk information in their purchasing decision that the insurance company does not have) will force insurance companies to find ways to acquire and use genetic test information, even if it is prohibited or regulated by a particular country. This will happen, the authors conclude, through globalization, by moving the company "offshore" to a country that does not regulate or prohibit the use of genetic test information. This concern seems at least theoretically plausible, however it is difficult to evaluate the actual chance of its occurring. This is because the data on the incidence and significance of adverse selection is not publicly available. In fact, the extent to which adverse selection is a problem for insurance companies is closely held...