Select Committee on Science and Technology Minutes of Evidence

Memorandum submitted by Norwich Union Life


  1.  Norwich Union is the trading name of CGNU plc in the UK, formed from the merger of CGU plc and Norwich Union plc in 2000. Norwich Union has been writing life insurance policies for 200 years and today is one of the largest insurers of life disability business in the UK, with a 30 per cent share of term insurance market written through Independent Financial Advisers.

  It is important for policyholders and shareholders alike that we fully understand the implications for our business of the rapid advances being made in genetic medicine. Genetics is an important business consideration for us. Undoubtedly it will present both opportunities and challenges and it is vital that the approach we adopt now provides a framework within which we can continue to offer the benefits of life and disability insurance to as many clients as possible.


  2.  Life insurance is based on the principle of the pooling of similar risks, with each client contributing to that pool in accordance with their risk profile. Our aim is to provide insurance cover to as many people as possible. Currently just over 90 per cent of applicants are accepted on standard terms with less than 2 per cent being declined due to the risk being considered too high to charge a competitive premium or being unquantifiable. The remaining small percentage of clients are asked to pay increased premiums.

  3.  Where applicants have in their possession information which indicates they would not be classed as standard rates, then it is important we have access to similar information. In particular, if an applicant has already undergone a relevant genetic test which has a high predictive value and the genetic condition will significantly increase the mortality or morbidity risk of that applicant, it is important that we have access to the same information when evaluating the risk. Our concern would be that unless both parties have access to similar information an imbalance is created which can potentially lead to "adverse selection" taking place with applicants seeking greater amounts of cover than they would in normal circumstances.

  4.  Family history has been an important part of the selection process for many years and has always been one of the main ways in which we glean an insight into potential hereditary problems. In many respects genetic information should be seen as an extension of this, and should be treated in just the same way as we do for any other medical advance.

  5.  In our use of genetic information we fully support and adhere to the ABIs Code of Practice on the use of Genetic Tests. The principles that we follow are governed by this code. In practical terms we adhere to the following principles:

    —  No applicant will be asked to take a genetic test as a pre-condition for insurance cover.

    —  Strict controls govern the handling, storage and confidentiality of all genetic information.

    —  All genetic information is handled by a Nominated Genetic underwriter who acts as a central reference point within the company for all applications containing genetic test results.

    —  Reference is made to a Chief Medical Officer of the ABI Genetics adviser for interpretation of genetic information.

    —  An audit of procedures and security is carried out on an annual basis and is reviewed and signed-off by the Chief Executive Officer.

  6.  We believe that the Code provides a clear framework within which our staff can operate and provides ample safeguards for clients.


  7.  Our expertise lies in the assessment of risk and not in medicine. We rely heavily on geneticists to interpret the results of genetic tests and their relevance in order to help us gain a greater understanding of this fast evolving science.

  8.  As provided for under the Code of Practice all "genetic" cases are handled centrally by our Nominated Genetics Underwriter who works closely with our Chief Medical Officer (Dr Alan Hunter FRCP). Where necessary, support and guidance in interpreting the genetic test results can be obtained from the ABI's genetic adviser, Professor Sandy Raeburn.

  9.  To gain acceptance it is vital that our use of genetic test information and the decisions we make are based on sound statistical evidence which can be demonstrated as having an accuracy and relevance to the insurance product under consideration.

  10.  GAIC have established clear principles governing the conditions for use of the results of genetic tests for insurance purposes. The criteria are:

    —  Proof that the test is accurate.

    —  Proof that the test has high predictive value.

    —  Acturial evidence demonstrating that a positive test result will have a significant impact on expected mortality or morbidity risk.

  We fully support the above process and are committed to using only those test results which gain the approval of the GAIC committee.

  11.  It is essential that we seek to gain a greater insight into the role that genetic information should play within our decision-making process in support of this goal we have:

    —  Undertaken actuarial investigations in support of the applications for the use of genetic tests made to GAIC.

    —  Supported the Institute of Actuaries Working Party.

    —  Actively encouraged and part financed research taking place within a leading university to gain a greater understanding of the impact of genetic conditions on mortality and morbidity risks.


  12.  The selection criteria used within the underwriting process is continually evolving to take account of and reflect advances in medical knowledge and understanding. As genetic medicine gains acceptance and develops we would expect to be able to make appropriate use of the advances.

  13.  Currently the only genetic tests available with a high degree of predictive value and a relevance in terms of life and disability insurance are a small number linked to rare monogenetic disorders. We will make use of these test results only when approval has been given by GAIC.

  14.  We would consider using tests results for diseases that are not single gene defects only when we are confident that we understand how the genes are interrelated and how they impact on expected mortality and morbidity. We see no immediate prospect that any reliable or accurate test will become available to assess this type of multifactoral risk for many years.

  15.  Accurate assessment of the predictive risk when dealing with polygenetic disorders is compromised by the current failure in most cases to understand the impact of environmental and behavioural influences at work resulting in two people with a similar gene profile but only one developing symptoms.

  16.  When and if we reach a position when genetic medicine can provide an accurate and reliable assessment of heterogenic disorders we would expect to engage the GAIC in discussions as to usage.


  17.  The current regulatory system has been effective in safeguarding consumers interests whilst at the same time allowing insurance companies to continue to operate commercially.

  18.  With regard to consumers interests the regulatory system has achieved the following:

    —  It has engendered public awareness of genetic issues.

    —  It requires strict adherence, as a prerequisite of life offices being given ABI membership.

    —  It has addressed important issues surrounding the handling and storing of confidential genetic information.

    —  It has placed clear accountabilities on the senior management of life offices requiring regular auditing and sign off by the Chief Executive Officer.

    —  It has removed the potential for life offices to compete on the basis of genetic underwriting. In particular, it has removed the spectre of companies using genetic data to offer preferred underwriting.

    —  It has placed strict controls on the tests that can be used through the criteria set by GAIC for the applications to use tests.

    —  it provides a clear policy guidelines for dealing with any breach.

  19.  With regard to the life industry the regulatory system has achieved the following:

    —  It has allowed insurance offices the freedom to underwrite, so important to the success of its business.

    —  It has demonstrated that the industry can act responsibly and does take public concerns into account. This is demonstrated by the current moratorium on the use of genetic test results for all mortgage-related products where the death benefit does not exceed £100,000.

18 January 2001

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