Memorandum submitted by Norwich Union
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
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
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
Reference is made to a Chief Medical
Officer of the ABI Genetics adviser for interpretation of genetic
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
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
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
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
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
Undertaken actuarial investigations
in support of the applications for the use of genetic tests made
Supported the Institute of Actuaries
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
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
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