Examination of Witnesses (Questions 62
WEDNESDAY 7 FEBRUARY 2001
62. Mr Clarke, Mr Bedell-Pearce and Mr Urmston,
thank you very much indeed for coming along this afternoon to
the Science and Technology Select Committee to help us with a
brief but important inquiry that we are undertaking into genetics
and the insurance industry. You will have some idea of the way
we are thinking on this. We know that the insurance industry has
to assess risk but we also know that, with genetic testing becoming
more prevalent, perhaps in the future even more so, and becoming
more accurate, there may be an issue of insurance companies wanting
to use personal and private information for their insurance cover
and the setting of premiums. That is the theme of the questioning
this afternoon. There are three companies represented here this
afternoon, The Cooperative Insurance Company, the Prudential Assurance
Company and the Norwich Union. We have a series of questions and
if we put every question to every one of you, we will be here
well into the evening. If we put a question just to one of you
and it looks like we are not going to put it to the others for
our own reasons, but if one of you feels urgently that you would
like to make a contribution, please catch my eye and I will allow
you to; but please do accept that not each of you can answer every
question. Otherwise, it will just take far too long. Having said
that, I would like to start with a question. Having thanked you
for the memoranda you and others have sent us. I wonder if each
one of you could state your company's present policy towards genetic
testing and how it is used in setting insurance premia.
(Mr Clarke) The CIS's policy with regard
to genetic tests is that, for life assurance, we do not use genetic
test information and do not require it to be disclosed. Where
that information is disclosed and it is to the proposer's advantage,
we are prepared to use it, but certainly not to the proposer's
disadvantage. With regard to critical illness insurance, which
is a slightly more specialised field, we have been accustomed
to taking genetic test information and using it, but subsequent
to sending our memorandum we have agreed with our reinsurers that
we will only use such test information where that test has been
approved by the GAIC. Previously, we have followed the ABI's slightly
broader guidelines pending the GAIC admitting and validating those
(Mr Bedell-Pearce) The Prudential's policy on this
is that we do admit the use of genetic tests if they have been
approved by the Genetics and Insurance Committee. We will however
also take note of negative tests if they are volunteered by the
applicants for life assurance. We do not undertake health insurance
and we have critical illness as a rider to our life assurance
policies. We do not have any difference in our policy between
these two types of insurance.
63. Do you think there is any, if I may use
the word perhaps inadvisedly, stigma attached to a negative test,
because would you not ask yourself why has someone had a test,
even if the results come out negative? Is it not because there
is a family history that they have had a test? Even though they
have come out negative, the family history is of this and you
might take note of that?
(Mr Bedell-Pearce) Invariably, if someone has had
a test in the current circumstances, there will be some family
history disclosed. We have direct experience of this in that we
have taken note of only seven genetic tests since they became
available. Only seven cases applied to us. In each case there
was a family history; in each case the test was negative and in
each case that enabled us to provide insurance on standard terms.
(Mr Urmston) I represent the Norwich Union. The Norwich
Union is somewhat similar to the Prudential's position in that
it follows the guidelines of the ABI. There is in effect a moratorium
for policies of less than £100,000. The ABI code suggests
that companies will not use genetic tests for less than £100,000
for mortgage purposes. Norwich Union applies that for any type
of term insurance or life cover. In other words, there does not
need to be a mortgage involved. Above that figure, we will take
into account the results of genetic tests on life insurance or
critical illness cover. To give you some understanding of the
numbers relative to Keith Bedell-Pearce, in 2000 Norwich Union
received some 50 genetic tests of which only 30 fell within the
criteria approved and existing in the ABI code.
64. How many fell within the GAIC code?
(Mr Urmston) Thirty. Approximately 18 of those were
negative and 12 were positive. Norwich Union sold something like
150,000 policies of term assurance or mortgage protection. We
are talking about very tiny numbers of people here. Norwich Union's
market is one which is very competitive. We sell through the IFA
market in the United Kingdom. We sell many policies for many hundreds
of thousands of pounds and many for millions of pounds. That will
give you an understanding of our market position.
65. You have answered my next question. I was
going to say that Co-operative Insurance told us that out of 460,000
applications for insurance since 1997, in less than four years,
only 14 have involved genetic tests. I was going to ask the Prudential
and Norwich Union what their situation is, but we have now been
told the Prudential was seven and Norwich Union was 50 and only
30 of those fell within the GAIC criteria.
(Mr Urmston) Those figures related to the year 2000
66. So you could perhaps multiply it by three
for the last three years. It does appear that all three of you
have a situation where, having sold a large number of policies,
there is only a very small proportion that have involved genetic
testing. That being the case, we know from Standard Life's evidence
to us that they say, "In view of the numbers involved, we
believe the effect to be insignificant." That being the case,
could I again ask all three of you, if there are such small numbers,
at this stage is it really worthwhile getting involved in genetic
tests because any money that you might lose, by having just one
of these policies out of so many that should have a higher premium
but has not, will be a minimal risk?
(Mr Clarke) We certainly agree with the comments that
you have received from Standard Life. The experience we have had
shows that we are talking about a very, very small number of tests
that have been performed. If we were to abandon our policy of
not taking that test information but instead loaded the premiums
for life assurance for the remainder of our policy holders, that
loading would be almost insignificant.
(Mr Bedell-Pearce) I agree that at this stage, from
the financial point of view, the impact is not significant. However,
this is a fast developing area. In the one area where the test
has been approved by the GAIC, it is so far as I understand a
very deterministic test. That is for Huntington's chorea. Therefore,
as a starting point, I think it is appropriate that this is taken
into account in underwriting those specific cases. There is quite
an important point in relation to underwriting which, so far as
I can see, has not been covered in any of the discussions on this
that I have read in papers published on both sides of the Atlantic.
That is, a very important and growing area of insurance is the
provision of annuities. Over the next 20 years, annuities are
likely to be a far more significant element of the revenue premiums
of insurance companies than term assurance. I suspect that is
the case already. In the case of annuities, it is perhaps counter
intuitive but, if there is what in the parlance of the industry
is called an impaired life, the insurance is granted on much better
terms than would be the case for someone who had not got an impaired
life. One has to proceed with a degree of caution in saying, "We
are not going to take notice of genetic tests" where, for
a substantial proportion of the population in the future, having
genetic tests available which show an increased risk of mortality
may be very much in their interests.
67. In terms of annuities?
(Mr Bedell-Pearce) In the context of annuities and
therefore there is a degree of ambivalence about this already.
(Mr Urmston) I would agree with the position that
you describe. I would echo what Keith Bedell-Pearce has said,
that there will be rising numbers of these tests as the market
develops. None of us can be certain the way this is going. What
the insurance industry has attempted to do with its moratorium
for low sums assured, and testing for the higher sums assured
is to remove the worst effects of adverse selection. The real
problem is that many policy holders coming to Norwich Union can
take out quite large sums assured. That may differ to some degree
between our positions as companies in terms of markets. If they
can elect to choose quite large sums assured, it is not unreasonable
for us to look at what is behind that decision. It is the selection
issue which causes some concern as the sums assured get larger.
68. Finally, again you have anticipated my question.
Since the numbers are so small at the moment, the cost would be
minimal. The stance you are probably taking now is because you
wish to establish a principle because, in the future, there may
well be a lot more genetic information available that you could
not afford to ignore. Rather than waive your rights totally at
the moment, you are establishing a situation that you might like
to use more in the future than at present. Is that correct?
(Mr Bedell-Pearce) That is correct but I would add
a rider. Mike Urmston and I have already discussed this. There
is a concern amongst the large insurance companiesand this
has already been raised by Professor Bobrow in his evidence to
you a couple of weeks agothat access to the genetic tests
may have a deterrent effect on people taking those tests. That
is something which the insurance industry does have to work very
hard to counter. I feel that more could be done by companies like
the Prudential and CGNU to provide a form of insurance, albeit
in slightly different format from standard terms, in order to
provide cover to people who do have positive tests. That is particularly
the case and I have a particular worry about the genetic tests
for breast cancer because the evidence is that those tests are
in themselves reasonably reliable; but also prophylactic action
can be taken in relation to early detection of a predisposition
towards the genetic breast cancer indicated by BRCA1 and 2. Therefore,
it would be a very unsatisfactory situation if people were deterred
from taking those tests.
69. The insurance industry has grown very rich
and very powerful quite happily without access to any genetic
information other than the somewhat approximate indications of
family history. Firstly, can you not continue to act without genetic
information? Secondly, do you not think that the situation with
HIV status, where insurance companies are not allowed to inquire
as to a person's HIV status, represents a reasonable precedent
for handling genetic information?
(Mr Urmston) What the insurance companies are trying
to do is to be on a level playing field with the policy holder
in knowing the same information that they have, not trying to
know more information, because of the problem of adverse selection.
My understanding of genetic testing is that in effect the underwriting
decisions that we can take can be improved significantly over
family history. Family history is a pretty crude measure in assessing
the ability of people or people's positions in terms of genetic
tests. Clearly, a more scientific method can help the underwriting
decision. We have looked through the 30 cases that were within
the criteria in the year 2000 and we have looked at what would
be the underwriting decisions if we had just used family history.
In 23 of those cases, the decision is more lenient through genetic
tests or the same. In other words, 23 people got a better decision
through this. Four fell within the moratoriumie, were less
than 100,000and only three received decisions which were
somewhat worse. You can see that what genetic testing is doing
is giving better information. There is nothing very unusual about
this. Over the years as science has developed and the medical
ethics of medical science and genetics have developed, what is
happening is the insurance industry is able to accept more people
within standard terms.
70. You have not answered the point on HIV.
(Mr Bedell-Pearce) The current position with HIV is
that insurers are allowed to ask if someone has tested positive
for HIV. What we do not ask is whether people have undertaken
an HIV test.
71. What would happen if a patient who was going
to have a genetic test decided to get insured first and then had
the test and the test might have been positive? As I understand
it, that would mean that you could not vary the terms of the insurance
that you had then let?
(Mr Bedell-Pearce) That is quite correct.
(Mr Urmston) We could improve the terms and will do.
72. At a later date?
(Mr Urmston) Yes indeed.
73. For the insurance company?
(Mr Urmston) No; from the consumer's point of view.
74. For clarification, I know this can get quite
emotional sometimes and it is very difficult to ask the question
because we do not know what genetic tests we are talking about.
In the event that somebody was tested positive for one of the
genetic problems that we now have begun to identify, is there
any insurance company that would blanket refuse insurance or are
we talking about a loading of the insurance, in that "my
wife has a brain tumour. I pay a premium. I find that fully acceptable
in the context". Is that what we are talking about in terms
of positive genetic tests?
(Mr Clarke) In practice, it improves our knowledge
of the probabilities. If we are prepared to rate adversely on
the basis of genetic test information, either case could apply.
Either the loading could be applied or increased if the test was
positive or in an extreme case insurance companies may decline
75. The question was: would you ever refuse
insurance or would you just load it?
(Mr Clarke) Either case could apply.
76. You could refuse?
(Mr Clarke) Either case could apply. All that the
test would do would be to improve the chances of that happening.
I think it is quite marginal, as we have seen.
77. You could refuse insurance?
(Mr Clarke) Yes.
78. I wanted to challenge your great belief
in science and genetics, that there is a pure situation where
you have a gene and that is it, because you can have different
mutations in the same gene, different expressions of the disease
and so on. You are putting over the idea that it is absolutely
pure and once you have that gene that is it. There is no perfect
genome. I think you have to agree with that. You are all sitting
there with 15 lethal genes in your genome at the moment and you
may never know that. You have picked for ten tests seven conditions.
I am interested in why you have such great faith that you can
predict from those seven that something could be said that will
affect people's faith and lives and so on. Why have you picked
those seven? Who told you? Why did it come to those seven out
of the thousands of diseases there are in the world, of which
there is probably a genetic component?
(Mr Bedell-Pearce) The seven conditions were identified
by the genetics adviser to the ABI, Dr Sandy Raeburn, who is professor
of genetics at Nottingham University. Of those seven tests, four
now have been withdrawn from application to the GAIC, so there
are only three tests at the moment which have been submitted to
the GAIC. One for Huntington's chorea has been approved and the
other two are awaiting approval. You are absolutely right and
it is interesting to speculate how far the use of genetic testing
will give rise to deterministic results in the future, because
there are very few mono-function genetic disorders known, although
the mendelian inheritance of man catalogue of gene defects that
can give rise to disease runs to some 4,000 known gene defects.
That puts it in context. We have only three tests that we have
submitted at the moment to the GAIC and only one, which is for
Huntington's chorea, is thought by all the medical and scientific
evidence that I have seen to be deterministic where, if there
is the identification of the repetition of the code CAG more than
39 times, in the scientific papers that I have seen, it is a matter
of certainty that Huntington's chorea will develop within a certain
time frame. As you move into the other two tests, early onset
familial Alzheimer's disease and certain types of breast and ovarian
cancer, the probabilities diminish and I agree we are in difficult
79. Bobrow went further when he gave evidence.
I am sure you have read it. He does not have the confidence that
Sandy Raeburn has in being able to predict. He said that he is
not sure if you have the gene that you can predict "when
the disease will start, how rapidly it will progress and thus
when death will occur." Wellcome said, "Even for the
highly heritable single gene disorders, there is less certainty
in identifying who will go on to develop the disorder." It
is a mess, is it not? You cannot really predict and yet with these
uncertainties you feel confident to talk about increasing or decreasing
premiums. It is an uncertain science.
(Mr Bedell-Pearce) We do not feel confident at the
moment. The only test that the insurance industry is using which
has been approved by GAIC is in respect of Huntington's chorea.
I do not want to stand in the middle of an argument about the
efficacy or otherwise of genetic testing between two academics.
The evidence that the insurance industry adviser has provided
us with and indeed the GAIC also has confirmed is that there is
a degree of predictive certainty so far as the Huntington's chorea
is concerned. I do agree with Professor Bobrow in relation to
not being able to forecast the onset of that particular condition,
but there is a considerable body of scientific evidence and practical
experience of the emergence of Huntington's chorea to indicate
that with certainty, where the nucleotide repetition is more than
39 times, the disease will emerge.