Select Committee on Science and Technology Minutes of Evidence

Examination of Witnesses (Questions 62 - 79)




  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 tests.
  (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 only.

  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 companies—and this has already been raised by Professor Bobrow in his evidence to you a couple of weeks ago—that 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.

Dr Turner

  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 moratorium—ie, were less than 100,000—and 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.

Mr Taylor

  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.

Mr Taylor

  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 cover.


  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.

Dr Gibson

  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 territory.

  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.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 3 April 2001