Examination of Witnesses (Questions 80
WEDNESDAY 7 FEBRUARY 2001
80. But there are cases where it does not develop,
even though you have the gene too.
(Mr Bedell-Pearce) It is a repetition of that particular
sequence. The area of doubt which I suspect Professor Bobrow was
referring to was where the repetition falls in the range of 35
to 39. In those circumstances, the insurance companies will regard
that as a negative result.
81. Have not the insurance companies a better
chance of predicting by looking back at what your great granny
or your grandfather and your mother and father died from? My experience
of life is you can usually predict from that just as accurately
as you can from a DNA sequence. That is what you have always done.
(Mr Urmston) That is what I was trying to refute earlier.
If you remember the figures I quoted, I was trying to say we have
gone back and said that, if we had used the family history methods,
what we have been able to demonstrateI think it is the
same for the Prudentialis that the practices that we use
are more accurate and are giving better information.
82. How do you know that? You are being conned
by the scientists.
(Mr Urmston) With respect, if your father or mother
have had this disease, there is a 50 per cent chance that you
may have it. If we rate on the basis of that, all the people who
have parents with Huntington's chorea we will end up rating in
line with that sort of probability. The genetic test means that
at least half of them we will not rate at all.
83. I say you can only say they have the gene,
period. You cannot say more than that.
(Mr Urmston) Genetics are only one input into an underwriting
process. There are things that the insurance companies can do
to try to help people who have a positive genetic test. One must
not immediately assume that a positive genetic test, whether it
be for Huntington's chorea or any other condition, definitely
leads to a decline or a rating. We ought to be looking a bit more
positively at what we can do in those circumstances. We can limit
the term of the cover. We can perhaps look for pooling in the
industry to try to solve those issues, because this is a tricky
thing. We can only go through independent genetic committees and
so on and take their advice.
84. Still on this theme of the relationship
between genetics and actuarial calculation, the Wellcome Trust
pointed out that this is an inexact science and you seem to be
agreeing with that. I wonder whether you can tell us whether you
are willing, in what you have just said about other things and
genetic conditions being taken into account, to publish the actuarial
and the scientific data which you use to support your policy?
(Mr Urmston) I can see no reason why the information
which goes to the Genetics and Insurance Committee should not
be made available. That is submitted as part of an ABI submission
to that committee, to try and provide the evidence that they have.
(Mr Bedell-Pearce) I can see no reason why we should
not ask the ABI to publish those. One of the key points is that
there should be openness and transparency in this. I can see no
reason why these submissions should not be in the public domain,
if they are not already.
85. Do you publish your actuarial evidence for
(Mr Urmston) What has happened with family history
over the years has been an assessment from the experience of the
major offices going back many years as to the experience of people
with that particular condition. The ratings that we use are drawn
mainly from reinsurance figures, where there is some evidence
of the impact of family history.
86. Is that publicly available?
(Mr Urmston) I am not sure that reinsurance manuals
are publicly available.
87. We have had a welcome affirmation of commitment
to openness. As I understand it, you have some ten tests that
are applied. If somebody comes up with a positive result, what
weighting do you give to factors such as early diagnosis and treatment
and indeed to non-genetic factors?
(Mr Urmston) As we have discussed already, we are
probably coming away from ten tests, and probably more focusing
on three at the most. Genetic tests are only one of a series of
factors in rating or underwriting decisions. There are medical
conditions, people's lifestyles and a whole series of other factors.
It also depends on the term of the policy that somebody is wanting
to take out. If they are taking out a relatively short term but
they will only suffer from this disease when they are much older,
it may not affect the underwriting decision at all. It is difficult
to be too specific but you can see there is a whole range of issues.
In trying to interpret genetic testing, the underwriter has to
go to an expert. He does not have the knowledge.
(Mr Clarke) We have been talking about this one specific
test for Huntington's, which is a very rare condition and affects
a very small part of the population. There is a rather inverse
relationship between the information that the insurance industry
is using, which is very limited and very rarein our case,
we do not use the information at alland the rather natural
public concern that is generated by this fact in so far as what
we are seeing here is an application of a very small set of circumstances,
of extra underwriting, extra statistical information, which is
clearly affecting only a very small part of the insured population
and, as we have already seen, does not affect very much of the
general body of the insured population. It would be useful if
the industry could try and explain itself a little more carefully
as to the possibility of these diseases and conditions arising.
I do feel that the general public at large are gaining the impression
that genetic testing by those companies that do use it is rather
more widespread than is the case. There are studies and market
research in this country about the degree of under-insurance within
the financial community. To get a label that the insurance industry
is requiring you to disclose genetic tests is going to deter even
more of the British public from taking out what is quite undeniably
a very valuable provision for protecting families and dependants.
88. Can we have a look at the Code of Practice
which you are voluntarily bound by? The Royal Society pointed
out that self-regulation is not an adequate regulatory system;
whereas the Norwich Union's own evidence says that it has been
safeguarding consumers' interest whilst at the same time allowing
insurance companies to continue to operate commercially. I should
not ask the Norwich Union but I can ask the other two gentlemen.
Do you think the Code of Practice has struck the right balance?
(Mr Bedell-Pearce) I think it has at this stage. It
will need to be revisited in the light of developments and experience
of the member companies. In terms of the overall principle of
a voluntary Code of Practice versus some form of statutory or
other regulation, at this stage, given the very limited amount
of genetic testing that is taken into account by insurance companies
and given the rapid change in the science and the interpretation
of that science, the flexibility of having a Code of Practice
which is subject to public scrutiny and overview and can be audited
by external bodies if necessary is a more flexible way of proceeding
than having something codified in legislation which may have to
be revisited on numerous occasions in the future.
89. We had some evidence from the Alzheimer's
Society which relates back to last year when certain insurance
companies appeared not to disclose the fact that a test was not
required for mortgages under £100,000. What sanctions can
the ABI bring on any insurance company that is out of line?
(Mr Clarke) I agree with Mr Bedell-Pearce in as far
as legislation in this particular area may be a rather rigid and
slow moving vehicle; whereas a Code of Practice could respond
more readily to developments. Certainly the ABI Code has been
revised and is being subjected to revision this current year.
We regard it as being essential minimum guidelines and it is up
to individual companies to strike their own levels above those
particular guidelines. One important aspect of the code though
is that it does set down quite clearly the security data protection
and the confidentiality aspects of the information that is collected
in this particular area. It is quite a good initiative on the
part of the ABI and the industry to publicise the steps they are
taking to secure this bond between the proposer and the insurance
company in what is a very sensitive area. I think the industry
should engage more readily with consumers and other bodies to
publicise exactly where this code is, who uses it, to what extent
it is being applied and perhaps be slightly more open to the views
of bodies like this and listen to them with great attention. The
industry has been a little quick to use its own tests rather than
waiting for the proper validation through the GAIC. With regard
to whether it is enforceable and capable of being policed, I do
not know if Members of the Committee are aware that membership
of the trade association is dependent on following the various
codes of practice. It obviously would be a very serious matter
if a member company of the association were unable to meet any
one of the codes of practice that applied. In this particular
one, the chief executive of each company has to certify each year
what is in effect an audit of their particular policy.
90. It is self-regulating, is it?
(Mr Clarke) It is self-regulating in the sense of
its membership of the association.
91. Self-regulating within each insurance company?
(Mr Clarke) Yes. It would be up to the individual
insurance company to have its own systems of audit. It could if
it wished make public its own audit of its own procedures and
that would be an initiative that could give it extra safeguards.
(Mr Urmston) There are a number of aspects which are
independent. We have the GAIC, which is clearly an independent
body. One might question what the GAIC goes on to do. It may well
monitor the performance of the companies in some way or collect
statistics or start audits. I do not think any of the companies
represented here or most of the industry would have a problem
in being able to demonstrate independently compliance with such
a code of practice.
Mr Taylor: The public are concerned about revealing
tests, although there has not yet been wide public debate about
this. If the public persist in being concerned, there is a cry
for the government to do something. What, in your view, could
the government do that would either hinder or help the insurance
industry in this context?
92. Is there not a problem that the Code of
Practice is the lowest common denominator?
(Mr Urmston) I am not sure that is a problem. You
have seen three companies here who are going slightly wider than
the Code of Practice in different ways. That is clear within the
industry. The Code of Practice is setting a minimum standard and
it means that people can get cover from different companies under
93. Reverting to my question, having been a
minister I know only too well that the public sometimes like the
government to do something, but there is no necessary magic in
what the Government does in making the consumers' interests better.
Do you think there are ways in which the government could take
action to help insurance companies?
(Mr Bedell-Pearce) I alluded earlier to the deterrent
effect of having these tests now available and perhaps it being
incumbent on the industry to come up with some practical solutions
for providing insurance. In the United States where this is a
much more significant issue in the absence of a national health
system in relation to health insurance, many states have enacted
an insurer of last resort. I would hope that the United Kingdom
industry would come up with a solution of that kind. Indeed, it
is entirely feasible because it has been put in place in respect
of other insurance issues over the years. In the 1930s, for example,
the Motor Insurance Bureau was set up and subsequently a mechanism
was put in place that, if someone is declined motor insurance
because of a disability of some kind, they can apply to three
insurers. If all three decline, they can go back to the first
one and they will be obliged to take the insurance. A mechanism
of that kind, set up voluntarily by the industry, would be a much
better solution than having the government impose such a thing
on the industry. The other alternative, which I suspect is not
going to be palatable, is that the state becomes the insurer of
94. Not even the Labour Government would consider
that. You talked about the fact that you might decline insurance.
It would be perfectly reasonable if your company declined a person
insurance, but it would be very difficult if every company then
followed suit so there was no competitive market for that individual.
You were suggesting a compromise from a different sector in the
motor industry. Would the ABI Code of Practice cover that, to
oblige members of the ABI not to act as a cartel against the consumer
who happened to have had a positive test?
(Mr Clarke) I do not think it would be right to describe
it as a cartel. There is a willingness to work together within
the industry to find a solution within the industry for these
excluded cases. Those were quite welcome comments. It is the first
time I have heard that. If we are to progress on the basis of
gaining public acceptability for underwriting practices within
the life assurance industry, for the industry itself to be providing
its own solutions is a very positive step forward. I doubt whether
it needs government sponsorship. It is something the industry
itself ought to be able to do.
95. Mr Bedell-Pearce, you said, "I hope
that there might well be a scheme similar to the scheme that came
in, in the thirties, for motorists." How is this hope turned
into a reality? You have your hope; Mr Clarke is very pleased
with your hope but has never heard of it before. How is this to
be turned into reality?
(Mr Bedell-Pearce) By the gentleman sitting behind
me who is our chief underwriter, who I instructed today to raise
this matter with the ABI Genetics Committee when it next meets.
96. Mr Urmston, I noticed in your initial presentation
that Mr Clarke referred to tests approved by GAIC, as did Mr Bedell-Pearce,
yet in your own case you said you followed the guidelines of the
ABI. They are different.
(Mr Urmston) Yes, there is a difference because the
original tests were defined prior to the formation of GAIC. There
continue to be a number of tests and we are now talking about
two further tests which are currently before the GAIC, where they
are determining one way or another whether insurance companies
97. Do you accept that the Code of Conduct is
more hard line and the GAIC is more liberal or cautious?
(Mr Urmston) I would accept that there is a timing
point. We would hope that this matter will be resolved quickly.
As the Code of Practice indicates, if there are any cases where
we have made an underwriting decision based on the previous set
of genetic tests and they are subsequently not approved by GAIC,
we will reverse that underwriting decision. I have looked at and
there is one case where, if one of those two remaining tests are
not approved, we would go back and give ordinary rates.
98. Generally, you accept that the Code of Conduct
is a bit premature?
(Mr Urmston) To be fair to the ABI, it was being proactive
in trying to come up with a system which could resolve. That was
probably following this Committee's report in 1995.
99. Do not blame us. We took a very liberal
view in 1995 and I think your Code of Conduct predates that inquiry.
Mr Bedell-Pearce, I am a little confused as to how many tests
there are because, in my understanding, there are ten genetic
tests that apply to seven inherited diseases. The GAIC have only
looked at three and have only given details for one and that is
Huntington's. What is the present position?
(Mr Bedell-Pearce) The ABI have submitted the tests
for three conditions, Huntington's, Alzheimer's disease due to
PS1 and APP and breast and ovarian cancer due to BRCA1 and 2.
Only one of those has been approved by GAIC, which is for Huntington's
disease. So far as the other four conditions for which there are
in some cases more than one test, myotonic dystrophy, familial
adenomatous polyposis, FAP, multiple endocrine neoplasia, which
is MEN, and hereditary motor and sensory neuropathy, which is
HMSN, there has been no submission to the GAIC. There are various
reasons why they have not been submitted. In the case of myotonic
dystrophy, it is regarded by the industry's genetics adviser as
not being sufficiently predictive. In the case of FAP, 90 per
cent of the cases are symptomatic by the age of 25. In the case
of MEN, there is a wide range of onset age and the numbers involved
are minimal. With HMSN, 70 per cent of onset is diagnosed before
the age of 20 and it is not life threatening. Those four tests
have not been submitted and, so far as I am aware, are not going
to be submitted.