Examination of Witnesses (Questions 120
WEDNESDAY 7 FEBRUARY 2001
120. In the CIS's written evidence, we heard
you express concern that people might be put off having tests
that were perhaps advised by medical advisers because they feared
a problem getting insurance. Earlier on, Mr Bedell-Pearce, you
also expressed that concern. Mr Urmston, do you share that concern?
(Mr Urmston) I do. I have supported that perspective.
One has to look at the moratorium on the £100,000. There
is that possibility there. Anybody will have the ability to receive
insurance for that level of cover. As we have commented, if the
industry can do more to help those who have positive tests, either
by offering improved terms or offering some form of pooling, that
will help to remove the perception that insurance is putting people
off taking genetic tests, which is mainly a perception if you
look at the evidence.
121. What is the insurance industry needing
to do to try and find out whether this is really a problem? You
seem to be saying it is a perception, that there is not any validity
in it. What evidence have you to justify that?
(Mr Bedell-Pearce) It is probably the most frequently
quoted reason for objecting to insurers taking into account genetic
testing but, as the HGAC pointed out in 1997, there was no quantitative
evidence to indicate that this in fact was a deterrent effect.
Therefore, the conclusion appears to be largely an intuitive one
rather than one supported by research. I have also looked at the
body of evidence in the United States, where genetic testing is
much more prevalent, and again I could find no evidence of quantitative
research relating to this except the fact that, if people are
asked just the broad question, they do tend to say, "Yes,
it would put me off."
122. That is precisely my point. Should not
the industry by carrying out that research?
(Mr Bedell-Pearce) I think there may be a case for
doing that, yes. There is inevitably going to be some difficulty
carrying out research of that kind because what I have also discovered
is that this is a hugely emotive area that generates a huge amount
of emotion and heat. Perhaps the insurance industry, certainly
on this side of the Atlantic, has not done itself any favours
by having what appears to be a degree of obscurity about its practice
and rules; whereas we have attempted on an individual case by
case basis to operate on a very open basis and, wherever possible,
to give prospective policy holders the benefit of the doubt.
123. That is the key because people think they
might lose insurance. Your evidence does not confirm that but
you have been woeful in the public explanation, in my view.
(Mr Bedell-Pearce) I think there is some ground to
be made up. That has been very clear to us as we have looked into
the wider implications of this. Having inevitably familiarised
myself with this whole area over the last two or three weeks beyond
what I would normally do, it has become very clear to me that
there is a whole range of social and economic factors arising
from genetic testing which will have huge significance over the
next 20 years or so. We welcome this particular debate and discussion.
As a company and probably as an industry, we would like to be
involved in this because I think there is a very substantial amount
of education that needs to be undertaken within the public as
a whole. The implications for such things as the National Health
Service, for example, are huge, much larger than the questions
of the fine details of underwriting of life assurance policies.
Chairman: I think Mr Clarke would like to make
a comment because there was a quotation from the Co-operative
Insurance Society's evidence to us that Lynne Jones was quoting
from. You say, Mr Clarke, that your company is concerned about
the possible conflict for individuals between undergoing a test
as recommended by their advisers and not doing so because of the
potential adverse effects for insurance purposes?
124. Presumably that is why you have a policy
which is more generous.
(Mr Clarke) The policy is because we believe as a
company that we have wider commitments in a social sense. We feel
that our approach to underwriting should be more inclusive than
exclusive. That naturally leads us to pursuing those kinds of
policies. We do make that statement and I would readily concede
that it is part of our perception of customer attitude. There
is some research evidence that says public opinion is firmly against
insurance companies using genetic testing and as part of our social
engagement with customers we as insurers also need to be educated
about their concerns. The CIS has its own values which it measures
by way of dialogue with its stake holder groups, including customers.
Although there is no specific evidence at our disposal at the
moment with regard to this particular issue, it will be a point
we will be taking up within the next cycle of engagement, hopefully
trying to get some deeper understanding of our own consumers'
thoughts on these particular issues. Were this issue to be revisited
in some months' time, maybe we would have had the opportunity
of presenting those.
125. I was very interested that today, out of
the blue, both the Pru and the Norwich Union have made comments
that the industry must try and do something. You have both suggested
some kind of industry wide pooling. Why is it you have only just
come up with this today, because you will remember back in 1995
this was one of the recommendations of our predecessor committee.
This was one of the suggestions we made and we suggested that
the industry should come up with a solution along those lines.
Why is it that you are only starting to mention this now; whereas
both your companies have gone along with this minimalist safeguard
that the ABI have promoted in the Code of Practice?
(Mr Urmston) The industry has perhaps focused more
on the testing and the Code of Practice, which was the main requirement,
and less on the communication. I feel that possibly we have failed
to communicate properly our practices. We need to do better.
126. The fact is that your company has been
loading its premiums for these tests, some of which have not even
had approval of the GAIC. You have not suggested any industry-wide
re-pooling until today.
(Mr Urmston) I have shown in the figures that genetic
testing has been beneficial to policy holders so far.
127. Why not have the same policy as the Co-op,
Virgin and Standard Life?
(Mr Urmston) We are back to the different markets,
the point I was trying to draw on earlier, that Norwich Union
is competing with some very high sums assured. We are competing
in the independent financial advice market, where premium rates
are reviewed perhaps three or four times a year. You can see that
that market is somewhat different and that is what brings the
different positions of the companies to this table.
128. Our predecessor committee suggested that
there should be a different arrangement for those high sums but
for your average type of amount there should not be any requirement
to reveal genetic tests unless it is to the individual's advantage.
Why does that not make sense?
(Mr Urmston) That is what we have done with the £100,000
129. Only for mortgage insurance.
(Mr Urmston) Norwich Union applies it to other life
130. You anticipate continuing that?
(Mr Urmston) Yes.
(Mr Bedell-Pearce) The ABI Code of Conduct does require
insurance companies which would otherwise decline insurance as
a result of positive genetic tests to provide some sort of insurance,
perhaps excluding the stated condition or limiting the term. At
the moment, with the size of the volume of cases coming in, you
probably could not create a pool.
131. It is the principle which is of reassurance
to people, is it not?
(Mr Bedell-Pearce) It is. That is the thing which
has prompted us. Dare I say it: there is nothing like an appearance
before a select committee to focus the mind on things like this.
We do consider our policy on these matters. The volume of genetic
tests going through our business is very small indeed. We have
come to realise that in the context of the implications of this,
particularly the deterrent effect, we should do something as an
industry to remove that deterrent effect if that is going to be
132. I want to look at the next five or ten
years. We are expecting an explosion in genetics research out
of which might arise, and probably will arise, the development
of more tests of the kind that we have been discussing this afternoon
and will bring in more common disorders such as heart disease
and more cancers than you have mentioned already. Genetics is
only one factor. Lifestyle and other factors also play a part.
My concern is that you may cherry pick customers eventually. I
know what the ABI Code says about not lowering premiums but can
I put it to you that I am a non-smoker and I get a better premium
than those people who puff cigarettes every day. The industry
is already cherry picking. I submit that eventually you will be
forced into cherry picking as a result of increased reliability
and increased availability of genetic testing. I wonder if you
would like to comment?
(Mr Clarke) It is a question of speed of development
and one's perception as to how some of these tests will develop
to the extent that they can be quite as predictive as the example
we have already seen of Huntington's disease. What I mean is they
will provide a quantum of extra information over and above what
we have seen through normal family history. Our own expectation
with regard to life assurance is that we would wish to hold our
position of not wanting to use genetic testing information for
as long as we possibly could. However, if there was widespread
use of genetic information by competitors and widespread adverse
selection, we would have to look at our own particular position
because we would be seriously and materially affected. For what
it is worthI am not a scientistI do not believe
that in the field of life assurance genetic tests will proceed
at such a pace over certainly the short and medium term, but it
will get to that kind of position that you are speculating.
133. If the pace was quicker than you are anticipating,
what would prevent a company breaking loose and going off at a
(Mr Clarke) Assuming it was allowed within the Code
and all these tests were permitted, you would be looking at some
kind of armageddon situation where the medical evidence was sufficiently
reliable that we could almost tell the date, time and place of
one's own demise and that would fundamentally ruin the fabric
of the insurance industry and the basis for its existence.
(Mr Bedell-Pearce) I suspect it would ruin the fabric
of society as well.
134. I have listened to the evidence from Professor
Bobrow and yourselves this afternoon very carefully. My personal
conclusion is that there are so many uncertaintiesI am
not convinced that even the Huntington's chorea test is so predictive
as you say and in Professor Bobrow's evidence we saw thatand
we raised the question of a moratorium with Professor Bobrow.
He pointed out that the industry had had quite a long time to
produce a voluntary moratorium which is not coming, clearly. We
pressed him further and he felt that it was unavoidable that government
might have to produce legislation to control the industry in the
not too distant future. In order to restore public confidence
in the insurance industry, would it not be in your best interests
to stand back for a few years, two at the very least, and forget
genetic testing until we have more reliable data?
(Mr Urmston) What we have tried to demonstrate in
today's meeting is that there is a moratorium of £100,000
cover or less and that is the reality of the United Kingdom position
135. Only for mortgage insurance.
(Mr Urmston) That is the main reason people are buying
life insurance. There are other views around. There was a discussion
some two years ago about whether the current Code was better or
worse than a moratorium or a full moratorium up to a certain level
of cover. There has to be some limit to that because of the adverse
selection point that we have discussed. The debate which went
on at the time said that there was a number of issues there. A
moratorium might increase the demand for genetic tests, firstly.
There would be a whole scale increase in demand for genetic tests
which I do not think the NHS necessarily would be able to cope
with. The impact would be that people may want to get genetic
tests while there was a moratorium in place prior to getting insurance
because the moratorium would then run out and the industry would
be able to rate on the basis of genetic tests. The idea of a moratorium
almost encourages people to buy while stocks last.
136. Is it not in the industry's interest for
people to have genetic tests so that they can take prophylactic
action? Are you not cutting off your nose to spite your face?
(Mr Urmston) I am just trying to give an indication
of the sort of arguments that went on about a moratorium at that
time. These were not insurance experts. They were people who were
looking at some of the genetic interests and the ethical issues.
There was also an issue around the counselling to give when people
are considering a genetic test. We should try and avoid insurance
being part of that advice. Many people, if faced with the decision
of taking a genetic test, I do not think go ahead with it because
of the advice that they receive. The fact that there is a moratorium
might encourage them to take a test. It actually works the other
137. We have come to the end of our evidence
session. Before I close, from the memorandum we had from the Royal
Society, they did say: "A statement from the ABI that research
results will not be used, and need not be declared, would be very
helpful." I wonder if I could ask each of you in turn whether
your individual companies would be willing to make such a statement
or to consider, after this afternoon, the possibility of making
such a statement. Research results of course are results where
academic scientists working in genetics are trying to push forward
cures for hereditary diseases. If those who are volunteering for
research are going to have the research results taken into account
in their own individual insurance policies one could understand,
I am sure, how the research into such things as Huntington's,
Parkinson's, Alzheimer's and so on could be set back. Am I asking
too much when I ask that the ABI think of making a statement along
the lines that I have suggested?
(Mr Bedell-Pearce) I do not think so. As a company,
that is our position. We will not take into account the tests
arising from an individual participating in a research programme.
I will certainly ask my colleague to put on his shopping list
when he goes back to the ABI Genetics Committee this particular
(Mr Clarke) We would not want to discourage anybody
from participating in valuable research exercises, so we would
be supportive of any initiative that the ABI would come up with.
(Mr Urmston) Absolutely. Indeed, the ABI Code envisages
that only certain tests will be approved and anything else we
will not use or support.
Chairman: Gentlemen, you have been very helpful
to this Committee's inquiry into genetics and insurance. We have
learned a lot from you and we hope that, in a little way, you
might have learned something from coming here this afternoon.
I am reminded of an expression I learned years ago that academic
books are written for the benefit of the author, but I had not
realised until this afternoon that select committees are for the
benefit of the witnesses. Thank you very much indeed for the way
you have helped us this afternoon and for the thinking that you
have all done before coming here, thinking that in a busy life
you do not always have time to do. You have paused to reflect
upon the issues that we are discussing and it is quite clear that
you are taking this matter very seriously. We thank you for that
and we thank you for what you will continue to do in this area
in the future. Finally, if you have any thoughts after you have
left here about the issues we have discussed this afternoon, please
do not hesitate to write to us with further information if you
think it is right that we should have it. On behalf of the Committee,
may I thank you all for the preparation you have put into this
afternoon's meeting, for coming here this afternoon and for being
so very helpful to us. Thank you very much indeed.