Memorandum submitted by Legal & General
1.1 Legal & General is one of the UK's
largest insurance companies. It is a leading provider of life
assurance, critical illness and income protection policies. In
conducting its business, Legal & General recognises its responsibilities
to society in general, to its policyholders and to its shareholders.
1.2 It seeks both to offer competitive terms
to its policyholders and to run its business in a sound and prudent
way in order that it remains solvent and can meet its policyholders'
reasonable expectations. The use of appropriate underwriting standards,
which evolve over time, is one of the cornerstones of sound and
2. THE DEVELOPMENT
2.1 The human genome project is leading
to more information to which people could have access concerning
their own genetic profile. This could lead to behavioural changes
in a number of areas, including aspects which could, in time,
affect the level of insurance claims and purchasing intentions
for insurance. The amount and quality of this information will
increase over time.
2.2 Your committee has in the past expressed
concern that people might be deterred from taking genetic tests
if they knew that adverse results might affect, in some circumstances,
the cost or availability of insurance. Life insurance in connection
with house purchase has been highlighted as an especially sensitive
area. This concern is recognised by the insurance industry in
general and Legal & General in particular. For this reason
the Association of British Insurers (ABI), after consultation
with genetics interest groups, has produced an extensive Genetics
Code of Practice. Legal & General fully supports this code
and adheres to it.
2.3 Forbidding the use of genetic information
by legislation could produce a situation in which people who have
had tests, which reveal them to be at high risk, can over-insure
themselves and avoid underwriting assessment. The result could
be considerably higher insurance premiums for everyone. A similar
argument would apply to any restriction to underwriting practice.
2.4 There is a policy dilemma for insurance
companies. In the absence of full and accurate disclosure of information,
proper evaluation of risk cannot take place. Insurance companies
could be "selected against" by people who know that
they are more at risk and would, therefore, benefit by being able
to take out high levels of insurance at a price effectively being
subsidised by all policyholders. Applicants would question the
reasonableness of arrangements which allowed good reason. It would
also undermine the principle of utmost good faith on both sides,
on which insurance is based.
2.5 Insurance companies will not delay the
development of genetic science. In time, new genetic tests may
be available and become accepted as comparable with all other
information currently looked at by life insurers in evaluating
risks, such as family history, doctors' reports and medical test
results. However, this will depend on the way in which genetic
2.6 Legal & General believes that developments
should be kept under careful review by the industry and that discussions
with geneticists should be encouraged on emerging issues. Legal
& General believes that this would best be performed centrally
by the ABI. In addition, it continues to ensure that its knowledge
expertise of this rapidly developing area is kept up to date.
It is a member of the United Kingdom Forum of Genetics and Insurance
(UKFGI), its Chief Medical Officer (CMO) is a member of the ABI
Genetics Committee and one of its actuaries was a member of Faculty
and Institute of Actuaries Genetics Working Party.
3. DETAILED RESPONSE
(i) What is your policy toward the
use of genetic test results, and what are the reasons underlying
3(i)1 Legal & General fully supports
and complies with the ABI Genetic Code of Practice. Accordingly,
we do not ask applicants for insurance to take genetic tests of
any description. The decision whether to have a genetic test is
up to the individual, with advice from his/her medical experts.
3(i)2 The results of some genetic tests,
specified by the ABI who seek approval from the Genetics and Insurance
Committee (GAIC), may be taken into account, but only when someone
has already had the test before applying for insurance. However,
for applications for mortgage-related life insurance up to £100,000
sum assured, Legal & General does not take into account any
adverse genetic test results.
3(i)3 In many cases, disclosing a previous
genetic test result can benefit the applicant. An applicant whose
family has suffered from a genetic condition, and who has not
had a test, might not be insurable. However, an applicant who
discloses a previous negative (ie favourable) test result, showing
that he/she has not inherited the condition, and who is otherwise
in good health, would be insurable on normal terms.
3(i)4 The reason why Legal & General
fully supports the ABI stance is that it believes it strikes a
suitable balance between the interests of Society in general and
those of its existing and prospective policyholders.
(ii) What scientific advice have you
based your decisions upon, and how reliable do you consider it
3(ii)1 In making medical underwriting decisions,
the medical underwriter will take into account information from
a great number of medical and other sources of information (eg
"Medical Selection of Life RisksR D C Brackenridge
(MD FRCP) and W J Elder (MB BS MRCP DCH)" and Reassurance
Manuals based on extensive data from both the UK and overseas).
Individual cases can then be discussed with one of our medical
officers who are qualified doctors with different areas of speciality
who have access to medical colleagues.
3(ii)2 The ratings themselves are calculated
on bases set by our actuaries which take into account the level
of risk the applicant brings to the fund.
3(iii)3 Applicants for new policies may
then be accepted on normal terms, rated or declined according
to the assessment of the medical evidence provided. Legal &
General believes that this basis is fair and properly utilises
the medical information and is therefore reliable.
3(ii)4 Genetic testing can bring more information
into the decision making process. Legal & General accepts
that as yet few tests provide enough information to enable reliable
underwriting decisions to be taken. Therefore, it follows the
ABI Genetics Code of Practice and only takes into account the
tests specifically approved by the Code.
3(ii)5 As already stated, Legal & General
does not ask applicants to undergo a genetic test but if one of
the approved tests is provided we would take it into account as
we would any other relevant information. All these cases are referred
to our Chief Medical Underwriter who is the Nominated Genetic
Underwriter (NGU) under the ABI Genetic Code of Practice. These
cases are always referred to our CMO. As a member of the ABI Genetics
Committee he can discuss the implications of the specific genetic
test results with his colleagues including the geneticist, Professor
J A Raeburn. As the committee represents considerable genetic
expertise and given that considerable information is known about
the prognosis for the few genetics tests which are used, we would
consider that our underwriting decisions are reliable.
(iii) The GAIC recently approved the
use of results from the Huntingdon's Disease genetic test in the
assessment of life assurance policies. If you generally accept
the use of such results in assessing risk, do you anticipate using
other genetic tests in the future and if so when? In particular,
would you consider using test results for diseases which are not
single gene defects, or where there are non-genetic influences
(for example heart disease)? What factors would you base your
3(iii)1 Legal & General believes the
Code includes the flexibility needed to ensure practice can adapt
as knowledge of genetic science increases. Legal & General
does generally accept the use of the genetic test results specified
by the ABI, where these genetic tests have been taken prior to
application (eg Huntingdon's Disease). The future use of other
genetic test results would depend on the ABI ascertaining their
pertinence for medical underwriting and approval by the GAIC.
3(iii)2 If an applicant provides us with
a genetic test result, the particular test not being on the prescribed
list, then we would not take the test results into account unless
it counted in the applicant's favour.
3(iii)3 The question as to when we would
use other tests is dependent upon such tests being developed,
then being approved by GAIC and subsequently allowed by the ABI.
3(iii)4 The future use of genetic tests
for diseases which are not single gene defects depends on the
same criteria as for the other single gene tests, as just stated.
We do not believe that these will be used in the foreseeable future.
(iv) How effective do you feel the
current regulatory system is?
3(iv)1 Legal & General does feel the
current regulatory system is effective. The current system imposes
strict controls on the use of genetic tests by the insurance industry.
Further, the ABI Code gives an applicant the right to appeal.
Our Chief Executive Officer has to confirm compliance with the
Genetics Code of Practice on an annual basis. Compliance with
the Code is a condition of ABI membership.
3(iv)2 Every case containing a genetic test
result is referred to the NGU and the CMO; the NGU is registered
with the ABI. The NGU and CMO are obliged to keep up to date with
genetics by use of, for example, ABI circulars, briefings, industry
updates and seminars.
22 January 2001