Select Committee on Science and Technology Appendices to the Minutes of Evidence


Memorandum submitted by Virgin Direct Personal Financial Services


  1.1  Virgin Direct was established in 1995 to provide straightforward, low cost, flexible and transparent financial products that meet the majority of most people's financial needs. From the outset, our policy has been to make these products accessible to anyone. Both in distribution (telephone and now internet) and product design (no middlemen, sales pressure or jargon).

  1.2  Life insurance was added to the product range in 1996 in the form of three competitively priced "term insurance" products, each designed to meet a specific need (repayment of a mortgage, life cover etc).

  1.3  These products broke new ground by being fully underwritten over the telephone, based on the customer's answers to a range of medical and lifestyle questions. Most customers could therefore be offered a guaranteed premium after a conversation of just 10 minutes or less. This was in sharp contrast to the weeks or even months taken by the traditional industry to confirm the customer's premium after processing written answers to a similar list of questions.


  2.1  Our policy from the outset has been clear. We do not ask applicants about genetic tests—either whether they had one or what the result was. We have no plans to change this policy in the foreseeable future. If a customer volunteers that they have had a genetic test, we only take account of the result if it is favourable to the customer. In this instance we would adjust the premium accordingly to give the customer the benefit of the favourable result.

  2.2  In order to assess risk, therefore, we use the customer's family history of relevant medical conditions to provide the information needed. Family history is a tried and tested method of determining the risk of the applicant suffering a hereditary illness. It is always included in the medical questions of fully underwritten life insurance and so is acquired by all insurers anyway, including those who now use genetic testing.

  2.3  We have adopted our stance for three key reasons:

  2.3.1  First, and most important, the industry has a moral responsibility to do nothing that would discourage people from taking genetic tests. We do not oppose genetic tests per se—they may become very useful in treating hereditary illness, and they need to be developed. If people begin to feel that taking such tests will make them uninsurable, or put at risk their family's financial security, this important medical development will be severely restricted.

  2.3.2  Secondly, the industry is in no position to start imposing these tests on customers. After ripping many of them off over personal pensions and endowment policies, we believe the industry might perhaps better focus its energies on rebuilding consumer trust.

  2.3.3  Finally, acquiring the results of genetic tests at this very early stage in their development does very little to improve our ability to underwrite risk. The improvements would be marginal at best.

  2.4  We are very disappointed by that stance taken by the majority of the UK industry and advocated by the Association of British Insurers (of which we are not members). Their policy of actively seeking genetic test results in our view reflects not only excessive self-interest but ultimately commercial shortsightedness.


  3.1  In the light of the above, we believe the most sensible way forward at this stage would be to hold a more comprehensive moratorium for three years prohibiting all insurers asking applicants whether they have had a genetic test and from making use of the results to increase premiums. In three years time this issue could be again reviewed and either the moratorium continued or lifted should the science—and customer acceptance of it—be progressed to an appropriate level.

19 January 2001

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