Genetic Information And Risk Classification In Individual Life And Health Insurance
Risk classification methods for health or individual life insurance cover should be examined critically. The question regarding the nature of information to be obtained from the insured before calculating the cost of insurance has generated mixed reaction from different players in the insurance industry. Different states have hence resulted to enacting different legislations which impose different restrictions for the insurance companies as to what information to be included in calculating insurance costs or even in working underwriting claims. The question of whether genetic information should be a part of the information necessary to insurers should be examined from all perspectives. Since medical information about the insured is extremely important, such information should not only be detailed but also accurate.
While medical information in most cases seeks to identify any pre existing condition before taking a medical cover, it is becoming increasingly important to determine whether an individual has any predisposing factors to certain medical conditions. Such information can either be obtained from the medical history or obtaining the genetic information of the subject. With technological advancements, testing for certain genetic conditions to determine whether an individual is at an increased risk of developing a certain medical condition has become increasingly possible. The increasing number of disease conditions with a genetic predisposition has created the need to examine the efficacy of genetic information as a method to be employed in risk classification. Questions raised regarding the use of genetic information have led to the enactment of certain insurance regulations restricting its use in determining the cost of insurance in some states. Some express the concerns that genetic information testing is an infringement to the individual’s private medical history. Others feel that it might not confer any meaningful advantage over the less costly medical and family history which can reveal almost as much details as a genetic profile would.
For any risk classification method to be effective, it should be unique in terms of accuracy and cost efficiency. The accuracy of genetic testing in determining the actual probability of developing a certain medical condition cannot be quarantined due to the fact that genetic factors are subject to certain environmental factors. Medical information obtained from family history may exclude some vital information regarding the risk of the individual in developing certain serious genetic conditions like Huntington’s disease among others which can be more accurately diagnosed through genetic testing. While this may suggest the need for using genetic information in the determination of an individual’s loss potential, an understanding of the criteria used in deciding the methods to be used in calculating the risk factor will shed more light on the subject.
The actuarial equity is an important criterion which seeks to classify individuals in terms of risk groups. In this case, any person seeking insurance can either be at high risk, low risk group or average. This can create different implications both to the insurer and the insured. Determining an individual’s level of risk can be a costly exercise for the insurer. The competitive nature of the insurance market is creating the need for insurers to explore unique ways of determining the loss potential of an individual in an effort to promote equity within the insured population. Due to the difficulty in determining the morbidity associated with certain risk factors owing to interference by environmental factors, genetic technological advancement has created the need for insurers to determine the exact genetic information of the individual. This will reduce cases of people been denied insurance cover or paying high insurance costs when they are classified in the high risk potential.
The ability of an insurer to determine the accuracy of the data obtained about the risk factor is a question of its administrative efficiency. Inefficiency on the side of the insurer will result to unreliable data regarding the risk factors of the insured. Use of proxy in addition to primary factors as a means of verification to the medical information is a common phenomenon among many insurers. This creates the need to use genetic information together with medical history since both are interrelated and any of them can act as proxy to the other. The question of whether the risk classification method confers any valuable incentive to the insurer and the insured is very vital. Genetic testing done to determine the loss potential of an individual before insurance can reveal a curable or manageable disease condition which the individual might not have been aware of and hence seek early medical or surgical intervention. This can also be advantageous to the insurer since a person who would have been excluded from insurance cover due to a high risk factor will end up receiving the insurance cover. In this case, if genetic information will act as an added incentive to both the insurer and insured, it is recommendable. However, in certain instances, it might be disadvantageous to both parties.
Genetic testing can raise certain ethical questions. It is important for the insurer to treat information obtained pertaining the genetic information of the insured as confidential. However, in some cases, this is not realistic since most insurance companies share underwriting information about their clients. The necessity the medical cover tom the individual is also a common question. In addition, obtaining genetic information can sometimes perpetuate discrimination among certain groups that are naturally discriminated against. However, it can be a useful tool since it can provide information regarding individual who may be reluctant to take insurance cover and hence encourage them to accept insurance.