Genetic Factors in Life Insurance: Actuarial Basis

Abstract

Insurance risk assessment is based on probabilistic models of the timing and severity of the event insured against. In the presence of genetic risk factors, the problem is similar to estimating age‐related penetrance and survival rates. There are no data from insurers’ past experience; all studies rely on the medical literature. Most actuarial research relates to severe single‐gene disorders, whose impact on insurance may be limited because of their rarity. Very little research has been done in respect of multifactorial disorders, but it may tentatively be concluded that they will have little relevance for life insurance.

Key Concepts:

  • There is concern that life insurers will use genetic test results to charge higher premiums to persons at increased risk, leading to an uninsurable ‘genetic underclass’.

  • Insurers are vulnerable to adverse selection if applicants are able to conceal information relevant to the risk.

  • Severe, dominantly inherited, late‐onset single‐gene disorders do lead to significantly higher premiums, but are sufficiently rare that it seems unlikely that adverse selection is a material risk.

  • The genetic contribution to complex multifactorial disorders is not likely to be more important than that of other, well understood, risk factors.

Keywords: adverse selection; life insurance; Mendelian disorders; multifactorial disorders; mutuality; solidarity

Figure 1.

Two‐state model of mortality.

Figure 2.

Stochastic process model of Alzheimer disease (AD).

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Further Reading

Fischer E‐P and Berberich K (1999) Impact of Modern Genetics on Insurance. Publications of the Cologne Re, no. 42.

Gerber HU (1990) Life Insurance Mathematics. Berlin, Germany: Springer.

Leigh TS (1990) Underwriting – a dying art? Journal of the Institute of Actuaries 117: 443–531 (with discussion).

Macdonald AS (2003) Genetics and insurance: what have we learned so far? Scandinavian Actuarial Journal 2003: 324–348.

Wilkie AD (1997) Mutuality and solidarity: assessing risks and sharing losses. Philosophical Transactions of the Royal Society, Series B: Biological Sciences 352: 1039–1044 (with discussion). British Actuarial Journal 3: 985–996, 1044–1058.

Zimmern R (2001) What is genetic information? Genetics Law Monitor 1(5) : 9–13.

Web Links

Breast cancer 2, early onset (BRCA2); LocusID: 675. LocusLink: http://www.ncbi.nlm.nih.gov/LocusLink/LocRpt.cgi?l=675

Breast cancer, type 1 (BRAC1); MIM number: 113705. OMIM: http://www.ncbi.nlm.nih.gov/htbin‐post/Omim/dispmim?113705

Breast cancer, type 1 (BRCA1); LocusID:672. LocusLink: http://www.ncbi.nlm.nih.gov/LocusLink/LocRpt.cgi?l=672

Breast cancer, type 1 (BRCA1); MIM number 600185. OMIM: http://www.ncbi.nlm.nih.gov/htbin‐post/Omim/dispmim?600185

Polycystic kidney disease 1 (PKD1); LocusID: 5310. LocusLink: http://www.ncbi.nlm.nih.gov/LocusLink/LocRpt.cgi?l=5310

Polycystic kidney disease 1 (PKD1); MIM number 601313. OMIM: http://www.ncbi.nlm.nih.gov/htbin‐post/Omim/dispmim?601313

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How to Cite close
Macdonald, Angus S(Dec 2009) Genetic Factors in Life Insurance: Actuarial Basis. In: eLS. John Wiley & Sons Ltd, Chichester. http://www.els.net [doi: 10.1002/9780470015902.a0005207.pub2]