The ABC of DNA and insurance

With the implications surrounding genetic testing a growing concern for the public, Col Fullagar examines the industry's handling of the issue in relation to insurance.

Over the last 20 years, the subject of genetic testing has increasingly been raised in the media, linked to issues such as criminal detection, victim identification, stem cell research and even parental disputes.

And of course, from time to time the subject has been linked to insurance, most recently in media reports about discrimination fears after health insurer NIB announced a plan to provide half-price genetic tests.

The reality is that while the science of genetic testing is highly dynamic, with new discoveries and advances happening almost daily, the regulations surrounding the ethics and practical applications of genetic testing are more stable.

However, notwithstanding the relative stability of the ethics involved, the subject of genetic testing warrants regular review because of its high media profile, which in turn can lead to client interest and questioning.

What is genetic testing?

Almost every cell in the body contains a nucleus that holds the 23 pairs of chromosomes comprising a person’s genetic material.

Each chromosome has within it the DNA that makes up the hundreds of thousands of genes.

Many of these genes produce proteins that have a number of roles in the human body. Some proteins are structural and make up the tissues of bones and muscles.

Other proteins, called enzymes, are involved in chemical reactions such as breaking down food. Others again, known as hormones, act like messengers, sending signals around the body.

All humans share the same set of genes but the precise DNA sequence of these genes differs slightly between individuals (by about 0.1 to 0.2 per cent).

While these differences account for things like differing hair, eye and skin colour, they can also be the cause of genetic disease or disease susceptibility.

A disease causing change in the DNA of a gene is called a mutation.

Genetic testing is a spectrum of medical test that identifies changes in chromosomes, genes, or proteins.

History of genetic testing

The history and study of genetics goes back many years:

• 1665 — cells were first discovered in plant and animal tissue;
• 1839 — cells containing nuclei were recognised as the building blocks of life. It was also recognised that cells could only be formed through the dividing of other cells, which laid the basic foundation for the study of genetics;
• 1879 to 1882 — Walther Fleming discovered chromosomes, which is the subject of genetic testing;
• 1902 — inherited diseases were first linked to chromosomes, and following this a number of other genetic disorders were found;
• 1950s — various discoveries were made concerning the nature of DNA, including the ratio of the DNA bases and the fact that they worked in complementary pairs;
• 1975 — a method to isolate and analyse DNA fragments was discovered; and
• 1983 — a method of DNA analysis was discovered that led to a number of disorders being found to be linked to genetics, including cystic fibrosis, muscular dystrophy and Huntington’s Chorea.

Since then there has been rapid development in the science of genetic testing, with recent breakthroughs, including:

• November 2006 — a significant variation in the genetic make-up of humans is discovered — a development that could lead to a fundamental reappraisal of the causes of many diseases;
• February 2009 — the gene that controls the production of tooth enamel is identified — a significant advance that could lead to the treatment of damaged enamel, new techniques in cavity prevention and the production of replacement teeth;
• July 2009 — researchers at Duke University Medical Centre identify a gene that appears to be highly predictive of not only the risk of developing Alzheimer's disease but also the age at which this will occur.

Types of genetic tests

Genetic tests are performed on a sample of body fluid such as blood, hair, skin or amniotic fluid (the fluid surrounding the foetus during pregnancy).

There are a number of different genetic tests, including:

• newborn screening, which is used just after birth to identify disorders that can be treated early in life;
• diagnostic testing can be used at any time in a person’s life to diagnose or rule out a specific or chromosomal genetic condition that may be suspected because of a physical change or symptom;
• carrier testing can identify people who carry one copy of a gene mutation that, when present in two copies, will cause a genetic disorder. This type of testing assists people with a history of genetic disorders to identify the risk of the disorder being passed on;
• prenatal testing is used to detect changes in a foetus’ genes or chromosomes before birth to assist couples who have an increased risk of having children with genetic disorders;
• pre-implantation genetic testing is a procedure performed on human embryos prior to implantation as part of in-vitro fertilisation;
• predictive and pre-symptomatic testing detects gene mutations associated with disorders that appear after birth and often later in life. This can be helpful for people with a family history of a genetic disorder but who are currently not displaying any adverse symptoms, for example a family history of breast cancer or haemochromatosis;
• forensic testing uses DNA sequences to identify an individual for legal purposes, for example victims or perpetrators of crimes, victims of catastrophes, and so on;
• parental testing uses DNA markers to identify the same or similar inheritance patterns between related individuals;
• research testing leads to discoveries such as finding unknown genes, learning how genes work and generally advancing the understanding of genes.

Life insurance underwriting

Insurance is the process whereby a group of people contribute an amount of money, called the insurance premium, into a pool so if any of them suffers the particular insured event, that person can draw the insured amount from the pool to compensate for their financial loss.

In life insurance, it is generally the case that information concerning the health, occupation, hazardous pursuits, and so on of the person to be insured is assessed by an underwriter in order to ascertain whether the overall risk of that person claiming:

• is such that charging the standard rate of premium will represent a sufficient contribution;
• is higher than normal such that a greater or loaded premium needs to be contributed to the claims pool or alternatively, it is practical for the additional area of risk to be 'excluded' with the addition of a special policy condition; or
• is so high that the risk cannot be covered even with the charging of a higher premium or the use of an exclusion, and the risk is deferred (if it is felt the risk will fall to an acceptable level in the future) or otherwise declined.

Generally speaking, 93 per cent of insurance applications fall into the standard category, around 5 per cent are loaded or have an exclusion added and 2 per cent are deferred or declined.

The process of underwriting applications enables each person to make a premium contribution based on the individual risk level of that person; however, underwriting relies heavily on each person applying for insurance providing the underwriter with all the information that is relevant to the assessment of the risk (ie, the duty of disclosure).

IFSA's genetic testing policy

In order to allay concerns people may have about how genetic testing can affect their ability to obtain life insurance, life insurance members of the Investment and Financial Services Association (IFSA) are required to adhere to a compulsory genetic testing policy.

The principles IFSA members agree to under the policy are outlined below.

(i) Will not require applicants to undergo a genetic test when applying for insurance.

The implications of genetic testing are far reaching, which is why individuals wanting to undergo testing are required to have counselling beforehand.

It would therefore be unethical for insurance companies to require applicants to have a genetic test as part of their application for insurance.

(ii) May require applicants to make available the results of any previously undertaken genetic tests.

If an applicant had previously undergone genetic testing and the results were unfavourable, but this was not disclosed, it may result in a lower premium contribution being made to the claims pool than should have been the case. This would compromise the viability of the claims pool.

(iii) Will ensure that genetic test results are only made available to their underwriters and reinsurers.

Insurance companies are obligated to protect an applicant’s personal information, including all health information and other sensitive information under the Privacy Act 1988. Therefore, information concerning genetic testing is only made available to those parties directly involved in the assessment of insurance applications (ie, the underwriters and, in some cases, reinsurers).

(iv) Will not use genetic test information to assess the risk for another family member.

To use the genetic testing information of one person to assess the insurance risk of another would constitute a breach of the privacy of the second person.

(v) When assessing applications, will take account of the benefits of special medical monitoring, early medical treatment, compliance with treatment and the likelihood of successful medical treatment.

An underwriter will, as far as practicable, take a holistic view of the risk factors associated with each applicant.

This not only involves considering the negative influence of adverse factors but also the positive influence of favourable ones.

(vi) Will provide the insured or the insured’s medical practitioner with reasons for any adjustment to premiums or policy conditions aligned to genetic testing.

Under the provisions of the Insurance Contracts Act 1984 (section 75), if an insurance application is deferred, declined or accepted at an other than standard rate of premium, the applicant is entitled to be given an explanation as to the reasons, either directly or via their medical practitioner.

In 2005, a total of 455,000 applications were made for life risk insurance. Of these, fewer than 400 disclosed that a genetic test had been undertaken.

Of the 400 applications:

• 48 per cent were accepted on standard terms;
• 30 per cent were offered sub-standard terms; and
• 22 per cent were deferred or declined.

However, of the 400 applications, only 14 — or 3.5 per cent — were offered other than standard terms because of an adverse genetic test result.

Col Fullagar is national manager at Risk Insurance.