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.

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