Banning Insurance Companies Access to Genetic Information Results in Hikes, Prof Finds

November 05, 2007 - News Release

As genetic testing becomes more common, concerns about insurance companies having access to people's test results has many Canadians wanting to keep genetic information private.

But a new study by a University of Guelph economist has found that banning insurance companies from having access to genetic information could lead to a 300-per-cent hike in premiums for those with a close family history of a genetic disease.

Prof. Michael Hoy, working with Julia Witt, of the Institute of Applied Economic and Social Research at the University of Melbourne, has developed a model to simulate how insurance markets would be affected if insurance companies didn't have access to a client's genetic information.

Published recently in The Journal of Risk and Insurance, the research simulates the market for 10-year-term life insurance plans of women aged 35 to 39 years based on the assumption that they have all had testing for the BRCA 1/2 genes linked to breast cancer.

Currently, Canada has no laws specifically restricting the use of genetic testing results. But the 2003 Public Opinion Research Into Genetic Privacy Issues found that a majority of Canadians reject the right of insurance companies to ask for genetic information even if the applicants have knowledge of a genetic condition.

Insurance companies argue that they should know the test results for genetic indicators of certain diseases and disorders so they can adjust premiums and benefits for high-risk clients accordingly.

"They've always used factors such as age, gender, family history and medical history in considering premiums and benefits, so they say the information revealed by genetic tests shouldn't be treated any differently," Hoy said.

If a ban were instituted, some consumers would have more information about their genetics than their insurance companies would. The result could be high-risk clients buying more life insurance and insurance companies increasing rates based on factors like family history, Hoy said.

As a result, anyone with a family history would pay a higher rate - as much as 300 per cent - regardless of whether they carry the gene because insurance companies would treat the entire group the same. The general population would see an increase of about 1.5 per cent, the model predicts.

Inflated insurance prices could also force some low-risk individuals to drop out of the insurance market all together, Hoy added.

"With fewer low-risk clients overall, insurance companies would have to raise prices even more to satisfy claims and stakeholders."

The debate on whether genetic information should be private is happening across the globe. In Europe some countries have issued an outright ban, and the United States is currently creating regulations to restrict insurance companies from accessing genetic test results to set premiums for health insurance, said Hoy.

Based on his research, he believes that, in the long run, a ban may not be the best solution and that policy-makers may need to strike a balance between access to genetic information and overall insurance rates.

He recommends a five-year moratorium on the use of genetic results by insurance companies to be followed by a review of the situation.

"That way, if high-risk individuals are disproportionately buying up insurance, then the terms can be reconsidered and alternative ways of helping those who are being unfairly penalized can be developed."

Prof. Michael Hoy
Department of Economics
519-824-4120, Ext. 52169

For media questions, contact Communications and Public Affairs: Lori Bona Hunt, 519-824-4120, Ext. 53338, or Deirdre Healey, Ext. 56982.

University of Guelph
50 Stone Road East
Guelph, Ontario, N1G 2W1