Life insurance lobbyists say national genetic information ban unnecessary

The fallout from a 2020 Florida law banning life insurance companies from using genetic information is a classic case of good news and bad news for the industry.

The bonus: No other state passed a similar law in the years since.

The bad news is that Florida passed a bad bill that mischaracterizes how life insurance companies use genetic information, said Curt Leonard, regional vice president of state relations for the American Council of Life Insurers.

Leonard spoke Wednesday on the final day of the LIMRA Life Insurance and Annuity Conference in San Antonio.

Leonard said ACLI is busy traveling around the country meeting with and educating legislators considering genetic testing bills. He added that about half of the states are considering some form of genetic information privacy bill.

Leonard explains that we must explain how we use the genetic test results in the applicant’s medical record. We got to talk about life insurance and why we do what we do. For 150 years, transparency and knowing what an applicant knows at the time of application has been an important foundation for issuing individually underwritten life insurance policies.

Florida gene use ban

Florida law prohibits life insurance companies from requesting or asking for genetic information or using genetic test results in any way. A person can voluntarily provide DNA information from genetic testing such as BRCA or other mutations to an insurance company, but they are not required to do so.

If genetic information is voluntarily provided, insurance companies still cannot deny coverage, limit or cancel insurance coverage, or set different premiums based on genetic information or DNA.

Under the Genetic Information Nondiscrimination Act signed on May 21, 2008, health insurance companies have long been prohibited from using genetic information.

Leonard said they, especially lawmakers, tend to conflate us with health insurance, when our business model and underwriting are completely different. One of the assumptions made is that we’re trying to find people’s genetic information without them knowing.

Dr. Dave Rengachary is RGA’s Senior Vice President and Head of Underwriting, U.S. Death Markets. Before joining the insurance industry, Rengachary was a general neurologist in Missouri.

Lawmakers often have little understanding of how life insurance underwriting works, and education needs to be an important part of any lobbying effort, he said.

They often think we don’t need risk factors. If we only had the diagnoses that were already in the charts, that would be enough, he said. No, we are trying to make predictions. Hopefully in the next 30 to 40 years or so. You wouldn’t do that based on your current diagnosis. You can do this based on your current risk factors.

SOA research

Jan Graeber, senior health actuary at the American Council of Life Insurers, said a 2018 study by the Society of Actuaries found that banning life insurance companies from using genetic information would cost the industry.

The SOA study found that if only the applicant knew the genetic test results, but both the applicant and the insurer knew the family history at the time of underwriting, future new business claims costs were expected to increase by 4% to 8% overall.

If only the applicant knows the genetic test results and family history, but the insurance company knows neither, future claims costs for new business are expected to increase by 5% to 10%.

What impact would a 4% to 8% mortality increase have on insurance costs for the next group of applicants and those after that? Graber asked. We’re showing people in low- and middle-income areas, where consumers are very price sensitive.

Panelists agreed that ACLI will continue to visit state capitals and meet with lawmakers to explain how life insurance works. Efforts to revise Florida law continue.

A key point here, Rengachary said, is the difference between aggressively adhering to well-protected, widely accepted protected class standards and creating new standards specifically for life insurance underwriting, and that’s where we draw the line here.

InsuranceNewsNet Senior Editor John Hilton has covered business and other news in daily news reporting for more than 20 years. John’s contact information is as follows: [email protected]. Follow him on Twitter @INNJohnH.

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