Life Insurance
The Time Is Now

• Jeff Roberts
• January 2019
• 

Key Points

• Inflection Point: Advances in genomics and an explosion in genetic testing are forcing hesitant life insurers to begin positioning themselves, as the science promises to increase morbidity and mortality.
• Promising Research: A study by RGA and King’s College London found polygenic risk scores make a “significant contribution to risk prediction for incidence and death from breast cancer and coronary artery disease” beyond typical underwriting.
• Explosion in Testing: More than 7 million direct-to-consumer genetic tests were sold just in 2017.

The warning was buried deep within the paired strands of Jon Sabes' DNA.

A mutation lurked there, a variant to the gene MSH6, signaling that he holds a fourfold increased risk to develop colon cancer.

The genetic clue was uncovered only after Sabes' younger brother, Steve, was diagnosed with both the deadly disease and the mutation three years ago at age 47. It drove the CEO of insurtech firm YouSurance to recently undergo his own genetic test.

Sabes asserts it's exactly the kind of customer-centric wellness role that life insurers need to embrace, applying genomics and genetic testing to inform and protect their customers—and the future of their industry.

He is far from alone.

“If I'm a life insurer, I would want my client to know, and I would encourage them to have regular colonoscopies,” said Sabes, 52, whose digital MGA uses saliva-based epigenetic exams to assess applicants' health and life expectancies. His brother has recovered and serves as YouSurance's chief operating officer. “When caught early, it's the most treatable cancer out there. But if you don't, it will kill you.

“It's an example where if carriers were open-minded enough to embrace this type of testing, there's a lot to be gained. When that will happen? I don't know. And what it will take? I don't know.”

The life insurance industry has reached an inflection point, with advances in genomics and an explosion in genetic testing—both clinical and direct-to-consumer—making it necessary for hesitant insurers to embrace the science, some experts say.

Recent advances in polygenic risk scores and epigenetics and cutting-edge applications like pharmacogenomics, genome editing and cancer treatments are already changing how researchers and doctors approach health care. Despite wrestling with well-founded concerns over anti-selection, privacy rights and regulatory oversight, insurers need to position themselves soon as those advances are coming more rapidly, in a cresting wave of genetic science.

“The time is now,” said Dr. Dave Rengachary, senior vice president and chief medical director, U.S. mortality markets for Reinsurance Group of America. “In other words, every life insurance company out there has to—at a minimum—develop talent and expertise and understanding of the issue as a first step.

“That is why you will see the combination of medical directors, data scientists and other disciplines coming together to develop expertise around the issue.”

The era of genomic medicine has arrived. It carries the potential to transform health care from the early detection of disease, to enhanced treatments, to prevention through personalized, precision medicine and eventually to an increase in healthy life expectancy.

Genomics will also influence everything from how insurance is underwritten and priced to how products are designed, industry observers say. It may even change how insurers engage and interact with their policyholders, making them a partner in their customers' health.

But many life insurers continue to move cautiously, “very much in a wait-and-see mode,” said Ronnie Klein, director of global aging for The Geneva Association, an international insurance think tank. “It's in such an infantile stage that companies are not looking at this as closely as maybe they should.”

The need to validate the science actuarially has created a “time bottleneck,” according to Rengachary. It is “really difficult to impossible” to predict when those breakthroughs in research will be commonly applied in the clinical world and can be fully transferable to insurance, he added.

That is why RGA has been collaborating with King's College London the past two years, researching recent genomics developments and how that research could be applied to life insurance.

In August, they reported that insights into genetic data can provide risk information not captured by traditional clinical and biomarker metrics. Specifically, they found polygenic risk scores—a measurement that identifies and combines multiple genetic variants to calculate someone's predisposition to disease—make a “significant contribution to risk prediction for incidence and death from breast cancer and coronary artery disease, above and beyond typical underwriting risk factors,” according to RGA.

The need to embrace genetics is a pressing one. As life sales stagnate and the mortality improvement rate flattens, it has become even more crucial for the industry.

“We really have to look forward,” said Christoph Nabholz, managing director and head of life and behavior research and development in Swiss Re's underwriting department. “Where are the improvements coming from if not from genomic medicine?”

A Question of Timing

There is risk in being first.

U.S. insurers largely have avoided an uncomfortable conversation with consumers over the sensitivities involving genetics, namely privacy rights, data security, anti-selection and regulation.

A federal law passed in 2008 prevents health insurers from seeking the results of genetic testing. However, life, disability, critical illness and long-term care insurers are not bound by the Genetic Information Nondiscrimination Act (GINA).

But experts caution that a first-mover advantage in this case could have severe consequences.

“The emphasis needs to be on a correct-to-market approach instead of a first-to-market approach,” Rengachary said.

Some insurers can be patient and position themselves for the medium term, according to Klein.

“A good company would get their act running in five to 10 years,” he said from Zurich. “When the science starts to advance, be a fast follower. You don't need to be on the cutting edge. Other companies will catch up very quickly.”

But there is risk in waiting as well.

The longer the delay, the farther insurers will fall behind on a spectrum of tangible opportunities.

On the in-force side, using genetic testing could improve customer engagement in an industry that largely has none. It can also strengthen trust with policyholders and present cross-selling opportunities as insurers become active partners in their customers' health and wellness.

And it can empower and motivate lifestyle changes—such as improving diet, increasing exercise and undergoing medical screenings—by revealing risk information and providing ways for people to act on it.

New product lines and the incentive of free clinical genetic testing could attract potential customers piqued by commercial direct-to-consumer companies like 23andMe and Ancestry.com.

MassMutual began offering genome sequencing to policyholders in 2017 at a reduced price. It was believed to be the first U.S. life insurer to do so. But it has discontinued the offer. MassMutual declined an interview request.

In 2016, Prudential Hong Kong, a subsidiary of Prudential plc, became one of a few international insurers providing DNA-based health and nutrition testing to policyholders.

And the global public health community is committed as well.

In October, the United Kingdom's National Health Service announced plans to sequence 5 million genomes over a five-year period. The publicly funded health care system will also offer whole genome sequencing and analysis for critically ill children with a suspected genetic condition and for adults with rare diseases or intractable cancers.

“Such an environment requires insurers to be prepared and ready to react,” Nabholz said. “We, as an industry, will have to change quite a bit.

“Insurers need to come to grips with what may be coming and spend time now working out a philosophy for how to deal with it.”

Meanwhile, startups like Minneapolis-based YouSurance could pressure legacy carriers by directly targeting the public with their services.

In its case, YouSurance is seeking to capitalize on epigenetic testing—which reveals how environment and lifestyle choices such as diet, exercise, stress and alcohol and drug use influence mortality risk at the molecular level. They potentially can “turn on or off” positive or harmful genes.

Sabes says epigenetic testing eventually will be more precise than traditional underwriting tools and far less invasive than paramedical exams that often discourage first-time insurance buyers.

Other companies, such as Helix and Sequencing.com, help consumers obtain DNA testing to predict health outcomes, analyze the results and store their genomic data. And dozens of smartphone apps generate disease predictions from direct-to-consumer test data.

“Frankly the time came and went,” for insurers to embrace genomics, said Sabes, who is also CEO of YouSurance's sister company, Life Epigenetics, a science and testing firm. “The question becomes: When—and if—does that happen? If incumbents don't do it, then we shall do it.”

Testing Explosion

Many U.S. consumers already have embraced genetic testing.

More than 7 million direct-to-consumer genetic tests were sold in 2017. Only 6 million were sold in all the preceding years, according to RGA.

Soaring public interest, the rapid reduction in the cost of testing (below $1,000), growing accessibility and improved accuracy and precision are driving clinical adoption.

Researchers also are reaping an avalanche of information and advances in genetics, data science and analytics because of those trends. Such understanding is allowing them to examine variants in the 6.6 million locations in the human genome and then calculate risk.

The potential for improved mortality and morbidity is a true win-win for insurer and insured, especially with research projects underway using the UK Biobank, a medical and genomic information database.

“If they can extend their lives for two more years, they're paying two more years-worth of premium and delaying that claim payment that collects interest for two more years,” Klein said. “It's worth a lot of money to an insurance company.”

On the horizon are assessment tools such as polygenic risk scores, which some medical experts consider the wave of the future. Their objective is to identify those at higher risk of disease who would normally go undetected by traditional risk factors by using algorithms.

“As we reach this tipping point of clinical adoption, there really is an expectation that life insurance companies should be able to then articulate a strategic vision for incorporating these advances,” Rengachary said.

There is also a need for insurers to protect themselves against the mounting threat of asymmetry of information, anti-selection and regulation banning the use of genetic information in underwriting.

The Society of Actuaries warned in an October paper, The Impact of Genetic Testing on Life Insurance Mortality, that expected new business claim costs for U.S. insurers could increase 4% to 8% if the future applicants know the results of genetic testing while the insurer does not.

And if only the applicant knows the results of genetic testing results and family history, expected new business claim costs could rise between 5% to 10%.

“Anti-selection is the first thing they have to be worried about,” Nabholz said. “Companies have to definitely look at the anti-selection impact first. And with genetic testing having significantly increased over the last two years, this has become more and more prevalent.”

But not all are worried.

Finding A Way

People were dying.

And they were dying young, many in their 20s and 30s—decades before insurers expected to receive claims.

The AIDS epidemic fueled dire predictions of an avalanche of excess mortality losses and unfunded liabilities as the scope of the crisis emerged by the mid-1980s.

And the possibility of asymmetry of information, with HIV-positive people or those in the early stages of AIDS buying life policies without disclosing their status, threatened the industry's very business model.

“AIDS was going to destroy insurance companies,” Klein said. “There were articles that said, 'Is this the end of insurance as we know it?'”

Instead the industry overcame the existential threat. It responded by changing how it underwrites the individual life business, introducing blood tests to assess mortality risk.

And it launched a new class of insurance, designing preferred mortality risk programs.

The lessons from the age of HIV/AIDS are applicable to the age of genetics, Klein says. Genetic testing that can predict disease susceptibility offers consumers risk information that life insurers do not have. That's a significant concern when the business model is assessing and pooling applicants' mortality risks and pricing premiums to that risk.

But just like in the 1980s, the industry will adjust and innovate in response, according to Klein.

“Insurers have always been great at figuring out a way to mitigate anti-selective risks,” he said. “From the epidemic they came up with, 'We'll take blood tests on everybody. And while we're getting blood, we can check other things. Are they a smoker? Are they taking drugs? What's their cholesterol?' And a whole new market came out of it: preferred life underwriting.”

Thus far, the chosen path for most insurers has been a conservative approach to genetics.

“Obviously it's an emotive, sensitive subject,” said RGA's Richard Russell, lead health data scientist, global research and data analytics. “It's quite a scary prospect to be told you may be at higher risk of a disease and not have all the other important messaging that needs to go with that.

“That's why I hesitate to say this will happen quickly or indeed it should happen quickly because it is a delicate subject.”

In recent months, privacy and data security concerns have dominated the genomics conversation with external stakeholders, according to RGA's Rengachary. They are critical issues, but the industry believes equal access to medical information—genetic or otherwise—is crucial.

“As an industry, we really need to improve how we are communicating about these issues,” he said.

Going forward, life insurers need to be proactive to clear up the misconceptions among regulators and applicants regarding how they use genetic information, Rengachary said.

Part of the problem stems from the false idea that genetics are deterministic. In fact, the value of genomics is not just the prevention of disease when possible and early detection when it's not. It's also the ability to motivate people to make lifestyle changes to reduce their risk.

Experts also caution that most disease is polygenic, originating from several genes as well as lifestyle and environmental factors. Huntington's disease—caused by a single, uncommon mutation—is a rare exception. Carrying a gene that increases your risk of a certain cancer does not mean you will develop that illness. Instead, it warns those carrying it that they need to mitigate their risk.

That is why RGA and others are investigating a number of promising tools on the wide spectrum of genomics.

“There are other promising pathways to improve longevity,” Russell said. “Pharmacogenomics. Whole genome sequencing. Genome editing. There's so much going on. We're trying to keep our fingers on the pulse of these developments.”

Developments that can change the industry's future.

“We need to accelerate the process and use this information in the most beneficial way for patient outcomes,” Swiss Re's Nabholz said. “Genomic medicine must play a really big role. We are so dependent on the next generation of improvement.”