Select Committee on Science and Technology Minutes of Evidence

Examination of Witnesses (Questions 80 - 99)



  80. But there are cases where it does not develop, even though you have the gene too.
  (Mr Bedell-Pearce) It is a repetition of that particular sequence. The area of doubt which I suspect Professor Bobrow was referring to was where the repetition falls in the range of 35 to 39. In those circumstances, the insurance companies will regard that as a negative result.

  81. Have not the insurance companies a better chance of predicting by looking back at what your great granny or your grandfather and your mother and father died from? My experience of life is you can usually predict from that just as accurately as you can from a DNA sequence. That is what you have always done.
  (Mr Urmston) That is what I was trying to refute earlier. If you remember the figures I quoted, I was trying to say we have gone back and said that, if we had used the family history methods, what we have been able to demonstrate—I think it is the same for the Prudential—is that the practices that we use are more accurate and are giving better information.

  82. How do you know that? You are being conned by the scientists.
  (Mr Urmston) With respect, if your father or mother have had this disease, there is a 50 per cent chance that you may have it. If we rate on the basis of that, all the people who have parents with Huntington's chorea we will end up rating in line with that sort of probability. The genetic test means that at least half of them we will not rate at all.

  83. I say you can only say they have the gene, period. You cannot say more than that.
  (Mr Urmston) Genetics are only one input into an underwriting process. There are things that the insurance companies can do to try to help people who have a positive genetic test. One must not immediately assume that a positive genetic test, whether it be for Huntington's chorea or any other condition, definitely leads to a decline or a rating. We ought to be looking a bit more positively at what we can do in those circumstances. We can limit the term of the cover. We can perhaps look for pooling in the industry to try to solve those issues, because this is a tricky thing. We can only go through independent genetic committees and so on and take their advice.

Mr Jackson

  84. Still on this theme of the relationship between genetics and actuarial calculation, the Wellcome Trust pointed out that this is an inexact science and you seem to be agreeing with that. I wonder whether you can tell us whether you are willing, in what you have just said about other things and genetic conditions being taken into account, to publish the actuarial and the scientific data which you use to support your policy?
  (Mr Urmston) I can see no reason why the information which goes to the Genetics and Insurance Committee should not be made available. That is submitted as part of an ABI submission to that committee, to try and provide the evidence that they have.
  (Mr Bedell-Pearce) I can see no reason why we should not ask the ABI to publish those. One of the key points is that there should be openness and transparency in this. I can see no reason why these submissions should not be in the public domain, if they are not already.

Dr Jones

  85. Do you publish your actuarial evidence for family history?
  (Mr Urmston) What has happened with family history over the years has been an assessment from the experience of the major offices going back many years as to the experience of people with that particular condition. The ratings that we use are drawn mainly from reinsurance figures, where there is some evidence of the impact of family history.

  86. Is that publicly available?
  (Mr Urmston) I am not sure that reinsurance manuals are publicly available.

Mr Jackson

  87. We have had a welcome affirmation of commitment to openness. As I understand it, you have some ten tests that are applied. If somebody comes up with a positive result, what weighting do you give to factors such as early diagnosis and treatment and indeed to non-genetic factors?
  (Mr Urmston) As we have discussed already, we are probably coming away from ten tests, and probably more focusing on three at the most. Genetic tests are only one of a series of factors in rating or underwriting decisions. There are medical conditions, people's lifestyles and a whole series of other factors. It also depends on the term of the policy that somebody is wanting to take out. If they are taking out a relatively short term but they will only suffer from this disease when they are much older, it may not affect the underwriting decision at all. It is difficult to be too specific but you can see there is a whole range of issues. In trying to interpret genetic testing, the underwriter has to go to an expert. He does not have the knowledge.
  (Mr Clarke) We have been talking about this one specific test for Huntington's, which is a very rare condition and affects a very small part of the population. There is a rather inverse relationship between the information that the insurance industry is using, which is very limited and very rare—in our case, we do not use the information at all—and the rather natural public concern that is generated by this fact in so far as what we are seeing here is an application of a very small set of circumstances, of extra underwriting, extra statistical information, which is clearly affecting only a very small part of the insured population and, as we have already seen, does not affect very much of the general body of the insured population. It would be useful if the industry could try and explain itself a little more carefully as to the possibility of these diseases and conditions arising. I do feel that the general public at large are gaining the impression that genetic testing by those companies that do use it is rather more widespread than is the case. There are studies and market research in this country about the degree of under-insurance within the financial community. To get a label that the insurance industry is requiring you to disclose genetic tests is going to deter even more of the British public from taking out what is quite undeniably a very valuable provision for protecting families and dependants.

Mr Taylor

  88. Can we have a look at the Code of Practice which you are voluntarily bound by? The Royal Society pointed out that self-regulation is not an adequate regulatory system; whereas the Norwich Union's own evidence says that it has been safeguarding consumers' interest whilst at the same time allowing insurance companies to continue to operate commercially. I should not ask the Norwich Union but I can ask the other two gentlemen. Do you think the Code of Practice has struck the right balance?
  (Mr Bedell-Pearce) I think it has at this stage. It will need to be revisited in the light of developments and experience of the member companies. In terms of the overall principle of a voluntary Code of Practice versus some form of statutory or other regulation, at this stage, given the very limited amount of genetic testing that is taken into account by insurance companies and given the rapid change in the science and the interpretation of that science, the flexibility of having a Code of Practice which is subject to public scrutiny and overview and can be audited by external bodies if necessary is a more flexible way of proceeding than having something codified in legislation which may have to be revisited on numerous occasions in the future.

  89. We had some evidence from the Alzheimer's Society which relates back to last year when certain insurance companies appeared not to disclose the fact that a test was not required for mortgages under £100,000. What sanctions can the ABI bring on any insurance company that is out of line?
  (Mr Clarke) I agree with Mr Bedell-Pearce in as far as legislation in this particular area may be a rather rigid and slow moving vehicle; whereas a Code of Practice could respond more readily to developments. Certainly the ABI Code has been revised and is being subjected to revision this current year. We regard it as being essential minimum guidelines and it is up to individual companies to strike their own levels above those particular guidelines. One important aspect of the code though is that it does set down quite clearly the security data protection and the confidentiality aspects of the information that is collected in this particular area. It is quite a good initiative on the part of the ABI and the industry to publicise the steps they are taking to secure this bond between the proposer and the insurance company in what is a very sensitive area. I think the industry should engage more readily with consumers and other bodies to publicise exactly where this code is, who uses it, to what extent it is being applied and perhaps be slightly more open to the views of bodies like this and listen to them with great attention. The industry has been a little quick to use its own tests rather than waiting for the proper validation through the GAIC. With regard to whether it is enforceable and capable of being policed, I do not know if Members of the Committee are aware that membership of the trade association is dependent on following the various codes of practice. It obviously would be a very serious matter if a member company of the association were unable to meet any one of the codes of practice that applied. In this particular one, the chief executive of each company has to certify each year what is in effect an audit of their particular policy.


  90. It is self-regulating, is it?
  (Mr Clarke) It is self-regulating in the sense of its membership of the association.

  91. Self-regulating within each insurance company?
  (Mr Clarke) Yes. It would be up to the individual insurance company to have its own systems of audit. It could if it wished make public its own audit of its own procedures and that would be an initiative that could give it extra safeguards.
  (Mr Urmston) There are a number of aspects which are independent. We have the GAIC, which is clearly an independent body. One might question what the GAIC goes on to do. It may well monitor the performance of the companies in some way or collect statistics or start audits. I do not think any of the companies represented here or most of the industry would have a problem in being able to demonstrate independently compliance with such a code of practice.

  Mr Taylor: The public are concerned about revealing tests, although there has not yet been wide public debate about this. If the public persist in being concerned, there is a cry for the government to do something. What, in your view, could the government do that would either hinder or help the insurance industry in this context?

Dr Jones

  92. Is there not a problem that the Code of Practice is the lowest common denominator?
  (Mr Urmston) I am not sure that is a problem. You have seen three companies here who are going slightly wider than the Code of Practice in different ways. That is clear within the industry. The Code of Practice is setting a minimum standard and it means that people can get cover from different companies under different conditions.

Mr Taylor

  93. Reverting to my question, having been a minister I know only too well that the public sometimes like the government to do something, but there is no necessary magic in what the Government does in making the consumers' interests better. Do you think there are ways in which the government could take action to help insurance companies?
  (Mr Bedell-Pearce) I alluded earlier to the deterrent effect of having these tests now available and perhaps it being incumbent on the industry to come up with some practical solutions for providing insurance. In the United States where this is a much more significant issue in the absence of a national health system in relation to health insurance, many states have enacted an insurer of last resort. I would hope that the United Kingdom industry would come up with a solution of that kind. Indeed, it is entirely feasible because it has been put in place in respect of other insurance issues over the years. In the 1930s, for example, the Motor Insurance Bureau was set up and subsequently a mechanism was put in place that, if someone is declined motor insurance because of a disability of some kind, they can apply to three insurers. If all three decline, they can go back to the first one and they will be obliged to take the insurance. A mechanism of that kind, set up voluntarily by the industry, would be a much better solution than having the government impose such a thing on the industry. The other alternative, which I suspect is not going to be palatable, is that the state becomes the insurer of last resort.

  94. Not even the Labour Government would consider that. You talked about the fact that you might decline insurance. It would be perfectly reasonable if your company declined a person insurance, but it would be very difficult if every company then followed suit so there was no competitive market for that individual. You were suggesting a compromise from a different sector in the motor industry. Would the ABI Code of Practice cover that, to oblige members of the ABI not to act as a cartel against the consumer who happened to have had a positive test?
  (Mr Clarke) I do not think it would be right to describe it as a cartel. There is a willingness to work together within the industry to find a solution within the industry for these excluded cases. Those were quite welcome comments. It is the first time I have heard that. If we are to progress on the basis of gaining public acceptability for underwriting practices within the life assurance industry, for the industry itself to be providing its own solutions is a very positive step forward. I doubt whether it needs government sponsorship. It is something the industry itself ought to be able to do.


  95. Mr Bedell-Pearce, you said, "I hope that there might well be a scheme similar to the scheme that came in, in the thirties, for motorists." How is this hope turned into a reality? You have your hope; Mr Clarke is very pleased with your hope but has never heard of it before. How is this to be turned into reality?
  (Mr Bedell-Pearce) By the gentleman sitting behind me who is our chief underwriter, who I instructed today to raise this matter with the ABI Genetics Committee when it next meets.

Dr Williams

  96. Mr Urmston, I noticed in your initial presentation that Mr Clarke referred to tests approved by GAIC, as did Mr Bedell-Pearce, yet in your own case you said you followed the guidelines of the ABI. They are different.
  (Mr Urmston) Yes, there is a difference because the original tests were defined prior to the formation of GAIC. There continue to be a number of tests and we are now talking about two further tests which are currently before the GAIC, where they are determining one way or another whether insurance companies—

  97. Do you accept that the Code of Conduct is more hard line and the GAIC is more liberal or cautious?
  (Mr Urmston) I would accept that there is a timing point. We would hope that this matter will be resolved quickly. As the Code of Practice indicates, if there are any cases where we have made an underwriting decision based on the previous set of genetic tests and they are subsequently not approved by GAIC, we will reverse that underwriting decision. I have looked at and there is one case where, if one of those two remaining tests are not approved, we would go back and give ordinary rates.

  98. Generally, you accept that the Code of Conduct is a bit premature?
  (Mr Urmston) To be fair to the ABI, it was being proactive in trying to come up with a system which could resolve. That was probably following this Committee's report in 1995.

  99. Do not blame us. We took a very liberal view in 1995 and I think your Code of Conduct predates that inquiry. Mr Bedell-Pearce, I am a little confused as to how many tests there are because, in my understanding, there are ten genetic tests that apply to seven inherited diseases. The GAIC have only looked at three and have only given details for one and that is Huntington's. What is the present position?
  (Mr Bedell-Pearce) The ABI have submitted the tests for three conditions, Huntington's, Alzheimer's disease due to PS1 and APP and breast and ovarian cancer due to BRCA1 and 2. Only one of those has been approved by GAIC, which is for Huntington's disease. So far as the other four conditions for which there are in some cases more than one test, myotonic dystrophy, familial adenomatous polyposis, FAP, multiple endocrine neoplasia, which is MEN, and hereditary motor and sensory neuropathy, which is HMSN, there has been no submission to the GAIC. There are various reasons why they have not been submitted. In the case of myotonic dystrophy, it is regarded by the industry's genetics adviser as not being sufficiently predictive. In the case of FAP, 90 per cent of the cases are symptomatic by the age of 25. In the case of MEN, there is a wide range of onset age and the numbers involved are minimal. With HMSN, 70 per cent of onset is diagnosed before the age of 20 and it is not life threatening. Those four tests have not been submitted and, so far as I am aware, are not going to be submitted.

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Prepared 3 April 2001