ProtectionMar 11 2015

DNA testing will be protection industry ‘game changer’

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DNA testing will be protection industry ‘game changer’

Following FTAdviser’s latest in-depth look on at how technological innovation is driving protection insurance forward, Finance and Technology Research Centre’s director Ian McKenna explained he also has his eye firmly on the implications for DNA testing.

“A service that can tell you how ‘at-risk’ you are of developing certain health conditions could turn the protection industry on its head; it puts customers in a tremendous position of power.”

He mentioned services like 23andMe, which provide DNA testing for as little as £125, noting that the cost will only decrease as the technology develops and becomes more mainstream.

In the US the heath data part of the 23andMe testing kits were asked to cease trading by the US Food and Drug Administration, although they are still trading the ancestry and raw genetic data tests.

However, the UK’s Medicines and Healthcare Products Regulatory Agency recently approved them for sale here, with the caveat that no DNA test is 100 per cent reliable and people should take any test result questions to healthcare professionals.

The testing claims to report on over 100 health conditions and traits, including inherited conditions and genetic risk factors.

Mr McKenna stated: “If a protection provider is able to embed this type of technology into their underwriting process, they will, overnight, be streets ahead of the competition in better understanding risks and pricing accordingly.”

Martin Bamford, managing director at Informed Choice Financial Planning, recently reported his own experiences using the kit, commenting that such services will become more widespread as genetic research continues and more people take an active interest in their health and ancestry.

“This is obviously still in its infancy, but I think we will see DNA tests used to personalise products and services. I can export the raw data, so I think it’s just a matter of time before an insurer starts accepting that as a way to get premiums down.

“Some will inevitably get hung up on the privacy aspects and there are risks around disclosure and cover for insurance purposes, but I think on balance that this is a really positive development,” he added.

Jay Sales, innovation strategist at the largest vision care insurer in the world VSP Global, agreed that the data and insights generated by genomic testing have the potential for long-term benefits.

“This is particularly true when coupled with something like an eye test, which can detect health risk factors that are also picked up by the genomic test,” he stated, explaining that examples of these risk factors are heart-related diseases, diabetes, glaucoma, cholesterol and Alzheimer’s.

“When you combine the evaluation of health risks with the ability to monitor health through an eye exam, you have the potential to reduce healthcare costs and mitigate risks. This shifts healthcare from reactive to being proactive and preventive, reducing financial impacts.”

Peter Hamilton, Zurich’s head of retail proposition, pointed out that the Association of British Insurers’ concordat and moratorium on genetics and insurance will be fully reviewed in 2016, but there are still very few single-gene medical conditions, so even the rise in personal genetic testing is unlikely to have a major impact on the industry.

“The new genetic profiling can provide some interesting dinner table conversation starters - ‘I’ve got plenty of Viking ancestors’ or some lifestyle pointers like ‘eat more broccoli’ - but short term at least, not a huge amount that will trouble underwriters.”

He explained that a lot of the risk can already be identified by existing access to family history, and while the tests might suggest a predisposition to certain conditions, most are unlikely to be life threatening and a lot will depend on related factors such as diet and exercise.

“Given this, it’s not obvious that the data from these tests could easily be incorporated short term into quote data in a meaningful way,” stated Mr Hamilton.

“Separately, better data on segmenting our customer base may mean more ‘tailored’ underwriting in future, i.e. short form versus full traditional underwriting, as technology gives us more and more opportunity to have differential processes for each customer or distributor type.”

Article updated on 12 March to confirm that 23andMe are still trading in the US, with no FDA ban, but being told to cease trading is the heath data part of the test.

peter.walker@ft.com