3 Jun 2000

CD Daykin
Government Actuary’s Department
New King’s Beam House
22 Upper Ground
London SE1 9RJ.

Dear Chris

Genetics and Insurance Position Statement

I have now read the revised version of the Position Statement and I think it is an improvement on the previous version, thank you very much. I still have a few comments which I have attached to this letter.

Yours sincerely, RG Thomas

Comments on the Faculty & Institute of Actuaries Position Statement

Preamble

The profession "does not advocate the interests of any particular group.’ This is untrue. The statement very directly advocates the interests of the insurance industry, and harms the interests of people with testable genetic predispositions to illness. What other effect could there be of arguing against restrictions on insurance companies’ ability to underwrite?

I think it might make the position with regard to advocacy clearer if you added:

"This statement has been prepared by a working party consisting mainly of insurance industry employees. It does not represent the views of actuaries who have an interest in this subject, but are critical of the insurance industry."

The profession "aims to evaluate the financial impact on all groups which are likely to be affected." As far as I can see actuaries do not aim to do this. Some later parts of the statement are concerned with the increase in the overall level of premiums if genetic test results are ignored; but this is an insurance company’s perspective. The statement gives no attention to the financial impact on individuals of being unable to purchase insurance, or being excluded from employment. Actuaries are not interested in these types of questions, presumably because they relate to the interests of individuals, rather than insurance companies.

Risk classification

"People expect to pay a premium appropriate for their own risk and not to cross-subsidise others." What evidence do you have for this? It may be what you expect, and what other members of your working party expect. It may be the very first thing on your mind. But then you have all spent many years immersed in these peculiar actuarial doctrines which hold that sick people take advantage of insurance companies and enjoy a multitude of unfair advantages and that there is no more worthy role for actuaries than keeping them out of insurance. It does not follow that people in general hold these views. Indeed, the British Social Attitudes survey results (details in one of my previous letters) strongly suggest that as far as genetic tests are concerned, people do not expect what the statement claims they expect.

What people expect, I suggest, is a little more complicated, and something like as follows. Most people – even intelligent, highly-educated people, let alone the wider population – have no clear expectations about the principles on which their insurance is priced. They have better things to think about.

However, if you ask people whether they are in favour of genetic test results being available to insurance companies, they will give you a very strong no. This appears to be the case in all countries.

On the other hand, if you ask people a different type of question, using language which insinuates culpability – language like ‘taking advantage’ and ‘cross-subsidy’, that is the language of the position statement – then you may contrive to elicit some sort of ‘yes’ (although as far as I can see you have not actually done this). And this answer may be inconsistent with the earlier ‘no’ to the question on genetic tests.

This confusion gives rise to a role for leadership. Leadership can be positive, tending to promote a solution which steers society away from focusing on inflammatory issues such as racial and genetic differences. Or it can be malign, tending to promote discrimination and foment hostility on racial and genetic grounds. Like Enoch Powell and all his cerebral sophisticated efforts to legitimise racial discrimination. Or like the Faculty and Institute of Actuaries and all its cerebral sophisticated efforts to legitimise genetic discrimination.

Risks of anti-selection

"The risks of a small minority of policyholders taking advantage of genetic information is greater in non-life classes of insurance". Two comments here.

First, I don’t think you have much evidence for this as a general proposition. It is mainly a political strategy of the UK insurance industry: make limited concessions on life insurance, and hope to get away with excluding everything else.

Second, a small minority of policyholders taking advantage of genetic information is completely besides the point, unless one is simply opposed to sick people having better lives. What matters is whether insurance can still work if a small minority of people take advantage. But the statement seems concerned with the possibility of a small minority of people taking advantage – a small minority of sick people having less miserable lives – whether or not this makes insurance unviable. This is the crux of the malign nature of the actuarial contribution. It is the reason why I think my life would probably be better if actuaries were ignored.

Conclusion

"The profession accepts that the ABI has gone some way towards meeting public concerns." But there is no substance to the ABI’s policy. The Genetics Code of Practice is a sham; most insurance companies are cheating; they are taking advantage (to use one of your favourite phrases) of their customers’ ignorance (and probably medical practitioners’ ignorance as well). If the Faculty and Institute of Actuaries were not in the ABI’s pocket, it would make some public comment on this.

"The profession does not advocate restrictions on insurance companies’ ability to underwrite." This is advocacy (which the first paragraph claimed you didn’t do). Obviously I am in favour of restrictions on insurance companies ability to underwrite, and I am not impressed by self-regulatory codes. The experience with the Genetics Code of Practice shows that self-regulation does not work, because insurance companies will not take it seriously, just as they never took self-regulation of sales practices seriously.