Effective Underwriting in the Genetic Testing Era

This paper notes that prior to the availability of genetic test results, conventional life insurance underwriting had produced satisfactory mortality results even though a number of applicants insured at standard or better must have had serious genetic markers. The paper discusses the problems that may affect underwriting when an applicant is aware of a genetic risk factor.

The paper suggests use of pre-genetic testing era underwriting methodology, including medical history and family history, with strict financial underwriting to control antiselection. A set of underwriting rules is provided. The need for a sales organization that can produce a substantial amount of business is cited as necessary for success.

To spread equitably any excess cost on account of insuring persons with genetic markers, a risk pool is suggested. The pool manager would also inform a company of additional applications to other companies by genetically impaired applicants.

The purpose of the proposal is to deflect ill-advised political solutions and, at the same time, to control expenses by ensuring a high ratio of paid-for policies to applications.