The rise of ‘precision medicine’, which takes account of a person’s genes, environment and lifestyle, may lead to higher rates of anti-selection in life insurance and increased lapse rates, according to a global reinsurer.
Swiss Re made the pronouncement in its most recent SONAR Report, which assesses emerging insurance risks within the next five years, stating this form of medicine provided benefits for the health care sector and challenges for the life insurance industry in managing the scope of new data it will receive.
The report stated that precision medicine was being enabled by the convergence of genomics, computer science, nanotechnology, biotechnology and cognitive science and was producing massive amounts of data that could be examined to improve health care on an individual basis.
It added that while earlier efforts in precision medicine had focused on conventional therapies the present and future focus was on regenerative medicine and the potential to match a disease to the therapy that is more likely to treat it, based on the individual genetic mark-up of the patient.
“With an increase of the predictive value of personalised genomic data, the insurance industry will be increasingly faced with anti-selection in life insurance…”
“The potential for precision medicine is regarded to be huge, particularly as ageing populations trigger demand for a new generation of medicines,” the report stated highlighting that extraction and order of genetic data to create new treatments or prevent disease will still require extensive work by governments and health care providers.
The report added that apart from having to deal with the large volume of information, life insurers will be faced with how to use the information and if those uses would be contrary to the purposes of insurance.
“With an increase of the predictive value of personalised genomic data, the insurance industry will be increasingly faced with anti-selection in life insurance and an increased lapse risk. Ultimately, it might even lead to a creeping erosion of the solidarity principle on which insurance is based.”
Swiss Re, Group Chief Risk Officer, Patrick Raaflaub said the SONAR Report highlighted risks for insurers that lay just beyond the horizon to prepare them for the possible changes that would soon arrive.
“Risk management is not just about managing risks in the present. It is about anticipating future ones to make sure we will be in a position to deal with them,” Raaflaub said.
“These risks may only fully reveal themselves to future generations. That doesn’t mean that we shouldn’t act today to reduce uncertainty and alleviate their burden.”
