...a dilemma to living longer
There are many reasons to be optimistic about advances in science and technology as we enter into an accelerated phase of identifying and treating health.
One gripping new science is Genetic Predictive Testing (GPT), which allows individuals to predict, with reasonable certainty, the risks of disease such as Alzheimer’s or Cancer. This is an exciting step towards healthier and longer lives, however, there is quite a debate going on in relation to the future cost of insurance.
The problem arises when insurers believe that they are being ‘adversely selected’ against. This is similar to a situation when a policyholder with a heart condition applies for travel insurance. Normally, individuals would have to declare a pre-existing condition, allowing the travel insurer to assess the risk and amend the terms accordingly. The key with GPT, however, is that the law actually prevents insurers from asking the question and a study, by Robert Green at Harvard University, has shown that individuals, having tested themselves, are 5 times more likely to buy healthcare insurance.
When insurers spot a significant trend in claims, they will tend to put their premiums up. They can do this by increasing premiums across every client, or more likely, they will attempt to identify the type of group responsible and target them with the increase. Worse, as GPT becomes more commonplace, insurers could begin to exclude certain types of disease or simply stop underwriting altogether. Government is taking a keen interest in this because policies like Private Medical Insurance reduces the burden on an already under resourced NHS and products such as Life Insurance can play a vital societal role in family life.
There are few answers to this complicated issue right now. One approach insurers are taking is investing more into medical research to help their customers with preventative treatment. This is a good step forward for existing customers but does not solve the problem for new policyholders.
The answer could mean Government intervention. How and what this might look like is too early to tell, however, the UK has had relative success with Government backed schemes for commercial terrorism and home floods.
We will be following this debate closely.
Categories: Employee Benefits & Healthcare