Can life insurers tap genetic testing results in decision-making?

In recent years, people around the world have become more excited at the prospect of using genetic testing to learn about their heritage, and send samples to various companies to get that information. Increasingly, however, many have found that there are more outcomes when they submit their DNA for examination (and data storage) than just getting a glimpse into their family trees. Some of them are positive, while others can be considered negative.

One potential issue here that people may be more aware of is that analysis of their DNA could impact their insurance eligibility and rates, according to Forbes Advisor. Simply put, life insurers may choose to look at this information to see if there are any genetic markers which may indicate that an applicant has a predisposition to illnesses or ailments that could affect their mortality. While health insurers are prohibited from using such data for eligibility or rate decisions, as part of 2008's Genetic Information Nondiscrimination Act, life insurers are under no such federal regulatory obligation to avoid such decision-making.

That, of course, leaves the question in the hands of the states, and only Florida currently considers adverse life insurance coverage decisions based on genetic testing to be illegal. That does not, however, mean that all life insurers use this data and some may only use it in certain situations. Moreover, they will not be able to cancel a policy if someone takes a genetic test after they have already obtained the coverage.

The intersection between genetic testing and life insurance is clear.

Understanding Florida's groundbreaking law
In July 2020, the state of Florida passed House Bill 1189, a first-in-the-nation law that prevents insurers that underwrite life and long-term care policies from in any way limiting or denying coverage to applicants based on their genetic data, as well as preventing them from making adverse rate decisions on the same grounds. The National Law Review notes that not only are companies prohibited from using such information against an applicant, they are not even allowed to ask for — let alone require — people to provide that data.

However, just to avoid any potential confusion about what this new regulation means for insurers, the law specifically includes language which allows underwriters to continue tapping other medical data as part of the application process. With that in mind, companies can still make decisions based on that information, just as they always have.

A deeper understanding
While GINA has been in effect for well over a decade at this point, there has not been much movement at the federal level to expand such rules to life insurance coverage, but there are increasing questions about whether that should happen. A 2015 paper published in the Journal of the American Medical Association noted that life insurers may often be hesitant to use this data, but that there are other considerations that might end up being a net positive for consumers and insurers alike.

For instance, if someone's genetic testing reveals a predisposition for something that could result in premature death or disability early enough, they can pursue treatment to mitigate or potentially even eliminate that risk, the paper added.

“In fact, if results of genetic tests ultimately aid diagnosis, prevention, and treatment, testing could actually lower the risk for many insurance applicants. Indeed, all of us have genetic predispositions to disease, and many can be modified by lifestyle changes and medical interventions,” the authors wrote. “Moreover, an individual found to lack the familial mutation for a potentially lethal disorder has a lower risk of that disease than the general population, something insurers may fail to appreciate.”

For that reason, and because life insurance is generally a positive for policyholders, the authors urged a closer look from regulators to ensure enough people have access to coverage while also doing something to control what information they can use in decision-making.

What comes next?
Considering all of the above, the growing number of people obtaining consumer-grade genetic testing (often for entertainment or medical reasons) may soon force lawmakers' hands when it comes to life insurance, according to The Regulatory Review. Because GINA is already fairly far-reaching — it not only prohibits use of such data in health insurance, but also in employment and other arenas — it is not beyond the pale to imagine that such issues will be extended to life insurance in the near future.

It is often said that states are laboratories of democracy, and if that holds true, Florida may be more of a trend-setter than an outlier within a few years. For that reason, life insurance companies may want to do more to make sure their strategies are ready to accommodate whatever regulatory efforts could go into place in the near future. That kind of preparation now could help them avoid any missteps when (or if) these kinds of rules are passed in other states or at the federal level.