Insurance lobbyists have a new target to address – State Genetic Information Bans. While Florida instituted a ban in 2020, preventing insurers from using genetic data, to date, no other states have established bans on genetic information. The Florida ban, according to the American Council of Life Insurers’ (ACLI) Regional Vice President, State Relations Curt Leonard, misrepresents how life insurers use genetic information. To educate state lawmakers, approximately 50% of whom are now considering genetic information bans, the ACLI is meeting with them to raise their awareness.
ACLI Steps up to Educate State Lawmakers
What state lawmakers do not fully understand is how insurers use genetic information in an applicant’s record and the reasons behind this usage. It is important for insurers to know what the applicant knows about their genetic information at the start of the application process. Lawmakers tend to combine different factors that disrupt insurers’ business models and underwriting of which they have little knowledge. Further, they mistakenly believe that a diagnosis is all the information that is needed instead of recognizing the need for current risk factors. They make assumptions such as that insurers are acting to obtain individual’s genetic information without their knowledge, which is not the case.
Price Impacts
According to a 2018 study conducted by the Society of Actuaries (SOA), if insurers only have knowledge of an applicant’s family history at the time of underwriting, new business claim costs could increase between 4% and 8%. When insurers do not have both an applicant’s family history or genetic testing results, future claim costs could rise by 5% to 10%. Low- and middle-income consumers would be most hurt by these increases.
As the ACLI continues its education of state lawmakers, one key message it will convey will be to emphasize the difference in respecting protected and accepted class standards and developing new standards for life insurance underwriting.