Genetics and Insurance

Abstract

Most actuarial modeling has concentrated on single-gene disorders, because it necessarily relies on genetic epidemiology to parameterize any models, and that is where the epidemiology is most advanced. We can identify two broad approaches. A top-down approach treats whole classes of genetic disorder as if they were homogeneous. This avoids the need to model individual disorders in detail, which in the case of multifactorial disorders may be impossible just now anyway. If, under extremely adverse assumptions, either extra premiums or the costs of adverse selection are small, this is a useful general conclusion; see for examples. In the long run, this approach is limited. A bottom-up approach involves detailed modeling of individual disorders, and estimating the overall premium increases or costs of adverse selection by aggregation. Examples include models of breast cancer and ovarian cancer, Huntington's Disease, early-onset Alzheimer's Disease, adult polycystic kidney disease and Alzheimer's Disease. Keywords: adverse selection; discrimination; critical illness insurance; genetics; insurance law; life insurance; underwriting