In the past, the insurance industry's interest in genetic technology primarily concentrated on the area of genetic testing. The foremost questions were: How should genetic data be dealt with? Is there an obligation to inform insurers? Does the danger of unfair discrimination by insurance companies exist or can genetic tests be treated like other conventional diagnostic tests? This is only a small selection of the questions that primarily reflect one thing - the widespread worry that the information and knowledge emerging from the genetic technology revolution are not being dealt with in a responsible manner.

The current significance and influence of genetic tests in risk assessment for life insurance are grossly overestimated, as a recent internal study conducted by Munich Re demonstrated. The study showed that, over the past four years, no more than a handful of genetic tests had been filed with proposals at any of the respective divisions of Munich Re worldwide.

In focusing on genome analysis, the fact is frequently overlooked that the insurance industry is also affected by completely different areas of genetic technology. Over the past two decades, just as bits and bytes have affected the manner of dealing with information, genes and proteins have had an irreversible influence on health care, agriculture and nutrition, as well as many other industries, which of course includes insurance.

These developments were the subject of a management symposium held in late 1999, to which Munich Re invited renowned researchers from many fields and representatives from the German insurance industry to discuss the dimensions of this revolution and the effect it is expected to have on the insurance industry in the future. Symposium participants included Prof. Jens Reich, speaker for the German Human Genome Project; Prof. Gunter Stock, member of the board of management of Schering AG in Berlin and responsible for research and development, and Prof. Ernst-Ludwig Winnacker, president of the German Research Association.

The worldwide Human Genome Project was the central topic of this symposium. According to Prof. Reich, this project will not only produce a completely new understanding of disease, with completely new diagnoses and possibilities for treatment, it will make a longer human life span conceivable. At the moment, research is still attempting to understand the ageing process itself. There are two competing concepts. The first sees the course of human life as advancing in programmed phases, whereas the other concept understands the ageing process to be one of progressive deterioration brought on by an accumulation of harmful factors. Both concepts provide interesting bases for influencing life expectancy through genetic technology.

In his capacity as the board member responsible for research and development in pharmaceuticals, Prof. Stock spoke of revolutionary advances in the field of pharmaceuticals that have largely gone unnoticed by the public to date (“silent revolution”). The dramatic shift in the age structure of the populations in many markets is posing a great challenge to the pharmaceutical industry as well. The cost explosion that this brings with it can only be countered by early recognition or, even better, anticipation and treatment of chronic diseases that are especially common in old age.

Thanks to the knowledge gained from the Human Genome Project, there will be a drastic expansion in the spectrum of available drugs in a very short time and the active ingredients of these new drugs will be based on entirely new principles. Parallel to the Human Genome Project, technologies in the form of genetic chips that are advancing at breakneck speed make it possible to direct these drugs more effectively and custom design them to each patient's genetic makeup.

Genetic therapy is another area of application. Here Prof. Stock outlined a case in pharmaceutical research in which a gene was implanted by means of genetically altered viruses that permit a “biological” growth of replacement tissues into patients suffering from severe cardiovascular constrictions. The company is expecting clinical implementation in six years. With this biological bypass, a real alternative to the conventional bypass operation, which today is still a rather complicated operation, would thus become available.

Implications for non-life (re)insurance

The presentation of Prof. Winnacker concentrated on genetically modified plants and foods. In contrast to conventional risks, the risks in this area are, in his opinion, calculable and controllable. For example, genetically modified food in Europe is subject to strict approval guidelines. These products are, thus, often more closely monitored than traditional foods.

In spite of growing unease among the general public about green genetic technology, Prof. Winnacker has a highly optimistic view of further development. Based on an annual growth of the world population of 86 million, economists calculate an increase in demand for basic food stuffs including wheat, rice and corn of up to 40% by the year 2020. The possibilities that conventional agriculture offers have largely been exhausted, and there is a progressive deterioration of many agricultural areas into steppe. The consequence of this, according to Prof. Winnacker, is that mankind ultimately cannot afford not to utilise genetic engineering as an instrument for increasing the crop yield of agricultural products.

The insurance industry is already feeling the beginnings of the genetic engineering revolution. For example, many genetically modified plants are not adapted to their environment and are highly sensitive to climatic influences, causing crop yields to diminish. Genetically modified micro-organisms in purification plants or containers for liquids that hold genetically modified bacteria (fermenters) used in the pharmaceutical industry require special know-how to make them insurable.

This problem is of special relevance for liability insurers who must take responsibility in the event of a loss, which in many cases may only surface after a latency period of several years or decades. In many countries, insurers are even held liable for bodily injury and environmental damage in spite of the fact that the current state of scientific knowledge may not permit the manufacturer of genetically engineered products to identify or expect losses of this nature. This mirrors the situation which occurred when the dangers of asbestos became apparent after many years of widespread use.

Personal lines

The most far-reaching effects of this new technology of the future, however, are already today being felt in personal lines insurance. The constantly growing spectrum of genetic tests is being discussed with great intensity, but at present only relatively few and rare diseases can be tested. Chip technology, however, will eventually open up new avenues here as well, when it becomes possible to compile hundreds of thousands of genetic tests onto one single genetic chip.

This will give preventive medicine an entirely new meaning. Physicians will in the future be able to implement far more individualised and, therefore, far more effective preventive measures based on the individual genetic makeup of the patient, instead of relatively general and, thus, only half-heartedly followed health recommendations, such as a low fat diet, no smoking and more physical activity, Even Jeremy Rifkin, publicist and prominent critic of genetic technology, sees the possibility here of insurance companies and pharmaceutical industries creating a preventive network for health care and reorienting the focus of the health care system from treating disease to real preservation of health.

Another important factor that will be relevant in the future for the insurance industry in industrialised markets is the progressive ageing of the population. This effect is further reinforced by longer life expectancies that are made possible by genetic technology. The development of more effective drugs, innovations in genetic therapy, as well as insights into the molecular ageing process of human beings, will surely contribute to a significant increase in the life expectancy of man. Francis Collins, head of the international Human Genome Project, is even assuming that, in the year 2050, average life expectancy will be 90 to 95 years.

In the future, this demographic development will be reflected to an ever greater degree in the calculation of insurances. For example, insurers will be obliged to account for this development by establishing additional reserves for old age or by introducing new calculation bases for annuities and pensions. The scenario of completely novel therapy procedures that even go as far as the genetically engineered replacement of entire organs that do not interfere with the immune system to be used in the treatment of chronic diseases, which occur more frequently in old age, will ultimately make a complete revaluation of term life insurances inevitable. According to Dr. Gerhard Rupprecht, chief executive of Allianz Life, Stuttgart, the effects of the revolution in genetic technology will also serve to broaden insurability matching the scope of insurability achieved by “normal, conventional” medical progress in the 20th century.

Dr. Detlef Schneidawind, member of the board of management of Munich Re, summarised this genetic technology symposium. Risks, he said, are also an inherent part of this technology of the future. It is, therefore, urgently necessary to assign a high priority to identifying and quantifying these risks as early as possible to be able to take advantage of the opportunities of genetic technology, which will most certainly outweigh risk potential, in a truly responsible manner.

  • Dr. Achim Regenauer is chief medical director at Munich Re.

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