Genomics as an Insurance Claims Management Tool

Posted by on June 25, 2018

This article was co-written with William Wilt, President of Assured Research, a research and advisory firm dedicated to delivering highly customized, actionable research and analysis to insurance and investment professionals. It was adapted from their February 2018 briefing.

Since the human genome was mapped more than a decade ago, and with the exponential increases in computing power since the early 2000s, the recent pace of scientific and medical developments has been nothing short of transformative. Those developments are reshaping everything from medical treatments for advanced cancer diagnoses to courtroom litigation tactics. It won’t be long before the breakthroughs reported daily around the world wash onto the shores of the P/C insurance industry – which has, for the most part, been an island of stasis amidst all this change. Not much longer!

Genetic testing…did you know?

Genetic testing can determine whether a claimant has a genetic predisposition to developing a cancer or other disease alleged to be caused by exposure to a toxin while on the job. Conversely, testing might also be used to determine if a toxin or chemical in a policyholder’s product caused injury.

Genetic testing can determine a claimant’s susceptibility to a toxin-induced injury. Maybe a policyholder/defendant acted reasonably to mitigate risk, but the claimant had a genetic predisposition to the injury, independent of any exposure. Alternatively, under some circumstances, the claimant might have been genetically susceptible to the effects of the toxin based on his or her genomic profile. The Damages could still be awarded but perhaps the size of damages and reputational damage to the insured could be blunted if the ‘susceptibility argument’ was credibly advanced.

Insurers need to get on board with the scientific revolution, or risk being run over by sophisticated and well-funded plaintiff counsel using science as their spearhead.

Genetic testing may, under certain circumstances, be able to determine if a particular product was the root cause of an alleged injury. Based on data gathered by consulting firm KCIC, asbestos plaintiffs name an average of 66 defendants in each asbestos lawsuit. It’d be nice to have a credible and legally defensible way for insurers to extricate their policyholders from that list.

Health insurers are creating policies to identify policyholders with a certain cancer predisposition syndrome associated a high lifetime cumulative risk of cancer and a tendency for multiple cancers in affected individuals. According to the filing:

“The purpose of genetic testing of individuals [suspected to have the syndrome] is to establish the genetic diagnosis [] to inform management decisions such as prophylactic mastectomies in women, avoidance of radiotherapy, cancer surveillance, and aid in reproductive planning.”

Two examples…New Jersey and Canada

We realize this can seem esoteric, so here are two practical cases underway as we write this note:

  1. There is a motion before a judge in Superior Court in New Jersey to have all asbestos claimants submit to a blood test where the genetic BAP1 mutation would be screened. BAP1 is a tumor suppressor gene. With certain mutations of the BAP1 gene, an individual may be more likely to contract mesothelioma (among other types of cancers) independent of any exposure (including asbestos). Lung cancer claims in asbestos litigation are even more critical because background rates of lung cancer (e.g., non-asbestos-induced) are far higher than mesothelioma rates. Insurance claims management would benefit greatly from a tool that separated background lung cancers from asbestos-induced lung cancers.
  2. Hundreds of previously-denied cancer claims made by former employees of a GE factory in Canada were recently re-opened by the Canadian Workplace Safety and Insurance Board. The claims were re-opened partly because doubt was cast on the efficacy of the epidemiological study originally used to deny the claims. Although the science wasn’t available at the time of this study (early 2000s), consider the imminently fairer process of linking cause and compensation to the actual “truth” of whether one’s cancer was caused by exposure to toxins on the job rather than the statistical vagaries of an “excess cancer rate” calculation from an epidemiological study.

Rating by broad class plans (age, gender, marital status) was good enough until the utility of credit scores was discovered. Auto pricing was then partially customized, but it won’t be long, we’d guess, before information gathered through telematics allows insurers who have invested in their future to cherry-pick risk pools and price auto insurance at the individual (or, nearly so) level.

So too, settling liability claims using the standard tool kit has been good enough (more or less) for decades. But what benefits might accrue to the first insurer that can describe to its clients the use of scientific tools that could extricate them from complex, time-consuming, and expensive multi-party litigation?

Autonomous and semi-autonomous cars currently represent a tiny fraction of the registered motor vehicles on America’s roadways. And yet, most can agree that it would be short-sighted for a management team not to have begun strategizing and scenario-planning for a transportation future that looks materially different than it does today.

Conclusions

We don’t think the early stages of a scientific awakening need to be expensive. Insurers with an emerging risk committee or a risk manager can task them with developing a report and, possibly, an action plan. Insurers need to get on board with the scientific revolution – or get run over!

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