Genetic Testing And The Economics of Life Insurance

The purpose of this project is to estimate the likely effects of testing for BRCA1 and BRCA2 mutations on the cost and price of life insurance contracts, under conditions where insurance companies do not have access to women's genetic test results. Contemporary debates about this issue pit women's legitimate interests in privacy against insurers' legitimate interests in financial solvency. Very little empirical work is available to move these debates beyond rhetoric and anecdote, and yet they are the centerpiece of over a dozen recent legislative bills addressing genetic privacy and discrimination. The theoretical basis for concerns about adverse selection is sound. The overall goal of this project is to determine if those theoretical problems are likely to occur in reality if BRCA 1 and 2 test information is available to women who desire it, but remains out of the reach of life insurers. The specific aims of this project are: (a) To develop a computer-based actuarial model reflecting the impact of BRCA1/2 testing on the cost of life insurance contracts. (b) To develop approximations of these outcomes based on plausible estimates for individual behavior. c) To refine those estimates based on observations of insurance purchasing decisions within a cohort of women tested for BRCA1/2 and the expressed intentions of a more broadly representative sample of US women. The results from this study will speak specifically to the actuarial implications of testing for heritable breast and ovarian cancer, but also more generally to other cancers and other genetic conditions for which predictive tests are developed.