Anti-selection & Genetic Testing in Insurance: An Interdisciplinary Perspective

Journal of Law, Medicine, and Ethics, Forthcoming

23 Pages Posted: 23 Jun 2021

See all articles by Dexter Golinghorst

Dexter Golinghorst

University of Iowa

Aisling De Paor

Dublin City University - School of Law and Government

Yann Joly

McGill University - Centre for Genomics and Policy

Angus S. Macdonald

Heriot-Watt University - Department of Actuarial Mathematics and Statistics

Margaret Otlowski

University of Tasmania - Faculty of Law

Richard Peter

University of Iowa

Anya Prince

University of Iowa College of Law

Date Written: June 9, 2021

Abstract

Anti-selection occurs when information asymmetry exists between an insurer and an applicant. When an applicant knows that they are at high risk of loss, but the insurer does not, the applicant may try to exploit this knowledge differential to secure insurance at a lower premium that does not match risk. Predictive genetic testing could lead to anti-selection if individuals, but not insurers, learn of genetic risk. Yet, to address fear of discrimination, several countries have, or are considering, limitations on insurers’ use of predictive genetic test results.

In this paper, we discuss anti-selection theory and modeling and illustrate how regulation regarding insurer use of predictive genetic test results could impact anti-selection in insurance markets. The extent of this impact turns on how much individuals alter their insurance purchasing behavior following predictive genetic testing. At first blush it may seem likely that those who learn that they are at high-risk of a genetic condition would attempt to gain greater coverage. However, we highlight several domains of on-the-ground realities that challenge this baseline assumption. These real-world considerations should be incorporated into modeling of anti-selection to truly assess the potential impacts of regulation limiting insurer use of predictive genetic testing.

Note: Funding Statement: Research reported in this publication was supported by the National Human Genome Research Institute of the National Institutes of Health under Award Number R00HG008819. The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health.

Declaration of Interests: No conflicts of interests to declare.

Keywords: Anti-Selection, Insurance, Genetic Testing, ELSI

JEL Classification: K32, I18, G22

Suggested Citation

Golinghorst, Dexter and De Paor, Aisling and Joly, Yann and Macdonald, Angus S. and Otlowski, Margaret and Peter, Richard and Prince, Anya, Anti-selection & Genetic Testing in Insurance: An Interdisciplinary Perspective (June 9, 2021). Journal of Law, Medicine, and Ethics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3863417 or http://dx.doi.org/10.2139/ssrn.3863417

Dexter Golinghorst

University of Iowa ( email )

341 Schaeffer Hall
Iowa City, IA 52242-1097
United States

Aisling De Paor

Dublin City University - School of Law and Government ( email )

Ireland

Yann Joly

McGill University - Centre for Genomics and Policy ( email )

740 Dr. Penfield Avenue, Suite 5200
Montreal, Quebec H3A 0G1
Canada

Angus S. Macdonald

Heriot-Watt University - Department of Actuarial Mathematics and Statistics ( email )

Edinburgh, Scotland EH14 4AS
United Kingdom
0131 451 3209 (Phone)

Margaret Otlowski

University of Tasmania - Faculty of Law ( email )

Private Bag 89
Hobart
Tasmania, 7001
Australia

Richard Peter

University of Iowa ( email )

341 Schaeffer Hall
Iowa City, IA 52242-1097
United States

Anya Prince (Contact Author)

University of Iowa College of Law ( email )

Melrose and Byington
Iowa City, IA 52242
United States

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