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23 Oct 18 15:29

The right to forget cancer might seem a strange concept to many; who would or even could truly "forget" such a life changing event? It is however more than just a concept, it is indeed already a law in France, and last week, Belgium announced plans to replicate this law. The idea is that, subject to certain conditions, you can forget your history of cancer when applying for insurance, without any consequences on claims being paid or not. If you had cancer as an adult, you need not disclose a history of cancer from more than 10 years ago, and if you had it as a child, then the disclosure still required period is shortened to 5 years. Now the insurance professionals out there, and indeed many in the medical profession, will quickly recognise that despite major improvements in cancer survival over recent years, the additional risk presented by many cancers, from recurrence or from second primary cancers or other treatment linked complications, persist long after these periods. What the law is really saying is that the additional risk from such histories needs to be absorbed into the base price. 

The argument from the cancer groups, who are all pushing hard for the French law to be replicated internationally and very rapidly is that no one chose to get cancer, so why continue to penalise those who have been diagnosed as cured from their cancer? The same argument could of course be applied to most medical conditions, and the whole voluntary insurance system would quickly fail if we removed all risk selection on this basis. The other argument, which I heard at the Youth Cancer Europe organised event at the European Parliament last week (YCE event), is that within the EU, you can forget your criminal record within 1-10 years of prison release, so surely at least the equivalent rights should be granted to those who were affected with cancer. From a personal perspective, this is quite a compelling argument, but the insurance professional in me always comes back to how to cover the cost, without increasing the price for all, and thereby potentially reducing the accessibility of insurance for many?

In France, the law has various conditions which limit the anti-selection risk. It is applied to life insurance only, covering house and business loans up to €320,000 (although this cap may soon be removed), and life insurance is essentially obligatory on all loans in France so much of the choice of whether to buy insurance, and how much to buy, is therefore limited. In other countries, whether you choose to cover a loan with life cover is a more voluntary act, and so people will inevitably make purchase decisions on their own personal perceived cost versus value, thereby increasing the costs of waiving the consideration of residual risk from cancers. More worryingly however, is that the form of the wording being pushed by the cancer bodies does not have any of these restrictions, indeed it proposes to drive the right to forget for all financial services (ECCO Resolution on Survivorship : Financial Discrimination) which would have far more wide reaching consequences. The proposed exceptions to the definition of active treatment also open up some very uncertain aspects which could prove unsustainable. In this form, it would require both sizeable price increases for all life insurance covers, and likely a reduced appetite to support larger insurance exposures in countries where this restriction exists as the pricing would be too speculative. It would also not be possible to continue to offer voluntary critical illness (CI) covers, an insurance which proves hugely beneficial to many who are diagnosed with cancer. Approximately two thirds of all CI claims are due to cancer, despite these policies covering many other illness. This is partially due to age distributions, but mostly because we have so few tools which really predict cancer risk at policy outset, other than history of cancer and therefore recurrence risk.

So as an industry, how should we respond?
a. Should we ignore it? Clearly not, as doing so risks potentially catastrophic and wildly different versions of the law being introduced in different markets.
b. Should we fight it? Possibly, but insurers don't usually fare too well when challenging laws designed to protect the disadvantaged public, so risks the same outcome as a.
c. Should we engage, and help to build more sustainable solutions for those with a history of cancer? In my opinion, absolutely. 

Another argument I heard in Brussels is that no insurer has gone bust in France as a result of this law, so why not just do this in all markets? The law, however, has only been in effect for 2-3 years, so it is too early to really tell how many additional claims are being paid as a result of this arrangement. It is also not possible to know how many additional people with a history of cancer have purchased life insurance as a result. One main mitigating factor, however, which helps ensure the law works in France as far as we can so far tell, is that the insurances are being purchased by working people who are buying a new home or business, i.e. typically mortgage cover, and we know that on average such individuals are usually healthier, which likely provides sufficient cross subsidisation to cover the additional costs of the right to forget. If we look at other countries, we already see in many markets across Europe mortgage linked life insurance being offered with very similar disclosure requirements without any need for legislation, and insurers are able to do so sustainably as a result of this cross subsidisation.

I personally remain uncomfortable moving away from risk based pricing for one disease only, but maintaining this for other diseases which might carry very similar levels of additional risk. This discrepancy is likely better addressed through voluntary industry lead solutions rather than legally enforced ones which will always struggle with the different risk shape for each disease. Cancer is obviously hugely important to insurers and to their customers, as it remains the number one cause of claim for the vast majority of life products, so it is vital that we get the pricing for the risk right. But if we can manage the mitigating factors well, surely it would be better to steer this issue towards truly sustainable solutions which provide insurance coverage to as many people as possible, than to just ignore a clear societal concern?

Category: Other

Location: Brussels, Belgium

1 Comment

Alicia Montoya - 2 Nov 2018, 6:45 a.m.

Fascinating topic, John.

Hmmm, as a consumer I find the right to be forgotten very attractive, in its digital application as well as with regard to health. Especially in this day and age when I’m pretty resigned to the fact that, if I live long enough, I will probably have cancer at some point(s) in my life.

I agree with you that insurance has to get the pricing right so as to remain the needed financial cushion it is for society. As usual, the question is who carries the cost.

I would like to see more work done around the real causes of the high (and rising) incidence of cancer. And I personally think that companies heightening that risk (eg through emissions, chemicals) should carry more of the delta.

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