Genetic screening and the insurance industry.

A great deal of the present concern regarding future use of genetic tests by insurers stems from a lack of knowledge of the basic tenets of private, voluntary insurance. For this reason, I would like to examine briefly some of the fundamental principles of insurance before directly addressing issues associated with genetic testing. Insurance is intended to provide financial protection against unexpected or untimely events. In particular, life and health insurance are not purchased in anticipation of imminent death or illness-although it's understood that death is inevitable and serious illness is fairly common. Rather, life insurance is obtained to protect dependents or business associates from the financial disadvantages that can occur in the event of unexpected death, and health insurance is meant to provide protection in the event of a significant financial loss associated with an unanticipated illness. How does private insurance work? Basically, policyholders pay a relatively small, affordable amount into a common "pool," and the benefits of that pool are distributed to the unfortunate few who die (life insurance), become disabled (disability insurance), or develop a serious illness (health insurance). In this way, the financial loss attendant on these events can be mitigated even though the events themselves cannot be prevented. Yet not all people are alike. The likelihood of occurrence and the magnitude of loss will vary. Some people will apply for large amounts of insurance and others for small amounts. Some will be young and others elderly. Occupations and avocations will modify the likelihood of unexpected death or illness, as will health-enhancing activities such as exercise, proper diet, and not smoking. And some applicants will already be in poor health or at known significant risk or developing poor health in the future. These different factors are evaluated by the insurance company through a process known as "risk selection and classification." The more common term for this process is "underwriting." By means of the process, the insurance company determines the appropriate contribution to the risk pool by an individual policyholder. The fundamental goal of the underwriting process is equity: policyholders with the same or similar expected risk of loss are charged the same. The higher the risk, the higher the premium. The lower the risk, the lower the premium. Note the distinction between equity and equality. With equity, premiums vary by risk; with equality, everyone-young/old, healthy/ill, and with/without associated factors that significantly increase the likelihood of experiencing an early claim-would pay the same price. During the underwriting process, risk classifications are created that recognize the many differences which exist among individuals in order to place applicants into groups with comparable expectations of longevity and health. Although the risk