The Right to Forget Cancer
The right to forget cancer might sound like some utopian world where we can ignore a disease that impacts and destroys many lives. Unfortunately, we are some way off "curing cancer" - a goal that remains, for now at least, only a dream. Medical science has achieved wonders in improving the survival of many cancers and detecting others at an earlier stage. Still, it remains in the top two causes of death in major countries and regions globally. In insurance portfolios, it is invariably the number one cause of death and dominates the Critical Illness claims' statistics. This raises important issues for the insured and the insurer to consider:
- The insured: the concern around cancer may be a leading motivator for insurance cover. It is a massive benefit for those diagnosed with cancer and their families if the prognosis is poor.
- The insurer: if insurers cannot price the number one source of claims correctly, they may rapidly go out of business.
So, what is the Right to Forget Cancer?
Medicine has advanced enough to keep many cancer patients alive, and those survivors face many challenges in accessing insurance. In markets where mortgages and other loans require life insurance, a history of cancer can make borrowing more difficult and more expensive, preventing people from buying their own house.
Patient groups are pushing for a right to forget the history of cancer when applying for insurance, usually after a certain period; typically, ten years for adults and five years for paediatric cancers. This would apply to application form disclosures, and still risk relevant cancer histories from medical records or other routes.
Is that a problem? For many cancers, it is not a problem at all. Indeed survivors of many types of cancers would anyway by then be eligible for a policy at the same premium rate as those without any such history. For other cancers, however, there remains a significant additional risk of recurrence or other complications, including new primary cancer diagnoses resulting from their intensive treatments.
This approach could then spread to non-mortality products, which would not be sustainable. Critical Illness provides substantial benefits after a cancer diagnosis, but the product's sustainability is in doubt without the ability to understand the most important risk factor: cancer risk. The right to forget might harm future cancer patients who may no longer be able to purchase this form of protection.
Why is cancer different from other diseases?
From a risk assessment philosophy perspective, it is not, but there are two differences from other conditions:
- A different mortality shape: there is a substantial risk of death from cancer early in the policy when recurrence of a prior cancer is most acute. However, with most other diseases the risk of death is more constant or increases over the policy term. Medical studies are also expressed differently due to this impact, and insurers therefore reflect this different mortality risk for cancer by charging a higher premium initially, which usually drops to a normal level when the recurrence risk is very low.
- Contradictory information: patients can receive different conclusions from their doctor and their insurer, even from the same data. Doctors will tell their patients that they are in remission, usually when most patients are likely to stay disease-free permanently. An insurer would be concerned about recurrence, spreading the risk of even a few additional claims across all people with that subtype of cancer. Life insurance premiums are based on very small risks; for example, only 1 in 1,000 people dying in any year. As such, a residual cancer mortality expectation of even only 1% is significant and cannot be absorbed into the standard premiums without distorting buying behaviour.
Where is the legislation now? And is legislation necessary?
Slightly different forms of legislation enshrining the right to forget cancer have been introduced in four EU member states: France, Belgium, Luxembourg and the Netherlands. While there is no EU-wide legislation yet planned, efforts are being made across Europe to establish similar approaches.
It can be argued that such legislation is unnecessary. Giving beneficial insurance treatment to cancer over any other condition might in itself be considered discriminatory. If legislation were extended to other medical conditions (which is sometimes proposed), it would undermine insurers' ability to provide cover on the free market. Purchasing life insurance is, in most cases, an entirely voluntary act, so people only purchase if they see personal value in doing so. Plus, if you know you can buy insurance despite having severe disease, why would you buy it when healthy? This undermines all costing assumptions and would make life insurance hugely expensive, if available at all.
In the UK every year, well over £1 billion is paid out to customers under Critical Illness plans alone, with more than half to cancer patients. In Europe, more than €600 billion is paid out in life insurance annually. These financial benefits may not fully compensate for a diagnosis of cancer or the loss of a loved one, but they will certainly help to reduce the financial stresses often encountered during such life events. Reductions in the ability of insurers to match the potential risk of customers to the price charged significantly undermine the sustainability of such protection products.
What can the industry do to help manage the issue beneficially for both the insurer and insured, including those with a history of cancer?
- Use the latest evidence: Insurers must continue to keep up with medical science to ensure terms are as beneficial as possible. For example, underwriting of stage 1 breast cancer in the 1990s used to be postponed for three years and then a heavy rating applied for up to ten years after the cancer treatment. Nowadays, terms are offered immediately after the diagnosis and could be eligible for standard premium rates after just two years.
- Avoid binary processes: The push towards simpler products and processes has led to questions like "have you ever had cancer?" Anyone ticking "yes" is sometimes declined without further consideration. Rather than risking declining people unfairly by asking if they have "ever" had cancer, questions should be duration-limited and/or backed by a fuller process.
- Explain decisions to avoid confusion: Cancer survivors are told they are cured, yet many are asked to pay an additional premium for life insurance coverage. This may lead them to think that they are at higher risk than they had been led to believe. At a minimum, reassure the customer that the underwriter is not aware of additional medical issues or concerns. While many insurers already do a good job explaining their decisions, there is clearly room for improvement.
- Engage with lobby groups: Risk selection is necessary to keep insurance affordable, but underwriting is often perceived as unfair by those negatively impacted. Talking with patient groups and regulators is essential to explain the process and show the catastrophic impact of ever further restrictions on risk selection. They are likely aware of access issues, but not the benefits of insurance products.
Insurers provide protection for their customers, using the best available information on individual risk and the latest evidence on the consequences of each disease. The nature of risk selection means that some people must pay more than others, as the risks they present are often diverse. Failing to match risk to prices will result in unaffordable insurance, as insurers would have to increase premium prices significantly. This would undermine the value of the products for the circumstances of many. Of course, insurers understand the perceptions when they charge an additional premium due to the history of disease, but those individuals are often the most in need of protection because they are at higher risk of an insured event happening; underwriting needs to reflect that risk in a fair manner.
Cancer is a terrible disease, and those that have gone through it still face many problems even after the disease has been put into remission. Cancer histories, however, represent a significant yet diverse source of residual risk for many insured events. The competitive nature of insurance drives down prices, including for those with a history of cancer. Low prices increase accessibility, but it can only remain affordable if insurers match price to risk. Unfortunately, that means charging an appropriate price for the risk that the cancer survivor represents is necessary, as is the case with any other medical condition. Insurers can and should do more to provide alternative solutions, but removing risk selection for cancer or other chronic diseases to give equal access is not the solution. The Right to Forget would threaten the availability of many of the protection products that do so much good for impacted individuals, the economy, and society as a whole.