Dr. Achim Regenauer

The genetic revolution - A challenge for insurers

Researchers have meanwhile almost completely decoded human genetics. What awaits us from the gene laboratories now? What developments does the future of genetic technology hold in store? Chief Medical Director Dr. Achim Regenauer explains what effects the genetic revolution may have on insurance.

Sir Isaac Newton once said that he felt like a child seeking shells on the shore of the great ocean of truth, and in view of the vast advances that are taking place in biotechnology and genetic technology, many people today share the sentiments expressed by the great physicist 300 years ago.

We are being overwhelmed by a flood of developments resulting from the decoding of human genes. Many items of news from the gene laboratories are fascinating, some frightening. Nobody knows what direction research will take. One thing is certain, though: the insurance industry will be one of the branches of industry directly affected.

Biotechnology as a driving force

There are a number of facts that support this thesis. First there is the booming area of biotechnology and genetic technology, whose potential has to be assessed and insured. Only two decades old, it is already causing the imagination of analysts and investors to take flight. "In 30 years", prophesies James Strand of International Venture Partners, "genomics and biotechnology will be the driving forces of our economy". For insurers, this gives rise to a whole new, highly interesting group of clients.

On the other hand, there are the potential ecological risks connected with "green" genetic technology (the growing of genetically modified plants). Let us assume that the fears of the harshest critics of genetic technology are realised and resistant "superweeds" evolve - who would be liable for the damage?

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Innovative boost for treatments

Finally, there are the numerous facets of "red" genetic technology, whose advances in medicine and pharmaceuticals will fundamentally alter our lives. Here are a few examples.

Just in time for the 50th anniversary of James Watson and Francis Crick's discovery of the double helix structure of the genetic code, the Human Genome Project announced in April 2003 that the code had been cracked. Although the press celebrated the genetic code's complete deciphering, research in the laboratories continued unabated. There were still hundreds of thousands of minor inconsistencies and gaps in the genome.

There are a mere 341 gaps remaining in the version released by the Human Genome Project in October 2004, the error ratio amounting to only 0.001 % (which corresponds to one typing error in a book of 100 pages). The human genotype is made up of a surprisingly small number of approximately 20,000 genes. In its recent version of the code, the Human Genome Project has attained a quality level sufficient to answer virtually any question and will thus be valid for many years to come. Hence, the original goals with regard to quality, cost and time-frame have been surpassed.

Every person's genome differs from that of other human beings - thus every person's predisposition to disease and reaction to medicine is unique too. We will now learn about the origins of many medical disorders and will often be able to detect diseases at an early stage. Methods of treatment, too, will be given an incredible innovative boost: there will be a whole array of fascinating new options, ranging from pharmacogenetics (offering the prospect of individual drugs with markedly reduced side effects) to novel types of medication (e.g. against Alzheimer's disease) and genetic therapy.

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And the Human Genome Project will also provide us with insights into the ageing process. We expect to gain important impulses from this research for extending the human lifespan and improving our quality of life.

The resultant challenges for life and health insurers will be significant. Without doubt, the improved possibilities of diagnosis will result in a drastic increase in expenditure for prevention and prophylaxis. A person who finds out that he is definitely going to suffer from diabetes at some later date will naturally attempt at least to postpone the onset of the disease. Pharmacogenetics will offer new, individually tailored medication for just this purpose. However, diagnosis and therapy are costly - in many cases extremely so.

Can genetic technology reduce costs?

On the other hand, the lifespan and quality of life of many people will improve, thanks to "red" genetic technology - a cost-reducing factor? The statistical mortality and morbidity rates will have to be reviewed at ever-shorter intervals, with consequences for life insurance (falling risk premiums), annuity insurance (premium adjustments, increasing need for reserve strengthening) and health insurance (greater range of possible treatments).

What products will we use to take account of this dynamic development? What premiums will be appropriate? What methods of underwriting will we implement in order to consider both the shrinking margins and breathtaking medical advances?

These are just some of the many questions we are proactively discussing with experts and clients. Our aim is to give our cients the knowledge today which they need for their business tomorrow.

This is certainly an ambitious objective, and naturally we do not know all the answers either. But we focus attention on the crucial issues. And that, it seems to us, is an important step on the shore of the "great ocean of truth".

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