01 How does growing genetically modified plants affect crop insurance?

In 2003, the global crop area of genetically modified plants increased to 67.6m hectares, wih the USA as the biggest producer by far accounting for 42.8m hectares, followed by Argentina (13.9m hectares) and Canada (4.4m hectares).

It is anticipated that the global crop area of GM plants will continue to grow, particularly in countries like China, South Africa and Brazil. Genetic modifications so far focus on herbicide tolerance and insect resistance. But since the main perils in crop insurance are natural hazards like drought, hail, frost, and windstorm, the effects of genetic modifications on crop insurance at this point are minor.

In the USA, GM plants are insured using the same terms and conditions as conventional plants, i.e. no distinction is made. So far, there have been no indications of significant differences in exposure. The cultivation of genetically modified plants in Europe has become more difficult owing to restrictive regulations and intensive debate on the risks involved.

Occasional cultivation problems with GM soybeans are reported to have caused crop loss due to susceptibility to heat and dry weather. There is also the danger of relying on production advantages so that genetically modified crops are grown in local conditions for which they lack adaptability. This, too, will result in reduced yield. We also need to be aware that the practice of cultivating large areas could lead to accumulation losses due to breakdowns in resistance.

Munich Re and the crop insurers are closely monitoring these loss potentials. Above all, substance modification and new gene properties like the resistance to abiotic stress (drought, frost, etc.) are developments to watch. It is vital to constantly evaluate the opportunities and risks and to respond by adapting insurance products and policy conditions.

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02 When we have genetic therapies for Alzheimer's disease, what effects will this have on health insurance?

There are few areas of society and science that have undergone such an explosive expansion as medicine in the past decades. This trend is forecast to increase even further due to the knowledge gained from genome research.

With genetic diagnostics, it will be possible to detect many diseases years (or decades) before they become symptomatic. This gives rise to entirely new diagnostic and therapeutic possibilities. How are they to be financed? Is the old concept of medically meaningful and appropriate treatment still valid? And if we revise it, how will this affect the statistics for health insurance claims?

There is also another aspect that is critical: in the medium term, we expect that genetic analysis will help us to better understand the causes and development of chronic diseases that are considered incurable today. This knowledge could provide a critical impetus for the development of new medicines that could perhaps slow down the chronic disease process.

An advance of this type might be conceivable in Alzheimer's disease for example, which affects almost one in two people over the age of 85. If we now consider that the age pyramid has already been shifting for decades and add genome research with its broad spectrum of new therapeutic possibilities plus its potential insights into the human ageing process, one could imagine a markedly increased life expectancy.

It is clear, therefore, that a breakthrough in Alzheimer's therapy alone could have enormous consequences for long term care insurance. And that is only one example of the many fascinating possibilities of genetic technology and of the resulting challenges facing health and long term care insurers.

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03 What has engineering insurance to do with genetics?

Engineering insurance today offers coverage for all possible equipment and technical plant: from excavators and cranes through airports to modern mega-projects such as giant dams, large-scale power stations or gigantic tunnels.

At first sight, genetic technology seems to have no role in this traditional line of business. However, a second look shows that the knowledge in genetic technology has already been applied successfully in some fields of engineering, such as in process engineering.

Genetic technology has begun to exert considerable influence on engineering disciplines. An example of this is the use of specially configured micro-organisms in sewage treatment plants. Genetic technology processes are also used today in the industrial production of medicines (e.g. insulin) in bioreactors.

Researchers are currently working on a genetic technology method to remove sulphur from coal with micro-organisms before burning. Apart from the enormous range of other technological applications, great advances are also expected in artificial intelligence research, and one day it may be possible to have a biochip as an interface to modern computers.

It can be seen that genetic technology will revolutionise not only our view of life and our living conditions but also our industries and production processes. This automatically alters the technical risks. Questions about the sensitivity of new processes and thus of operations safety need to be analysed and answered by experts in engineering insurance.

Munich Re engineers are working closely with their clients in this respect. Progressive exchange of information and constant adjustments of risk concepts should work to ensure adequate protection against unpleasant surprises.

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04 Will the average life expectancy increase to 90 years? And what would this mean for the private insurance industry?

Since the beginning of the last century the life expectancy of people in industrialised countries has steadily increased. This gratifying process is mainly due to medical advances and the improvement of our standard of living, not to any change in our gene pool (no genetic selection process can operate within a hundred years).

In the future, however, our genes will play a significant role in extending individual lifespans: Insight into the ageing process as a result of genome research, more targeted development of medicines with the aid of molecular medicine and (at least for some diseases) a breakthrough in gene therapy are only some of the conceivable advances that would have a long-lasting impact on demographic changes.

Some experts believe that we could live to an average of 90-95 years by the middle of the 21st century. In this way, the silhouette of the tree of life of our society will slowly change from that of a pine tree to that of a cylinder. For the individual, this change in the population structure is positive since more and more people will survive to an old age.

On the other hand, experts in social policy speak of this phenomenon as a rather unhealthy population structure and refer to the overloading of social security systems. It is foreseeable that the demographic change will lead to more personal responsibility for care, pension scheme funding and health insurance costs. Insurers providing personal coverage will certainly have to include an acceleration of demographic change in their calculations.

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