Health Risks

Rare diseases– increasing in frequency

Diabetes, hypertension or asthma: diagnoses every underwriter is very familiar with. If they appear in applications for life or disability insurance, it is possible to adequately and immediately judge the risks with the aid of the Munich Re risk assessment manual (MIRA) in the vast majority of cases. Yet what should be done if the health declaration includes a condition of which even the company’s own medical officer has never heard of?


The frequency of such cases has risen noticeably in recent years, as advances in medicine have made diagnoses more precise and thus identifying rare diseases has become easier. At present, for instance, approximately 6,000 rare diseases are known. By 2020, this figure is likely to reach 8,000. A medical condition is statistically defined as rare, for example in Europe, if the disease is found only once in 2,000 people. In the United States of America, any disease or condition that affects less than 200,000 people or  to make it comparable 1 in 1,500 people, defines a rare disease. The groups of patients affected by each condition are therefore very small compared to a common disease such as diabetes. An extreme example is ribose-5-phosphate isomerase deficiency, a condition that to date has only been diagnosed in one single patient.

By 2020 up to 10% of the population will be affected

For the purposes of medical underwriting in the insurance industry, these extremely low case numbers pose an enormous challenge: medical studies and statistically evaluable data concerning the progression of the respective diseases are only very sparse or virtually non-existent. As a whole, however, rare disease are a growing, global phenomenon. At present, for instance, approximately four million people in Germany have one of the 6,000 known, rare diseases. This is a continuing trend: the number of diagnoses will increase further as the number of known diseases grows. “The frequency of occurrence of these medical conditions amongst the population in Europe is currently about 7%. This accounts for almost 30 million people”, says Alban Senn, Medical Officer at Munich Re. “We anticipate that by 2020, about 10% of the population will be affected.”  This number equals around 400 millions in Asia or 52 million in North America. This trend alone is indicative of the increasing relevance of rare diseases to the insurance industry. What’s more, many of those affected have a much higher life expectancy than was the case in the past thanks to enhanced diagnostic and therapeutic options. Cystic fibrosis as an example: Two decades ago, it was highly unlikely that a child with this metabolic disorder would reach adulthood. Due to optimised medical care, however, patients born with cystic fibrosis today have a very good chance of reaching the age of 50. “Those affected and their families have contributed significantly to this positive development”, says Karsten Filzmaier, Head of the Medical Centre of Competence at Munich Re. “They take advantage of modern communication technology in order to establish global online networks where they can share their experiences, make their voices heard and trigger medical research.” Cystic fibrosis patients have achieved tremendous success in this way. This relatively frequent, rare disease is known to a wider public today – and research regarding new drugs and treatments is being conducted by numerous scientist around the globe, who likewise are continuously improving their networks.

Considerable reputational risks, but also opportunities

What impact does this have on life insurance? “Given these developments, our underwriters are receiving more and more applications from people with rare diseases. And anyone who applies for a life insurance policy has the right to a fair and individual risk check of course”, Filzmaier stresses, adding: “The challenge here is to estimate the individual risks based on statistical evidence thus being in line with regulations despite the fact that often very little data is available.” Otherwise, there is a threat of both legal disputes and public criticism from self-help groups, which can seriously harm the reputation of insurers. “Furthermore, it is wholly inconceivable from a social and ethical, as well as corporate perspective, that an applicant be rejected merely because the company’s appointed medical officer is not familiar with the rare disease. We are obliged”, Filzmaier emphasises, “to assess the individual risk as accurately as possible and offer sound reasons for the decisions we make.” This requires time and special expertise, but also opens up the insurance sector to groups of clients who previously could not be insured.

Lynch syndrome as a practical example

In the spring of 2014, a 35-year-old Australian woman submitted an application for life insurance to a local, direct insurer. In the application form she declared to have Lynch syndrome, a rare condition caused mutations by one of four different genes which is associated with a greatly increased risk of cancer. People with Lynch syndrome very often develop colon cancer, for instance. In female patients the uterus and ovaries are also often affected by cancer. The applicant was actually really diagnosed with colon cancer in 2007; which was removed by surgery completely. She didn´t have any symptoms ever since, and regular follow-up examinations were unremarkable to date. To clarify the applicant’s insurability, the primary insurer contacted the underwriters at Munich Re in Australia. They forwarded the case to the Medical Centre of Competence in Munich, where specialists assess the risks related to rare and complex medical conditions on a daily basis. The team has the necessary biomathematical, medical and actuarial expertise, and has developed methods with which the risks can be configured even when very little data is available. As to solving this particular challenge, Senn explains: “To begin with, we reviewed and evaluated all the available medical information on Lynch syndrome. Self-help groups are often a valuable source of preliminary information, since they are close followers of research activities and provide online information on the latest studies.” On the topic of Lynch syndrome alone, there are more than 40 registered groups worldwide.

Markov model as a mathematical bypass

The results of Munich Re’s research: “Not a single study anywhere in the world regarding the life expectancy of patients with Lynch syndrome could be found fitting to the situation of the applicant. So we were lacking the essential data that would enable us to determine the mortality risk which is vital to a life insurance policy,” Senn reports. “However, we did find studies that offered reliable information on the risk probability of a woman with Lynch syndrome contracting certain types of cancer during her lifetime. We then evaluated recent studies and registry data, which provided information on mortality rates such as from diagnosed cases of colon cancer.  Those rates had to be adjusted to the special situation that the applicant was under regular surveillance. Using methods known as Markov models, we were then able to combine these results in such a way that the probability of death could be roughly calculated. So we take a mathematical detour and use our models to create, metaphorically speaking, a bypass in the decision-making process.” Despite her rare disease, the 35-year-old Australian, according to the final rating recommendation from Munich Re, was insurable with a moderate loading to her risk premium. This was good news not only to the direct insurer in Australia, but also to the individual concerned. The insurer as a result could add a risk into the books relying on the fact that it was underwritten based on statistically validated aspects of insurance medicine. This considerably minimises the reputational risks when it comes to managing rare and complex medical conditions.

The Gate – global network of expertise

Individual cases of this nature are costly both in terms of time and resources, unfortunately. To enable instant global access to knowledge that has previously been gathered and to systematically improve efficiency when it comes to rare medical conditions and underwriting, Munich Re has created an internal knowledge platform. “The Gate” (Get Access to Medical Expertise), as the platform is called, anonymously records all the individual cases that have been processed: including the individual medical history, relevant examination results, the individual decision, and all the corresponding data and models used for the purpose of calculation. “Hence we are using a similar strategy to the self-help groups and medical centres for rare diseases”, says Filzmaier, “we are also creating our own global network, pooling our experience in the assessment of rare medical conditions and thus ensuring globally consistent, legally compliant decisions that take the latest scientific standards into account.” “The Gate´s” advantage: If, anywhere in the world, another applicant with Lynch syndrome is identified in future, “The Gate” will provide the local medical consultants at Munich Re with immediate access to the know-how and relevant calculation models developed for assessing this risk. If new data becomes available from recent studies into Lynch syndrome, the database need only be updated. In such a way, “The Gate” considerably shortens the processing times whilst ensuring maximum legal certainty, and encourages the accumulation of knowledge within the global network of expertise at Munich Re at the same time.