Insurance case study: Cancer (part 1), the underwriter’s view

Do you sometimes wonder why underwriters make certain decisions? Need insight into the different claims processes or help explaining things to clients? This mini-series from Munich Re will hopefully provide some of the answers.

In future articles Hélène Michaud, assistant vice–president, marketing, Munich Reinsurance Company will discuss dementia, cognitive disorders, long term care and critical illness definitions. In this part of our series though, Michaud discusses cancer, family histories, their application and their relevance in the underwriting process. Part two of our cancer case study examines the critical illness claims process.

Article highlights:

• The difference between normal and inherited (or familial) cancer risks. • The underwriter’s view of cancer.

Cancer, family histories and critical illness insurance

While all cancer is genetic, this doesn’t mean all cancer is inherited. For cancer to develop, there must be damage to the genetic material of the cell, which can be inherited but could also be caused by environmental factors. In general, the amount of damage required to produce cancer takes place in several steps, which may occur over many years. Those with an inherited susceptibility to cancer are “partway there,” which explains why familial cancer tends to develop in people at a younger age than sporadic cancer does, but also why inherited cancer risk is with a person for life.

An increasing number of genetic mutations are being discovered that may lead to preventive treatment and increased surveillance, which might ultimately allow doctors to prevent certain cancers or detect them at a curable stage. Such treatment, however, may not completely eradicate the risk posed by these cancer-causing genes.

Statistically speaking cancer is still the leading cause of premature death.

In 2008 there were an estimated 166,400 new cases of cancer in Canada. In the same year it’s estimated that 73,800 people died from cancer. Four types of cancer — prostate, breast, lung and colorectal — account for the majority of new cases. Lung cancer is the leading cause of death in both men and women, followed by colorectal cancer for men and breast cancer for women.

Currently, one in 2.5 women and one in 2.2 men will develop cancer in their lifetime. In addition, one in 4.2 women and one in 3.4 men will die of cancer.

The underwriter’s task is to pay close attention to any family history of cancer, especially if this history includes more than one family member, or the occurrence of cancer at a young age (under 60). In addition, some applicants may have personal evidence of an inherited predisposition to cancer even if they have no personal history of cancer. For example, an individual who has a history of dysplastic nevi (atypical moles) and a family history of melanoma is at very high risk to develop melanoma.

Melanoma

Melanoma may cluster in families because of shared risk factors (fair skin and extensive sun exposure, for example) or because they share specific genetic factors. Multiple family members with a history of melanoma or individual family members with a recurring case are familial predisposition markers for underwriters. Individuals with certain skin cancers have a lifetime risk of melanoma that is close to 100%.

Breast cancer

Women carrying the BRCA1 and BRCA2 genes have a high risk of developing breast and ovarian cancer at some point in their lives. Such families, those with certain, identifiable genes, are recognized when the occurrence of breast or ovarian cancer happens at an early age and when the occurrence of breast or ovarian cancer happens across multiple generations. While this type of family history gets our attention, it’s important to remember that much less dramatic family histories also carry increased risk.

Having a single first-degree relative (mother or sister) with breast cancer doubles a client’s risk of breast cancer. The father’s side of the family is often neglected, but men transmit breast cancer genes exactly as women do. A history of breast cancer in the paternal grandmother and aunt, for example, could be highly significant. That said, an insurance company’s routine questions about family history would rarely pick this up as the critical illness application requests family histories for mothers, fathers, and siblings only. The additional information regarding family history may also be developed using the attending physician’s statement.

Colon and prostate cancer

Colon cancer is similar to breast cancer; a single first-degree relative (parent or sibling) with colon cancer doubles the colon cancer risk. With prostate cancer, it’s interesting to note that having a father with a history of the disease more than doubles a man’s risk, yet this risk more than triples if a brother is also diagnosed with the disease. As in other familial cancers, the younger the relative was at diagnosis, the higher the risk for other family members.

Further understanding of genetics will undoubtedly lead to preventive strategies and better treatments for those who develop cancer. Underwriting philosophies will no doubt evolve in response to medical research and the critical illness claims experience.

The underwriter’s view and the practices used for assessing risk factors in critical illness underwriting

Critical illness applications should include a complete family history. Key questions an underwriter will consider are:

• What specific types of cancer are included in the family history, if any? • What is the total number of occurrences in the family? • What is the age of onset among afflicted family members? (Onset at younger ages increases cause for concern.) • What is the applicant’s personal history? • Is the applicant obtaining regular and appropriate screening?

All known family history will be taken into account. Although the application asks about parents and siblings, sometimes the application or the attending physician statement gives additional family history from grandparents, aunts, uncles and children.

The chart below was developed by Munich Re to help with the preliminary assessment of family histories. The chart will hopefully help to promote a better understanding of how underwriting decisions are made, helping you to set clearer expectations with potential clients.

Family History of Cancer

Relative’s age at diagnosis	# of first-degree relatives diagnosed with:
	Breast/Ovarian Cancer				Colorectal Cancer		Prostate Cancer
	1		2	> 2	1 – 2	> 2	1- 2	> 2
< 50	Male Standard	Female Rate	Rate	Decline	Rate	Decline	Rate	Decline
50 – 59	Male Standard	Female Rate	Rate	Decline	Rate	Decline	Rate	Decline
60 +	Standard		Standard	IC *	Standard	IC *	Standard	IC *
* IC – Individual consideration will be given based on number of affected family members (immediate or extended) and age at diagnosis.

Case studies:

The following case studies illustrate the factors underwriters take into consideration when reviewing applicants with family history risk factors.

Family history of colon cancer

• The applicant is a male, age 45, applying for $100,000. “John” had a routine colonoscopy one year ago with normal results. His brother had colon cancer at age 48.

• The family history rating is +50 for colon cancer but a credit of 25 can be applied with a negative colonoscopy, for a final assessment of +25. Note: A negative colonoscopy means no abnormality, including no benign polyps.

Family history of breast cancer

• The applicant is a female, age 40, applying for $150,000. Maria’s mother had breast cancer at age 46. The applicant sees her doctor for minor medical conditions (cold and flu vaccines), but there is no medical history or evidence of Maria getting a regular checkup with screening mammograms.

• Maria’s family history rating is +50 for breast cancer. As she is not having screening mammograms, a breast cancer exclusion should also be applied. The exclusion could be removed with a normal mammogram, but the rating would remain in place.

Family history of prostate cancer

• The applicant is a male, age 42, applying for $500,000. His father had prostate cancer at age 52. The applicant undergoes annual testing. His 2007 PSA (prostate-specific antigen) reading was 2 (lab “normal” range is 1-4). In December 2008, his PSA reading was 3.

• A family history with one occurrence scores +50 but a credit of 25 can be applied for onset in a family member over age 50, for a final assessment of +25. Unfortunately, the applicant’s PSA result increased during the past year. Although the PSA is within normal lab ranges, his age-adjusted PSA should be less than 2.5 — a reading of 3 is abnormal at age 42. The application would likely be postponed for a full investigation.

Next week: Part 2, the claims process.

The authors: Hélène Michaud, assistant vice–president, marketing, Munich Reinsurance Company; Joan Tolan vice-president underwriting Canada and underwriting best practices, North America, Munich Reinsurance Company. Edited by Kate McCaffery, Advisor.ca.

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(01/22/09)