A past cancer diagnosis may be a relevant risk factor because of its impact on mortality and morbidity. Where this is the case, a RTBF may enable the cancer survivor to access financial services, such as insurance, under similar terms to other consumers, including other cancer survivors with no heightened risk. The impact of a past cancer diagnosis may, indeed, depend on various factors, such as the type of cancer, the treatment and the age of the individual. Insurers are constantly updating their risk assessments as cancer treatments and prognoses improve, and past cancer diagnoses are only reflected in pricing when they present increased risks. Individuals with a past cancer that has no impact on their mortality or morbidity risk will therefore pay similar premiums to other consumers.
Cancer survivors’ access to financial services is important. And insurers’ access to consumer data is also necessary. Depriving insurers of this access will increase the uncertainty around the likely losses in the pool of risks, potentially leading to insufficient reserves to pay claims. This forces insurers to increase premiums for everyone, including cancer survivors, to make sure that there is enough money to pay an uncertain level of claims. Higher premiums, combined with a potential decrease in benefits, could in turn mean that fewer people choose or can afford to take out cover.
RTBFs could, therefore, potentially reduce the availability and affordability of insurance cover for the majority, including those whose past cancer does not present an increased risk. A poorly conceived RTBF in terms of the diseases it covers and the timeframes it imposes could harm more than it helps.
To address the problems that a poorly designed RTBF could raise, it is of the utmost importance that insurers remain capable of accessing consumers’ cancer data, even if the cancer risk factor is not taken into account for pricing. Access to consumers’ data preserves information symmetry and allows insurers to determine the composition of their portfolios and the claims reserves required. It will still impact consumers. Cancer survivors who would have paid a higher premium under a risk-based underwriting system will pay a lower premium, whereas consumers with no past cancer and cancer survivors with a past cancer but no heightened risks will have to pay higher premiums.
Nonetheless, this alternative, which gives insurers access to cancer data, at least mitigates the detrimental consequences of an RTBF, ensuring that people still have access to insurance without damaging the core function of risk-based underwriting.