I was dozing off in front of the TV recently when I thought
I must have been dreaming about 1984(1). But then I
realised it was real.
Most of us have watched CSI(2) or other police dramas,
and we ‘know’ at least a couple of things about DNA:
1 DNA is quite unique
2 Identical twins have identical DNA (basically they come
from the same zygote that was split)
I was thus very intrigued by this advert that showed a pair
of twins, who received different ‘health’ advice based on their DNA. Of course
they could be fraternal, but then why use twins? In most people’s mind, when
they think twins, they think identical.
So how would it be possible to have different advice to 2
people based on their DNA when they share the same DNA?
It was a ridiculous ad, from my point of view.
I was fully awake by the time I realised that the
organisation getting people to gleefully share their DNA was an insurance
company. This wasn’t dystopian 1984(3), this was a brave new
world(4); we aren’t forced to do things that are probably bad for us, we do
them more than willingly.
I am very concerned about data privacy, and allowing someone
to get access to your DNA is a huge breach of your privacy. Someone was
arrested recently(5)
for refusing to divulge passwords to his mobile devices argued that “With a
digital strip-search, it's not just your possessions that are searched, it's
your personal and professional life”. I would say that “a strip-search of your
DNA it’s not your present that is searched, but your past, that of your blood
relatives, and your
potential future, one you may not even be aware of(6)”
Even today, in order to get the coverage on many insurance
policies, you are required to fill up a form truthfully, and are reminded that
your coverage would be invalidated if you were found to have been economical
with the truth. Also you are required to report any changes to your answers.
For example, for health coverage, the medical history of your family is usually
part of the questionnaire. It makes sense; some illnesses are hereditary, and
in order to properly evaluate your risks, such knowledge is invaluable. It also
usually results in an increase in premiums paid.
Now what happens if an insurance company takes a peek at
your DNA, and increases your premium based on some markers that you weren’t
even aware of?
Or worse...
What happens if the insurance company denies your claim because
while you thought you have no relatives who had cancer, your DNA clearly shows
indicators of hereditary cancer (and you should have known of relatives who had
it)?
That’s something I would try to resist as much as I can. Out
of curiosity, I decided to take a deeper look at the product at their website (7). The insurance company has
outsourced all the non-insurance bits to a third party, Prenetics(8); basically while the data is
being collected by the “reputable” insurance company, the DNA data is not held
by them, nor is the advice provided by them. The third party guarantees(9) that the DNA data will
not be made available even to the organisation that provided the test to the
individual (here the insurance company). Phew...
However they do reserve the right to send you marketing
information, campaigns, third party ads based on your cookies, perform
R&D...
I personally think that this would be something that
Pharmaceutical companies would find very useful. If I were them, I’d get
Prenetics to target people with specific DNA profiles, for different drugs to
test their efficacy; or better still make the ads appear while you are surfing.
Then based on the purchase where I collect personally identifying data, I could
easily track the effectiveness of my drugs, at very low cost and you would know
nothing about it; a true blind test.
Merger and Acquisitions are also a thorny subject. I am in
no way suggesting that Prenetics is planning to break its own rules as set out
in its privacy statement. However these rules do not necessarily apply to
anyone who would choose to acquire Prenetics.
Prenetics is a Hong Kong based company. In a recent case
when Facebook acquired whatsapp, the FTC wrote to both companies a strongly
worded note(10) that stated: “We want to make clear that, regardless of the
acquisition, WhatsApp must continue to honor these promises to consumers.
Further, if the acquisition is completed and WhatsApp fails to honor these
promises, both companies could be in violation of Section 5 of the Federal
Trade Commission (FTC) Act and, potentially, the FTC’s order against Facebook”.
There is no guarantee that the Hong Kong Authorities would take a similar
stand; after all Hong Kong is known to be one of the freest markets in the
world.
Imagine, being able to understand what strengths someone’s
DNA shows, this pool of data would be manna for insurance companies, being able
to select lower risk individuals. Most insurance up to now has been based on
the idea of pooling risks. Being able to segment the pool into smaller, finer
pools of similar risk would allow insurance companies to, at the same time,
reduce premiums, reduce risk, and increase profits. Who wouldn’t want that?
However, think of the people who, through no fault of their
own, are in the pools that carry high risks; either their premiums would shoot
up, or they would become uninsurable. And out goes the ‘solidarity principle’.
And to me that’s one of the fundamental questions that
insurtech asks: are we ready to have less solidarity, be more selfish? Big Data
certainly allows more precise evaluation of risks, hence it is relatively easy
to create segments of lower or higher risk, and price them accordingly. Is that
something we, as consumers, want? May be for behaviour driven risk such as
driving, but may be not for the lottery of genetics such as health. Or “do you feel lucky?”(11)
What is even more pertinent, how much say will we have in
this?
Incentive wise, people who think they are lower risk will be
attracted to lower premium pools, forcing the rest to be charged higher premiums.
And organisations will have the incentive to devise ways of identifying the
lower risk individuals since they can offer them lower premiums and make more profits
at the same time.
The beauty of things is that, pushed to its extreme, as more
detailed accurate data is collected, enabling the size of the segments to
drastically fall, and offers become more personalised, at the limit, your hospitalisation
insurance premium should be slightly higher than the actual cost of your hospitalisation
over time, after all “data science”/”Big Data”... are not precogs(12).
If the costs of the premiums you would pay for insurance would
be slightly higher than hospitalisation over time, why would you need insurance
in the first place?
The main attraction of insurance if the costs of the premium
over time are about the same as the cost of what the insurance is covering is
that there would be no need to worry about finances when the risk hits (no
double whammy). However, financial institutions might think of offering loans
that would deal with cash flow issues if/when hospitalisation happens... Then
why would you waste money on say hospitalisation insurance? You might be better
off finding ways of making your savings grow in case of a rainy day.
Hence, to me, as “Big Data” and insurtech makes the cost of
insurance closer to the actual cost of the risk (say hospitalisation), then
there is even more reason to focus on growing savings/investments for a rainy
day: investments as a form of insurance.
But until then, it may be a good idea to think twice before
surrendering your DNA to a third party. That's a piece of data you need to be really careful about...
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