NEW YORK (GenomeWeb) – As scientists discover more and more molecular biomarkers that can predict an individual's disease and mortality risk, the results are not only applicable in personalized medicine but are also making their way into a new marketplace: the life insurance industry.
Earlier this month, GWG Life, a company focusing on the secondary life insurance market, said it had begun collecting saliva samples and analyzing epigenetic biomarkers, developed by researchers at the University of California, Los Angeles, in potential customers as part of its underwriting process. The Minneapolis-based company, which was founded in 2006, said this makes it the first "insurtech" firm — a company that uses innovative technology to improve the accuracy and efficiency of insurance pricing — to apply DNA methylation testing to life insurance underwriting.
GWG specializes in purchasing life insurance policies from individuals who want to monetize them for a variety of reasons, offering them more than the cash value of their policy. Last year, the company's parent GWG Holdings, which trades on the Nasdaq, purchased $466 million in face value of policy benefits and had $69.5 million in overall revenue, along with a $3.1 million net loss.
Biotech companies have also begun taking an interest in life insurance. For example, San Diego's Human Longevity, which was cofounded by Craig Venter, last year hired a president for its insurance and corporate business group who has expertise in the life insurance industry, and Venter has been presenting the company's research at various meetings of insurance or actuary professional organizations. Also, several firms focusing on telomere research have expressed an interest in the life insurance market in the past.
"There is a lot of excitement around how technology promises to improve the insurance industry," said Jon Sabes, founder and CEO of GWG. "But we don't see companies such as ourselves really acquiring and translating new cutting-edge technologies into commercial applications that go to the very heart of these products and services."
In general, he and several experts said, the life insurance industry is slow to adopt new technologies, but Sabes is convinced that it "will undergo some pretty radical change" in the future.
GWG is always looking for ways to more accurately assess a policy holder's life expectancy, he said, and came across epigenetic work on aging by Steve Horvarth, a professor of human genetics and biostatistics at UCLA, as part of its research.
Sabes said he first became aware of Horvarth's work in 2013, when he published a paper in Genome Biology in which he described an epigenetic "aging clock" that he wrote would likely "become a valuable addition to the telomere clock" that correlates aging with telomere length. The assay he used measured methylation at 353 CpG sites to predict age and worked in most tissue and cell types. It could also detect accelerated aging, for example as a result of diseases such as cancer.
Later research by Horvarth and others showed that DNA methylation age, measured in blood, could predict all-cause mortality later in life, independent of health status, lifestyle, and known genetic factors.
Last September, Horvarth and a large number of collaborators, including Brian Chen, at the time a postdoc at the National Institute on Aging, validated these findings in a study published in Aging that looked at 13 different cohorts — a total of more than 13,000 individuals. They found that epigenetic age indeed predicts all-cause mortality "above and beyond chronological age and traditional risk factors," and even more so when blood cell counts were included.
"Really, that was the comprehensive work that we were looking for that did more than just establish the fact that people have a biological age vs. a chronological age but, in fact, that these age acceleration factors, measured at the molecular level, could be predictive of all-cause mortality," Sabes said.
In November, GWG took an exclusive option on the technology for measuring epigenetic age acceleration, for which UCLA and Horvath had filed a patent application. The company is currently negotiating a license with the university, which it hopes to complete within the next month.
Also, in February of this year, GWG hired Chen as vice president of research and analytics to lead the company's initiative to incorporate epigenetic biomarkers into its underwriting. In addition, it recently signed on Tom Nodine, an insurance technology expert, as a consultant to help it assess the value of the new approach.
At present, life insurance providers in the US look at a variety of metrics to determine an individual's mortality risk, including their gender, medical history, family medical history, body mass index, blood pressure, cholesterol levels, tests for chronic diseases, and smoking tests. Life insurance companies are currently exempt from the Genetic Information Nondiscrimination Act (GINA), which prohibits the use of genetic information for health insurance and employment, so they could also include genetic tests in their underwriting. But experts said most life insurers have stayed clear of genetic testing for fear of being accused of genetic discrimination and because they might be included in GINA in the future as a result. "I think the industry is very cautious about any movement in that direction for the reason that there could be political repercussions," Sabes said.
But the epigenetic test GWG is now adopting is different from a genetic test because methylation markers can change over time in response to life style or the environment, rather than being etched into the DNA from birth, making them more similar to other medical tests that are already used as part of underwriting.
The epigenetic test could offer several improvements to traditional underwriting. "We think that being able to provide a more refined view of life span will enable products to be more accurately priced," Sabes said. "We will offer different types of products to individuals, particularly for long-term care needs, and a host of other product improvements that the insurance industry is unable to do because they haven't equipped themselves with any modern-day tools."
Earlier this month, GWG started sending out cheek swab kits to life insurance policy holders interested in its offerings. From the test results, the company calculates a hazard ratio that can be translated into a mortality factor. "Many times, you have science but you don't know how to make a commercial translation to it. In this case, we've actually found that the translation of the science to the commercial application is relatively straightforward," Sabes said.
"From the statistical models, you can derive, essentially, the life expectancy, or the mortality rates, and then that plugs in very seamlessly into the current actuarial models," Chen explained.
For the published studies, the researchers used Illumina arrays to measure DNA methylation, which cost on the order of $300 per sample and yield a lot more information than the few hundred markers needed, Chen said. Instead, GWG plans to use targeted sequencing, which he estimated could reduce the price per sample by an order of magnitude, and the company is building partnerships with labs that would take on the sequencing work.
Currently, GWG is using the methylation profile in addition to its traditional underwriting to see whether the two agree. "If so, then in theory, you could replace existing underwriting with a test," Sabes said, which could make the process cheaper, quicker, and more convenient. If the two don't agree, this would indicate that the company might need to re-examine how its products are priced, he added.
In the third quarter of this year, GWG plans to start using the test results to determine pricing for its products, he said, and it might introduce new products that are based on this new underwriting.
In addition, the firm plans to bring the test "into the larger insurance industry" this year, which could include working with existing life insurance medical testing companies, life insurance firms creating products with accelerated underwriting, or reinsurers.
The company will still keep an eye on additional biomarkers that could further improve its models. Researchers at the National Institute on Aging, for example, are trying to identify new biomarkers that can predict premature aging or diseases "at a much earlier stage than we're able to do now," Chen said. "We're not to just [about] epigenetics — my viewpoint is very agnostic, and whatever technology is mature and be able to be utilized, we're definitely open-minded about that."
According to Al Klein, a principal and consulting actuary at actuarial service provider Milliman, there has been some interest in adopting molecular aging markers in the life insurance industry, in particular telomere testing technology. Two companies — Telomere Diagnostics, which was cofounded by Nobel Laureate Elizabeth Blackburn, and Titanovo — approached him in the past about possible applications of their tests in the industry, he said.
In general, many "insurtech" companies are looking into new technologies for better actuarial predictions, he said, including in areas outside of molecular testing. One trend in the industry is a move towards accelerated underwriting in order to shorten the process, he said, which typically takes several weeks for life insurance.
Sabes said that GWG's test could potentially "dramatically improve" accelerated underwriting, and that the company hopes the turnaround time for the test, once it has been scaled up, will be a week.
Klein also said it is important to get reinsurance companies on board with new underwriting technologies before introducing them to the general life insurance market. Reinsurers take on some of the risk associated with larger policies from primary insurance companies, and if those companies start using new methodologies that reinsurers are unfamiliar with, he said, they may refuse to deal with them or increase their rates.
To stay on top of new developments, many reinsurers have also set up internal units to investigate new technologies and sometimes even partner with "insuretech" companies. "GWG should probably approach the reinsurers and explain what it is they have to offer and see if they get their buy-in," Klein said, which would make later adoption by primary insurance firms easier.