Risk-based underwriting

Consumer Credit Directive: Including right to be forgotten for persons with prior diagnosis would be bad for consumers


A new Insurance Europe paper setting out the sector’s key messages on the ongoing review of the Consumer Credit Directive (CCD) outlines why the introduction of a right to be forgotten for persons with a prior diagnosis of certain communicable and non-communicable diseases, including cancer, would have significant negative impacts on consumers and their insurers.

This follows the European Parliament’s amendments to the CCD legislative proposal that would require member states to draw up a list of communicable and non-communicable diseases in order to introduce a 10-year right to be forgotten (RTBF) for adults (five years if diagnosed before the age of 18). The RTBF would mean they would not be required to disclose a prior diagnosis of any disease on that list to an insurer.

Were this to be adopted in the final CCD, insurers foresee:

  • Reduced access to insurance protection for all consumers - An RTBF can have a detrimental impact on tariffs. There is, therefore, a risk that average premiums would increase and/or cover would diminish for all consumers due to the uncertainty about potentially higher risks for insurers.
  • Increased risk of consumer detriment - The risks are particularly high due to the European Parliament’s intention to apply an RTBF to a broad list of communicable and non-communicable diseases, rather than limiting it to cancer. The absence of any limitation to the RTBF to specific insurance products, for example only life insurance, means there could be unforeseen consequences for certain consumer groups and/or types of insurance products.
  • Disappearance of some products - In the longer term, some products may become commercially unviable or unattractive to consumers, creating the risk of underinsurance in more vulnerable sections of the population.
  • Uncertainty for consumers - Including multiple diseases will require complex medical terminology to define each of them. This could make it extremely difficult for customers to know whether they should disclose a prior diagnosis. This could lead to significant claims uncertainty because non-disclosure of material facts could lead to the insurance coverage becoming void.
  • Opaque system - The diseases concerned would be included on a national list based on expert views rather than scientific, statistical and medical data that can objectively show the risk of the insured event happening and therefore the viability of adding a disease to the list.
  • Less certainty about insurers’ ability to pay future claims - Without information about the risks insured, insurers will find it difficult to meet their regulatory obligations and build adequate reserves to pay future claims, as they will not have the full information on possible future claims coming through their books.

To avoid unforeseen negative consequences for consumers, the implementation of any RTBF at EU level should be via a flexible code of conduct. This should be agreed to by all stakeholders, put scientific, medical and statistical data at its centre, and be able to be smoothly adapted to scientific developments. Insurance Europe, therefore, advises against a rigid mechanism embedded in EU legislation that is hard to adapt.

Insurance Europe also strongly welcomes the recent assurance given by EU Commissioner Mairead McGuinness that the European Commission will gather more evidence and encourage dialogue between national authorities, patients and the financial sector during the drafting of the EU code of conduct on fair access by cancer survivors to financial services.