"How Old You Are" vs. "How Much You've Aged": Biotechnology Emerges as a New Variable in Insurance Risk Assessment

Insurance Formulas Face Uncertainty Amid Shifts in Disease and Longevity
Will Biological Clocks Be Used in Insurance Underwriting?
Varying Impact on Health Insurance, Annuities, and Underwriting

As advancements in biotechnology allow for more precise measurement of aging and delay the onset of diseases, the insurance industry's approach to risk calculation is poised for significant change. With metrics such as individual biological age and the effectiveness of treatments and preventative measures emerging as new variables, analyses suggest that everything from insurance premium calculations and underwriting to the very structure of health and annuity insurance products could be affected.

According to the insurance industry on October 2, the global reinsurer Munich Re recently examined the potential use of “biological clocks”—which utilize epigenetic information to measure aging and mortality risk—for life insurance underwriting. Although these methods are not yet more predictive than conventional risk indicators such as age and medical history, Munich Re noted that, as analytic techniques evolve by combining various types of biometric data, biological clocks could serve as valuable supplementary indicators for underwriting in the future.

Epigenetics is the field that studies changes in how genes function, without alterations in the underlying DNA sequence itself. A primary example is the “methylation” pattern—chemical markers that attach to DNA and shift as people age, which can be used to estimate biological age. The development of such technology makes it possible to more accurately determine an individual’s actual health status and degree of aging, suggesting that these could become significant new variables in insurance risk assessment.

Within the insurance sector, there is lively discussion about the impact of life science technologies related to aging. As therapies that selectively eliminate aging cells, artificial intelligence-driven drug discovery, and biometric age measurement technologies continue to advance, they may fundamentally reshape the structure of insurance risk instead of merely reducing it. Traditionally, insurers have assumed that the probability of disease and deterioration in health increases with age. In the future, though, they may need to consider interventions that delay disease onset or allow individuals to recover function after a decline. As a healthcare industry expert explained, “For insurance companies, the risks they must account for will become more complex—not only the incidence of disease, but also the timing of onset, severity, and how long health can be maintained after treatment.”

From Risk Rates to Adverse Selection: Will Insurance Product Calculations Change?

The effects are likely to vary by insurance product. In the case of health insurance that pays a fixed amount for diagnoses of diseases such as cancer or dementia, widespread adoption of technology to prevent or delay disease onset could alter current risk assumptions. For insurance products like indemnity insurance, high-priced new technologies such as genetic or cell therapy—if included in the coverage—could generate new cost burdens. Meanwhile, for whole life annuities, longevity risk may increase because longer lifespans will require insurers to make annuity payments over longer periods than initially anticipated.

Some experts have raised concerns that the expanded use of biometric data might exacerbate information asymmetry between insurers and policyholders and intensify risk segmentation. If insurers over-segment policyholders based on health information available to them, the risk-sharing function of insurance could be undermined. Conversely, if individuals obtain more information about their own health risk through direct-to-consumer tests than their insurers possess, the resulting change in purchasing behavior could make adverse selection a more serious issue.

An insurance industry official stated, “For long-term insurance, risk rates such as mortality or incidence rates are projected years into the future and premiums are calculated accordingly, but if anti-aging technologies advance rapidly, it could lead to a disconnect between actuarial assumptions and actual risk. In the past, it was assumed with relative certainty that health deteriorates and disease risk increases with age, but now it’s not simply a question of percentages—the very trajectory of becoming ill and recovering as one ages could change.” The official added, “Because even small changes in assumptions can have a significant impact on the profitability of long-term products, it will be important to continually assess how changes in medical technology affect the traditional risk rates and structures of insurance products.”

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