Genetic testing will create a minefield for insurers because assessing the risk is not straightforward after detecting a 'bad' gene, warns analysts Datamonitor in a new report.

Discovering a genetic disposition to a life-threatening illness will have massive implications for the writing of life insurance, private medical insurance and critical illness policies, it says.

But while a person may be more likely to develop an illness if they have the gene, it could be countered by other factors such as the person's diet and lifestyle.

Datamonitor fears actuaries may not take these factors into account and so oversimplify the calculation of the risk, causing premiums to rise unnecessarily for some policyholders.

"The problem facing underwriters is to assess the interplay of genetic and environmental factors in risk, particularly for complex polygenic conditions such as cardiovascular disease," states the UK Health Insurance 2000 report.

"The clear yes/no answer given by a genetic test might be taken out of context.

"Actuaries are adept at calculating risk, but when understanding the risk requires specialist scientific expertise, they may oversimplify."