Many Australians hold life, total and permanent disability, and income protection insurance policies. For most people, they simply sign up to these insurances and pay their annual premiums, often out of their superannuation. As such, it is not something that many people give great attention too. However, the advances in genetic testing may change this mentality, with insurance companies becoming more likely to discriminate based off one’s genetics.
At the moment, genetic testing is not something that the majority of people undertake. However, advances in technology and decreased costs have resulted in the expansion of the genetic testing industry in Australia. Many speculate that within a few short years, it will become part of the mainstream healthcare system and used more broadly by general practitioners and specialists. Whilst this is advantageous for one’s healthcare, it also has significant ramifications on the life insurance industry and what a consumer can expect to pay.
In Australia, insurance companies are able to legally require applicants to disclose all genetic testing results and use this information to assess the applicants’ “risk”; that is, if the applicant has “bad genetics”, they will pay more for insurance coverage. In effect, it allows insurance companies to discriminate. This is obviously not an issue if the applicant has never undergone genetic testings, but as the industry continues to grow, more and more Australians will have this testing and in turn, many individuals will need to disclose this information. This disclosure must take place upon one’s application for insurance, or if an individual requests to change their cover.
Some may not see this as an issue, as insurance is based off the notion of risk.; the riskier a person is, the higher their insurance premium will be. However, the problem lies in the fact that a lot of genetic testing is “direct to the consumer”, that is, not administered by a treating medical practitioner. Nonetheless, these results must be disclosed to insurance companies, even though the results may not have been explained to the individual, or the testing may not have been done in an environment which meet scientific and medical standards.
Furthermore, it also appears that the insurance sector does not pay enough attention to preventative measures one can take if they are prone to genetic conditions. As such, there is a possibility that genetic testing results may be misused, purely in order to increase insurance premiums in situations where it cannot be justified.
Many agree that this is an issue and it will only grow to be more problematic if nothing is done to address the situation. As a result, two broad avenues for moving forward have been proposed by various parties. The first is to prohibit the use of “unapproved” or “unauthorised” genetic testing results for the calculation of risk. This is the preferred option of the Australia Law Reform Commission (ALRC), which issued a report on the subject in 2013. The ALRC proposed that approved testing results should only be used in situations where it could be proven that such information was scientifically reliable, actuarially relevant and reasonable. Whilst this would be a step in the right direction, it still does not address the issue of insurance companies not taking into account potential preventative measures an individual could take, and how this should be considered during the calculation of risk.
The second avenue forward is one which has been taken by the United Kingdom, Canada and other European countries. Since 2001, the UK has had a moratorium on the use of all genetic testing results in respect to life insurance policies, and other countries have legislatively prohibited insurers from using this information in more recent years. This effectively goes a step further, as it also prohibits the use of “approved” genetic testing results, and thus eliminates the issue of insurance companies failing to consider the preventative measures available.
This second option is clearly the most advantageous for consumers, as it keeps insurance premiums lower for everyone, however, it should also be asked whether this is fair on insurers. Insurance is based off the presumption of risk; the best example of this is comprehensive car insurance. The make, model and location of a vehicle are all considered when calculating how “risky” a car is. Thus, if a person is more at risk due to their genetics, is it unfair to disallow insurance companies from taking this into account? Whilst some may say yes, it would be argued by many that consumers should be protected from excessive premiums nevertheless.
In light of the above, and the Federal Government being unwilling to take any action on the issue, the Financial Services Council (FSC) has proposed a moratorium to limit the use of genetic testing for life insurance policies, starting from July 2019. This moratorium would stipulate that only approved genetic testing could be used in the relevant circumstances. It should be noted that the FSC’s proposed course of action has little to no government oversight, thus, there will be no checks and balances in place to ensure that insurance companies continue to comply with this moratorium.
Genetic testing is certainly the way of the future. Technological advances will allow such testing to be used in a wider variety of circumstances and available to a larger portion of the population. This will unquestionably result in better healthcare and preventative treatment options, however, it will need to be ascertained how to balance this with the legal ramifications genetic testing has on life insurance. Currently, the industry is proposing a moratorium to limit the use of genetic information, however, as time progresses, the need for government intervention will become apparent. When the time comes, the Federal Government can choose to go one of two ways, pro-consumer and ban the use of all genetic information, or merely prohibit the use of “unauthorised” test results.
For more information on the above article we recommend that you contact Accredited Specialist Joe Bonura on 02 4626 5077 or jbonura@marsdens.net.au.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication
