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Life insurance industry bans itself from using genetic test results

Thursday 8 August, 2019
by Tarishi Desai, Legal Research Officer and Hayley Jones, Manager of Treatment & Supportive Care

Securing insurance, particularly life insurance, can be a struggle for people affected by cancer and is an increasing concern for many. Debate about the use of genetic information by life insurance companies and genetic discrimination has been longstanding in Australia, and abroad. Now, an Australia-wide, industry-imposed freeze on the use of genetic information in life insurance applications has come into effect. This is good news for people considering having a genetic test to identify a predisposition to cancer or another health risk. However, there are concerns about the effectiveness of the new measures.

How does the freeze on the use of genetic test results work?
The Financial Service Council (FSC), the peak body in Australia which sets mandatory standards and codes of conduct for life insurance companies, has introduced a moratorium – or freeze – on the use of genetic testing information in life insurance policy applications.

Effective from 1 July 2019 until 30 June 2024, the moratorium applies to all new life insurance policies post 1 July 2019 and does not operate retrospectively.

The moratorium means that for life insurance policies up to $500,000 in total, consumers do not have to:

  • disclose an adverse genetic test result (i.e a test result showing that they have a genetic change that increases their risk of developing a particular condition);
  • take a genetic test when applying for life insurance; or
  • disclose any genetic test results undertaken as part of research if the consumer does not receive results.

Consumers can provide favourable genetic test results if they wish (i.e genetic test results that show a person does not have a genetic change that increases their risk of developing a particular condition). Life insurers must consider any preventative or risk-reducing measures the consumer takes to lower their likelihood of developing a condition they have a genetic predisposition towards, for example through medical monitoring, screening tests or preventative surgery.

For life insurance policies that are in total more than the following, life insurers can still request information about any genetic tests:

  • $500,000 of lump sum death cover
  • $500,000 of total permanent disability cover
  • $200,000 of trauma/critical illness cover
  • $4,000 a month in total of any combination of income protection, salary continuance or business expense cover.

This is binding on life insurance companies that are members of the FSC, of which all companies selling life insurance in Australia currently are.

The moratorium and a factsheet developed by the FSC are available on the FSC’s website.

Why has the moratorium been introduced?
Currently under Australian laws, consumers must disclose all relevant health information in life insurance applications.[1] This includes disclosing details of a family history of certain conditions, and any known genetic test results from tests ordered by doctors, done as part of research studies or any take-home (or do-it-yourself) tests undertaken. Insurance companies can use this information in underwriting (assessing risk or likelihood of making a claim) by potential consumers of life insurance products, including death, permanent disability, trauma or critical illness cover, and income protection insurance. For some people, having an illness or condition, or a genetic predisposition to one, can increase their risk level, and the likelihood that they make a claim against their insurance policy.

In addition to using genetic information in underwriting, the requirement to disclose genetic test results to life insurers means life insurance companies can use this information to lawfully discriminate against a person seeking life insurance, if they meet certain legal requirements.[2] For example, life insurers can deny insurance outright or, exclude insurance cover for certain conditions—such as cancer— or increase premiums in some situations. However, they must be able to show that providing insurance without these restrictions would be an unacceptable risk to them. 

Although genetic testing can be useful in diagnosing genetic conditions and to identify and manage the risk of developing such conditions, including some cancers like familial breast and ovarian cancer, it does have  limitations: Results may be unclear or give false impressions, and most genetic tests can only give an indication of increased risk, and can’t predict if or when a person will go on to develop an illness or condition, such as cancer.[3]

Inquiries have concluded that many genetic tests are not accurate or reliable enough to be used in insurance underwriting to predict future risk.[4] There have also been longstanding concerns that people are not having clinically useful genetic tests, or are not participating in important research studies, because of fear of potentially negative insurance implications.[5] This reluctance to be involved in such research may impact technological advances in treatments and has the potential to compromise Australia’s competitiveness in international research,[6] undermining the significant investments in genomic (personalised) medicine research by federal and state governments.[7]

These issues were considered by the 2017 Inquiry into the Life Insurance Industry, which went on to recommend a moratorium on predictive genetic testing — testing performed on a person who has a family history of a certain illness or condition but who has no symptoms at the time[8] — similar to that between the Government of the United Kingdom and the Association of British Insurers.[9]

Potential issues with the effectiveness of the moratorium
Concerns exist about the effectiveness of the moratorium which the FSC has now introduced, including that the moratorium is self-regulatory with no government or independent oversight, and that the financial limits may be set too low. Experts are calling for stricter regulation of the life insurance industry.[10] 

Other countries have stronger bans or other regulation in place, such as laws prohibiting insurance companies from asking for any genetic test results.[11] The implementation of recommendations of the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry relevant to insurance policies may also impact the operation of the moratorium going forward,[12] which will be reviewed in 2022.

The introduction of the FSC’s moratorium comes as new research reports that a significant number of people affected by cancer who are seeking life (and other forms) of insurance are struggling to obtain it.[13] Many people with cancer predisposing genetic changes commonly experience difficulties in obtaining new life insurance policies, even if they are healthy and have taken preventative measures.[14] These new studies build on the 2013-2015 work of the McCabe Centre which reported concerns about access to life and travel insurance by people affected by cancer.[15]

The McCabe Centre will continue to monitor any developments affecting the moratorium as part of its focus on how to improve access to insurance for people affected by cancer.

Further information
Importantly, genetic test results do not affect private health insurance and group life insurance (life insurance products that are available through superannuation funds) as these types of insurance do not require an individual risk-assessment of each potential consumer.[16]

Australians who are seeking more information or are concerned that they may have been discriminated against in their insurance application can call Cancer Council on 13 11 20 and are encouraged to seek independent legal advice. Individuals can make formal discrimination complaints about their life insurer to their insurer or to the Australian Financial Complaints Authority.

Please note this was prepared for information purposes and should not be relied upon as legal advice.

 

[1] Insurance Contracts Act 1984 (Cth) s 21; Carter v Bohem (1766) 3 Burr 1905, 1909 (Mansfield LJ).

[2] Disability Discrimination Act 1992 (Cth) s 46.

[3] National Health and Medical Research Council, ‘Medical Genetic Testing: Information for health professionals’ (April 2010) (accessed 17 July 2019).

[4] See, e.g., Parliamentary Joint Committee on Corporations and Financial Services, Parliament of Australia, Inquiry into the life insurance industry (Final Report, March 2018), Chapter 9, 154-5.

[5] See, e.g., Parliamentary Joint Committee on Corporations and Financial Services, Parliament of Australia, Inquiry into the life insurance industry (Final Report, March 2018), Chapter 9, 154-5; Australian Law Reform Commission, Essentially Yours : The Protection of Genetic Information in Australia (Report No 96, March 2003), 676; Jane Tiller and Paul Lacaze, ‘Australians can be denied life insurance based on genetic test results, and there is little protection’ The Conversation (online 25 August 2017).

[6] Parliamentary Joint Committee on Corporations and Financial Services, Parliament of Australia, Inquiry into the life insurance industry (Final Report, March 2018), Chapter 9, 155.

[7] See, e.g., funding opportunities as part of the Australian Government’s Genomics Health Futures Mission and the Victorian Government’s 2018 announcement of $33.3 million in genomic sequencing to diagnose and treat rate conditions: Department of Health (Vic), ‘Genomic Sequencing Helping Victorians Get the Care They Need’ (Media Release, 26 July 2018).

[8] Human Genetics Society of Australasia, Pre-symptomatic and Predictive Testing for Genetic Disorders (Guideline, March 2014).

[9] See Concordat and Moratorium on Genetics and Insurance 2014, Department of Health, Government of the United Kingdom and Association of British Insurers (entered into force 1 November 2001) and Government of the United Kingdom and Association of British Insurers, ‘Code on Genetic Testing and Insurance’ (October 2018).

[10] See, e.g., Jane Tiller et al, ‘Genetic Discrimination by Australian insurance companies: a survey of consumer experiences (2019) European Journal of Human Genetics (Brief Communication 8 July 2019), 1-6; Human Genetics Society of Australia, Genetic Testing and Personal Insurance Products in Australia (Position Statement, February 2018).

[11] See, e.g., the United States of America has the Genetic Information Non-Discrimination Act of 2008 (Pub L No 110-233, 122 Stat 881) that protects individuals from genetic discrimination in health insurance and employment. Many European countries have implemented bans and other regulation in accordance with the Council of Europe’s Convention on the Protection of Human Rights and Dignity of the Human Being with regard to the Application of Biology and Medicine: Convention on Human Rights and Biomedicine, opened for signature 4 April 1997, ETS 164 (entered into force 1 December 1999  (‘Oviedo Convention’). For more information see Margaret Otlowski et al., ‘Genetic discrimination: international perspectives’ (2012) 13 Annual Review of Genomics and Human Genetics, 433–54.

[12] Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Final Report, February 2019).

[13] Legal Aid New South Wales, What’s the Risk?’ Access to insurance for people living with health conditions (Report, July 2019).

[14] Jane Tiller et al, ‘Genetic Discrimination by Australian insurance companies: a survey of consumer experiences’ (2019) European Journal of Human Genetics (Brief Communication 8 July 2019), 1-6.

[15] Deborah Lawson and Sondra Davoren, Making the Law Work Better for People Affected by Cancer (Report series, McCabe Centre for Law and Cancer and Cancer Council Victoria, 2013-2015).

[16] Division 55-5(1)-(2) of the Private Health Insurance Act 2007 (Cth) establishes the principle of community rating and prevents discrimination in the provision private health insurance. See also, Margaret Otlowski et al, ‘Genetic testing and insurance in Australia’ (2019) 48(3) Australian Journal of General Practice (online).