Genetic testing and Australia's insurance industry

14 November 2019
The first two decades of the new century has already seen remarkable progress in the scientific community's understanding of genes and their impact on our lives.

There are now tests which can predict the risk of someone developing a particular disease during their lifetime, potentially offering that person the opportunity to take preventative treatment or adjust their life choices.

The pace of these scientific breakthroughs has been so rapid that it's not surprising that neither the law nor the insurance industry has kept up.

In many instances, people applying for life insurance are required to disclose the results of any genetic testing they may have received. This is despite it being widely understood that a genetic test can only identify an increased risk of disease and does not mean that person will necessarily get the disease. Moreover, such disclosure requirements could potentially lead to the discrimination of some people based on factors (their genetic makeup) outside their control.

Recent changes to disclosure 

After much discussion about the pros and cons of using genetic data in federal parliament, the Financial Services Council (FSC) announced that from 1 July 2019 that it will call a moratorium on the use of genetic tests in life insurance. This means people are no longer required to disclose the results of a genetic test that they may have had before applying for insurance cover nor can the insurer ask or encourage customers to take a genetic test.

On the face of it, good news. But, as always, we need to read the fine print. While this is a welcome development by the FSC, there are significant shortcomings.

Firstly, the moratorium is only an interim measure and it's only applicable to those financial institutions which are members of the FSC.

Secondly, the moratorium is only a "standard" to which the members of the FSC can be held to account - a closer examination of the standard reveals that there are no ramifications for an insurer which breaches the standard and continues to require genetic test results from its customers. The company wouldn't even lose its membership of the FSC.

Finally, and most significantly, the moratorium and the "standards" are not legally binding.

Privacy, protection and discrimination 

The Parliamentary Inquiry into the Life Insurance Industry in 2018 made the point that as the use of genetic testing in health care increases, so do the concerns around privacy and genetic discrimination. It found that it is not only inherently unfair to limit or deny someone access to life insurance for reasons beyond their control, it was also stopping people from taking part in public health and scientific research project in case their genetic information could be used against them.

As a result, the parliamentary committee recommended that the FSC, in consultation with the Australian Genetic Non-Discrimination Working Group, assess the consumer impact of imposing a moratorium on life insurers from using predictive genetic information.

However, there has been no concurrent change to the Commonwealth laws governing insurance. The Insurance Contracts Act (1984) Cth requires an insurance applicant to disclose all matters before entering into the contract which in effect includes genetic testing.  The end result is that people applying for insurance arguably become subjected to genetic discrimination.

So do our discrimination laws provide any protection? The Disability Discrimination Act (1992) Cth permits insurers to discriminate on the basis of a person’s disability if it is based on actuarial or statistical data on which it is reasonable for the insurer to rely, and the discrimination is itself reasonable given the data and other relevant factors.

The question becomes is genetic testing data reasonable for an insurer to rely upon and therefore give the green light to positively discriminating against those who have had genetic testing and excluding particular medical conditions from insurance cover?

Academic researchers have touched on this issue somewhat.  UNSW's Kathy Liddell wrote in 2002 that  "presently, very few genetic tests predict disease in a way that is ‘actuarially significant’, that is, in a way that clearly and reliably indicates that the person is more likely than others to make a claim on the insurance policy".

Overseas, the UK and the US have policy and legislative protections in place which prohibit the use of genetic test information in health insurance underwriting (but not life insurance). While the UK has had this in place since 1997, insurers can still use genetic test information to assessing the risk of accepting or rejecting an application under this policy. Across the Atlantic, the Genetic Information Non-Discrimination Act of 2008 means that health insurers cannot use genetic information, including results of predictive genetic tests, to make eligibility and coverage decisions.

So what does the FSC's genetic testing moratorium mean for Australian consumers?

For those insured through their superannuation fund's group insurance, it will have no impact since individuals aren't required to provide health information, including family history and genetic testing  to be eligible for cover. However, if an individual wants to increase the cover provided automatically then they will be subject to the disclosure obligations noted earlier; although now subject to what little protection the moratorium may provide.

When it comes to retail insurance, it's likely that genetic testing results will fall within the scope of information required to be disclosed in certain circumstances (depending on the cover and the results of the genetic testing). The general rule is that insurers may legitimately use the personal information they obtain from applicants eligibility and coverage.

The only protection currently available to consumers it has to be said is pretty thin. There is the discrimination legislation mentioned earlier which doesn't address the questionable usefulness of relying on genetic data, and the moratorium which can't be enforced.

What are next steps for the industry? 

While the FSC's moratorium is a positive first step, we would like to see the industry take a more stringent lead in this discussion. The FSC must lift its gaze beyond the moratorium, use the available science and actuarial modelling to properly assess the complete abandonment of the use of private genetic information by insurers in deciding whether to offer insurance to a potential insured.

We would also like to see parliament revisit this issue and consider legislative reform to ban the use of genetic testing in the assessment of an insurance application. Otherwise the moratorium will simply be seen as a cynical ploy to delay a legislated outcome, particularly if it is not used to assess the true costs and benefits to consumers.

For the sake of an equitable society and the future of public health, the insurance industry must not stand in the way of such reform; the voices of consumers and their advocates must be heard loud and clear over that of the powerful and well-resourced insurance industry.

It would be a positive development for the community to witness from an industry so recently exposed as beset by  poor corporate culture and behaviour toward its customers.