The increased accessibility of genetic testing has been problematic in the insurance sector, where a more personalised understanding — and pricing — of risk has come up against notions of privacy and discrimination.

At the turn of the millennium, a full genetic test cost as much as US$1 million. Today, the cost is generally under US$1,000 and access in developed economies is widespread. For people wanting to know about their risk of disease or seeking to satisfy their curiosity about family ancestry, that is good news. It’s also good news for biomedical researchers building ever larger databases of aggregated genetic information. But the availability of genetic testing has created a dilemma in the insurance industry.

The impact of disclosing genetic results

Many people fear that the disclosure of their genetic information to insurers will result in higher premiums or that they may be refused cover entirely. The issue can put people off having a genetic test or can put them off even applying for insurance. 

From the insurance industry perspective, more information and data is welcome, as underwriters look to more accurately price the risk, but the danger is also commercial if too many people are dissuaded from taking out cover for fear of the consequences of disclosure. 

In the past two decades, this dilemma has even created its own terminology: genetic discrimination or GD.

Consumer protection around the world

The ethical and commercial balance between individual and insurer has been dealt with differently in various jurisdictions. 

In New Zealand, legislative gaps mean that insurers can use the genomic test results to refuse cover or increase premiums for products such as income protection, permanent disability and even travel insurance.

According to head of the Medical Genetics Group at the University of Auckland Professor Andrew Shelling, New Zealand is ‘out of step with the rest of the world in its consumer protection’, particularly given the country’s obligations to improve the health of the indigenous population, who are historically resistant to testing. 

Elsewhere, the Japanese insurance industry has established guidelines banning health and life insurers from using genetic testing to discriminate against insurance applicants. However, as in New Zealand, there is no law preventing insurers from requesting and accessing test data.

In 2021, Singapore introduced an open-ended moratorium on insurers using predictive genetic testing results when assessing any insurance application. The exception is if an applicant wants a level of cover higher than outlined in the moratorium and they have taken an approved test. The Hong Kong Federation of Insurers has a similar model, with members abiding by a best-practice code governing the use of genetic testing.

Australia also has a moratorium in place. Health insurance is legally protected from genetic discrimination, but life insurance isn’t — although its applications are limited.  

In 2019, the Financial Services Council (FSC) followed the United Kingdom and introduced a five-year, self-regulated moratorium on the use of genetic test results — including research findings — for life insurance policies up to certain limits. 

The right balance with genetic disclosure

Halfway through the moratorium period, Nick Kirwan — policy director, life insurance, for the FSC — says he believes the Australian system is getting the balance right. He is a staunch advocate for ongoing industry self-regulation.

‘The moratorium means that people can take out a reasonable level of cover without having to disclose an adverse result from a genetic test,’ says Kirwan.

‘If they want cover which exceeds those limits, they would have to disclose the results and they are also able to voluntarily disclose a favourable test result.’

Kirwan is originally from the UK, where he was involved in that country’s moratorium from its early days in his previous role with the Association of British Insurers. He is quick to compare the Australian experience against benchmarks set by other countries.

In Australia, the limit for disclosure is a policy of up to A$500,000, while in Germany the limit is 300,000 euros and in Switzerland it is 400,000 Swiss francs.

‘This is more than the median amount of cover which people choose to buy,’ says Kirwan. ‘It lets people choose the amount they would typically buy without disclosure, but it also means that people can’t go nuts with millions of dollars in cover, knowing that they are likely to claim. In that situation, it’s the other customers in the risk pool who would pay for that, so it’s about getting the balance right.’

The Australian approach is up for review at its halfway point this year and Kirwan believes it is a system that is working and an area that does not need legislation. 

The FSC plans to add independent oversight when the genetic testing provisions are added to its Life Insurance Code of Practice. It has input from consumer rights organisation the Financial Rights Legal Centre and a compliance committee, which will collect and have oversight on industry data.

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