Insurers debate over the colour of genes

Genetic testing is likely to remain at the forefront of issues facing the life insurance industry over the next decade. Aaron Driver reports on how the major players are grappling with the issue of discrimination.

The insurance industry was grappling with the troublesome implications of genetic testing late last year as it hosted, for the first time, a stakeholders workshop embracing a wide cross section of medical, ethics and consumer organisations.

The Investment and Financial Services Association (IFSA) received widespread support for initiating the educational gathering, but it also had to negotiate a number of strongly divergent views on the subject.

Claims of continuing genetic discrimination and calls for alternative products, such as a policy of non-disclosure of genetic test results for small sums insured, presented vigorous challenges to the industry as it continues to prepare for the genetics revolution. And amid this dialogue, fears have surfaced that the use of test results by insurers is scaring off volunteers from participating in medical research that requires genetic testing.

The IFSA workshop was timely following the recent decision by the Australian Competition and Consumer Commission (ACCC) to authorise IFSA's decision not to require or coerce life insurance applicants to undergo genetic testing. The ACCC ruling complements IFSA's existing policy that the results of genetic tests performed prior to an insurance application should be disclosed, similar to any other information relevant to risk.

However, several stakeholders who attended the workshop are actively pushing for a more sympathetic ceiling or threshold approach that rules out the use of any genetic test results for small to moderate insurance policies, possibly capped in the realm of $200,000 to $300,000.

Proponents of the ceiling model argue that a lack of statistical data on genetic test results and the diseases they identify is leading to unfair and uninformed discrimination, which in turn is discouraging people from undertaking potentially life saving tests. A ceiling model would provide an insurance safety net for individuals wishing to undergo genetic tests.

One stakeholder, Associate Professor in Law at the University of Tasmania, Dr Margaret Otlowski, supports a ceiling model similar to that adopted in the Netherlands.

She says that since the early 1990s Dutch life insurance applicants have not been required to disclose genetic test results for sums insured below $A225,000.

However, she says full disclosure is required for policies exceeding that amount to protect insurers against the risks of adverse selection.

Dr Otlowski says the compromise ceiling approach is the best genetics lobby groups can hope for. She says it lies somewhere between the extremes of Austria and Norway, which have completely banned insurers from using genetic information, and Australia, which permits open use of genetic test results and even entertains debate about whether insurers should be able to initiate tests.

"With this approach the costs to the insurance industry could be contained and insurers wouldn't have to deal with genetic information routinely, which would save on administration," Dr Otlowski says.

On the eve of the stakeholders workshop, IFSA chief executive officer, Lynn Ralph, said the peak industry body had examined a variety of capped insurance models around the world and found it difficult to draw parallels between different insurance industries.

For example, she says the oft-quoted ceiling model in the UK only applies to mortgage-related insurance, where it is common market practice that individuals can not obtain a mortgage without life insurance.

The Australian system, she adds, is unique because the vast majority of individuals obtain group life insurance through superannuation funds, where the inability to self select means there is no underwriting, and therefore no need for genetic test results.

Partially in response to discrimination concerns, and also in order to build more solid industry data on the use of genetic testing, IFSA is currently developing an industry register to keep track of insurance applications containing genetic tests.

The data, which will possibly be collected by an independent actuarial firm, will generate high level figures on the number of genetic tests examined and the number of applications rejected on the basis of those tests. The information will be anonymous in the interests of strict protection of privacy.

Ralph says IFSA has tried to get to the heart of allegations about discrimination but unfortunately much of the research is anonymous and impossible to verify.

"I've heard people say there are 50 cases of discrimination in life insurance but we haven't even seen 50 tests," she says. "And gut feel we sort of know we have approved insurance for more than half of them, so we can't get the numbers to add up."

Legal researcher at the University of Melbourne, David Keays, who earlier this year released the first widely publicised incidents of genetic discrimination in Australia, disagrees with IFSA's position, saying discrimination is still occurring and is not likely to stop in the near future.

Keays, who spoke in support of the ceiling model at the workshop, says genetic discrimination is reaching the point where it is beginning to jeopardise medical research.

He says a number of scientific researchers have approached his department concerned that volunteers are reluctant to submit to genetic testing out of fear that those tests might be used against them later if they apply for life insurance.

"Particularly in Melbourne and Sydney, where we have such good track records in medical research, researchers require these volunteers and that is being jeopardised," Keays says.

Keays' research has identified six cases where healthy individuals were refused insurance or charged higher premiums on the basis of their genome, with one individual required to undergo a genetic test before insurance would be granted.

Although his research did not follow these complaints through with insurers, Keays says that when combined with an anonymous survey conducted by the NSW Genetics Education Program, the number of alleged incidents of discrimination stands at about 50.

"Clearly these are not anecdotal cases anymore," he says. "Research has reported so many cases, and its quite likely there are many more out there because none of the cases that we encountered were the same."

Despite concerns of ongoing discrimination, the director of the NSW Genetics Education Program, Kristine Barlow-Stewart, says the workshop was "very, very positive". She says one of the main themes to come out of the meeting was the need to further educate insurers, actuaries and the general public about genetics and what testing means.

Barlow-Stewart says considerable support was expressed for alternative products that may be able to assist those who are currently uninsurable because of their genetic makeup.

"I believe we need to look at the ceiling model very carefully," she says. "I am hopeful that the insurance industry is as keen as we are to work out some options for these people."

David Keays says another potential product is where individuals who test positive to a disease, such as breast cancer, can still obtain insurance for all eventualities except breast cancer. However, he has doubts about IFSA's ability to deliver on policy reform.

"While there were points of consensus and [the workshop] was very productive, the major problem that remains is getting all the insurers to agree," Keays says. "IFSA really isn't in a position where it can speak for and develop a policy that binds all their members, and that's a significant obstacle at the moment."

Keays says the workshop also identified the need to develop a better industry complaints mechanism to cater for individuals who felt they had been unfairly discriminated against on the basis of their genome.