This so-called moratorium, implemented by the FSC on the recommendation of a parliamentary joint committee, will allow customers who have had genetic testing to purchase life cover of up to $500,000 without disclosing the results of those tests.
While the survey appears to strengthen the case for allowing life insurers to discriminate against people with adverse genetic test results, FSC senior policy manager Nick Kerwin said the industry was actually in favour of a protection threshold.
He said the key was to “balance the interests of Australian consumers with the interests of the genetics research community and the sustainability of the life insurance industry”.
“If we were to allow people to take out unlimited amounts of cover when they know something about themselves, then it would be the other customers that would have to pay for that,” he said.
“There absolutely has to be a limit. We think $500,000 is about the right number.” He said Switzerland and Germany had successfully legislated compulsory limits at similar levels.
The introduction of this limit came after experts warned MPs insurance consequences could put people off getting genetic testing.
A 2016 paper by the Human Genetic Society of Australasia cited extensively by the parliamentary committee said this was a real risk.
“Genetic discrimination has occurred in Australia and remains a significant concern of those seeking testing. Fears of insurance discrimination should not prevent individuals from accessing clinically indicated genetic testing,” the paper stated.
Asked whether he thought the FSC survey was leading because it encouraged respondents to think of themselves as low-risk, Mr Kerwin said it was designed specifically to alert consumers to the fact that without differentiated premiums low-risk consumers were subsidising high-risk consumers.
“When you ask, ‘Should insurers have the right to see your DNA?’, of course everyone will say no. That’s a question without context. It’s like saying, ‘Would you like free food?’ But what it misses out is the fact that there is going to be cross-subsidy,” he said.
“The FSC’s research questions go to the heart of whether it’s fair to base insurance premiums on inherent factors like gender, age or genetic profile. People are already being tested for a range of genetic conditions and the cost of tests is falling dramatically.”
The survey did not ask respondents whether they thought they should be charged higher premiums if they had adverse genetic test results.
While life insurers expect to make detailed use of genetic data, at the moment only a tiny fraction of policies involve the use of such data.
Brett Clark, chief executive of life insurer TAL, told the parliamentary committee that out of 33,000 retail policy applications, only 750 contained any genetic information. Zurich chief executive Tim Bailey told the committee it “would be extremely rare for genetic information to be disclosed at the time of underwriting”.
Currently life insurers only ask customers whether they have undergone genetic testing; they don’t require such tests.
However, Mr Kerwin pointed out that the cost of genetic testing was coming down dramatically, meaning the use of genetic data in life insurance would inevitably increase.
The moratorium will come into force in July 2019, and will end in 2024. The FSC plans to conduct a review of the threshold in 2022.