After years of hanging tough on genetic testing, life insurers are set to make dramatic changes to the way they deal with the highly controversial issue.

The Financial Services Council (FSC) said today consultation will begin on a moratorium to stop life insurers asking all applicants whether or not they have had a genetic test.

Genetic testing has been available for decades, but how the issue is handled by insurers has increasingly become a concern as costs fell and increasing numbers of people arranged tests.

Many countries restrict or ban insurers from using genetic information. In Australia, insurers cannot require a test, but there is a carve-out in anti-discrimination law that allows them to ask about testing and refuse cover or increase premiums on the basis of adverse results. Non-disclosure can lead to claims being denied.

And as this News Ltd article demonstrates, there are fears some people decide against potentially life-saving genetic tests because of the impact it could have on their insurance cover, and earlier this year a parliamentary inquiry into the life industry called on the FSC to take action.

While today’s move is a response to those calls, one expert told insuranceNEWS.com.au more consultation should have been carried out prior to the announcement, and the proposal’s limits are too restrictive.

Under the moratorium, all Australians will be able to get up to $500,000 of life or total and permanent disability cover without having to disclose an adverse test result. There are also limits of $200,000 for trauma and $4000 a month for income protection.

Those seeking cover under the limits will not be asked about genetic testing, but those asking for higher cover may be asked.

However, if they are declined cover as a result, they can reapply for the lower cover with that insurer or another.

The moratorium will start on July 1 next year and continue for five years, with a review planned for 2022.

“Life insurance, and the entire financial services industry, recognises that we need to do a better job listening to the concerns of the community and acting where we can,” FSC CEO Sally Loane said.

“This new moratorium… will free Australians from the fear of taking a genetic test, as the result will no longer prevent anyone taking out life insurance.”

Ms Loane says the moratorium will mean Australia and the UK are the only places in the world where a favourable genetic test result can be disclosed, but an adverse result doesn’t have to be.

“The life insurance industry will now work with a broad range of geneticists on how to implement the moratorium, including how to raise awareness for people considering taking a genetic test or taking part in genetic research.”

The FSC says the July start date gives time for more consultation, and enables life insurers to change their application questions, underwriting manuals, algorithms and systems, and complete staff training.

However, Ethical, Legal and Social Adviser in Public Health Genomics at Monash University, Jane Tiller, says the limits are too restrictive.

Ms Tiller, a founding member of the Australian Genetic Non-Discrimination Working Group, gave evidence at the parliamentary inquiry but was disappointed not to have been consulted about the proposed moratorium.

“In the UK the only limit is for Huntington’s disease,” she told insuranceNEWS.com.au.

“Here, the limits are too low and they are not specific to any particular diseases. They cover absolutely everything.

“It’s a good first step but the process has been very opaque. The limits are lower than they should be and we are disappointed that we have not been consulted before now.”

An FSC spokesman told insuranceNEWS.com.au the limits are in line with other jurisdictions.

“The moratorium limits are in line with Germany and Switzerland, and significantly more than Holland and Sweden,” the spokesman said.

“In all those countries, the limits apply to all tests. The UK is an outlier in this respect.

“The industry has looked carefully at international comparisons. The cost of the moratorium will need to carefully managed by life insurers to ensure a balance between those who have genetic conditions and those that don’t.”