The Actuaries Institute supports introducing legislation to regulate life insurers’ use of genetic testing results, the peak body says in a submission to Treasury. 

It says intervention would raise consumer confidence by alleviating concerns around the effectiveness of self-regulation. 

At present, the industry has a self-regulated moratorium on the use of genetic testing. A partial moratorium introduced in 2019 was extended indefinitely under changes to the industry’s code of practice last July. 

Under the moratorium, life insurers should not require or encourage applicants to take a genetic test as part of their life insurance application. Similarly, applicants should not be required to disclose results of genetic tests taken as part of medical research where the applicant would not receive the results.  

However, there are exceptions. For instance, the moratorium allows insurers to request or use the results of a genetic test if the total lump sum death cover a person would have is more than $500,000. 

Treasury has floated three recommendations in a consultation on the use of genetic testing results in life insurance. The first proposes no intervention, the second suggests legislating a total or partial ban on the use of adverse test results, and the third recommends legislating a financial limit. 

The institute’s submission says the third action is the most appropriate, as it “balances the need to provide people with an adverse genetic test result with access to a reasonable level of insurance against the need to promote insurance affordability and sustainability for the whole insured population”. 

It proposes setting financial limits below which applicants are not required to disclose genetic test results: $1 million for death cover, $1 million for total and permanent disability, $250,000 for trauma and $8000 a month for disability income insurance cover per life insured across all life insurance policies held in aggregate. 

“In our view, this level would meet consumer needs and community expectations of accessing a reasonable amount of life insurance to cover the financial impact of death or disability. The financial limits should be reviewed periodically to ensure they remain appropriate.” 

It says the financial thresholds’ purpose is to limit overall premium rises and “set a limit whereby there remains an appropriate level of cover for all customers who need insurance”. 

Click here for more from the submission.