Financial Advisers Association Australia has raised concerns over the proposed ban on the use of genetic test results in life underwriting.

One key issue relates to the impact on people who already have life cover, FAAA says in a submission to Treasury.

“This is an issue of equity … it is critical to consider how a ban … will impact existing clients with life insurance policies, who will likely suffer further premium increases because of this policy change,” the submission says.

“This genetic testing ban is likely to result in certain Australians who are aware they have a higher than average risk after receiving genetic testing results getting access to life insurance at a lower cost than their risk would warrant, while others will ultimately pay more.”

Treasury’s consultation on the ban’s legislative design closed on March 12.

The consultation paper says a total ban on requesting access to and using adverse genetic test results in life insurance underwriting will be introduced.

At present, life insurers have a self-regulated moratorium on use of genetic tests below certain coverage limits. Introduced in 2019, the partial moratorium was extended indefinitely under changes to the industry’s code of practice from July 1 2023.

FAAA says as testing becomes more advanced, “it is likely that the results will be better able to predict the timing of the onset of [serious] health conditions. This could be used to the advantage of the person involved or their family.

“We are making the point that this will significantly increase the already high cost of life insurance for others. The extent to which this is likely to occur is difficult to predict. However, it is certainly likely to be a factor.”

FAAA says it favours a model where “the existing moratorium on insurers using genetic testing in life insurance below certain caps [is] legislated.

“We think this would provide a sensible balance, allowing people with high-risk genetic test results to still access life insurance, but not at a level that would unreasonably impact the life insurance pools and increase costs for existing life insurance policyholders.”

See the submission here.