Treasury has released a consultation paper on the life industry’s stance on genetic testing, in response to growing concerns the present setup discourages Australians from undertaking potentially life-saving tests to avoid hurting their chances of securing affordable insurance. 

The launch of the consultation paper today comes after federal lawmakers introduced a motion in September to consider introduction of regulations that will bar life insurers from discriminating against customers based on their genetic test results. 

In the paper Treasury proposed three regulatory intervention options including legislating a ban and legislating a financial limit that will define the thresholds at which insurers cannot request or utilise adverse genetic testing results in their underwriting. 

At present the industry has a self-regulated moratorium on the use of genetic testing in life insurance. Introduced in 2019 the partial moratorium was extended indefinitely as part of changes made to the industry’s new Code of Practice that came into force on July 1. 

The moratorium was introduced in response to concerns that individuals would not undertake genetic testing for fear of negatively impacting their ability to obtain affordable life insurance. 

However, the moratorium has failed to achieve its intended results, the Treasury paper says, citing findings from a federally funded report by Monash University researchers. 

“The report found that the existing moratorium continues to discourage consumers from participating in both established clinical genetic testing, which may identify a need for potentially life-saving treatment, and medical research involving genetic testing,” the Treasury paper says. 

“Addressing these concerns requires review of the regulatory framework for the use of genetic testing in life insurance underwriting. 

“This consultation paper seeks feedback on both the impacts of life insurers using genetic test results in underwriting on genetic testing and research, as well as a range of potential policy responses.” 

The Monash University report raised other key issues about the moratorium besides the concern that Australians are avoiding genetic testing because they are concerned it may affect their insurance premiums. 

The report says life insurers are not complying with the moratorium, including asking applicants about genetic test results despite applications falling below the financial thresholds, and says the moratoriums financial thresholds were set too low. 

Under the moratorium, life insurers would not require or encourage applicants to take a genetic test as part of their life insurance application. Similarly, applicants would 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 under certain conditions. Insurers could only request or use the results of a genetic test if the total amount of cover a person would have – including both the cover being applied for and any existing individual and group insurance cover with any life insurers – was more than: 

• $500,000 of lump sum death cover; 
• $500,000 of total permanent disability cover; 
• $200,000 of trauma and/or critical illness cover; and 
• $4000 a month of any combination of income protection, salary continuance or business expenses cover. 

The Council of Australian Life Insurers (CALI) says the industry agrees the Government should regulate the use of genetic test results by life insurers in the underwriting process. 

Regulation should support the Federal Government to make modifications to keep pace with advances in genetic science and healthcare while considering any impacts on the accessibility and affordability of life insurance in the community, says the peak body. 

“It’s critical that regulation meets community expectations while also managing the risks and costs of life insurance fairly for everyone insured,” CALI CEO Christine Cupitt said. 

Closing date for submissions is January 31. 

Click here for consultation details.