The Canadian Life and Health Insurance Association (CLHIA) has reaffirmed an integral piece of its position on genetic testing, adopting a new industry code on an issue that has caused some consternation among privacy advocates and interest groups.One of the key points of the code is to maintain the concept of “equal information” at the point of underwriting: any person undergoing a genetic test who does not want to see the results does not have to report the test to the insurance company. However, once people are aware of the results and apply for insurance, the insurer must be made aware of this “relevant” information when applying for life and or health insurance, said Frank Zinatelli, vice president and general counsel of the CLHIA.
“This is a principle that’s in insurance legislation in all the provinces. It is an essential part to do underwriting,” said Zinatelli. “If a person wants to apply for insurance, an insurer needs to know what level of risk they are bringing to the table to determine whether to offer the insurance to them and at what rate.”
What’s new in the code, he said, is that those who have had genetic testing done as part of a research study and aren’t informed of the results do not have to report that they have had the testing done. As well, once a person has taken a genetic test, insurers will not require one from other family members.
While Zinatelli couldn’t provide any figures, he said the number of people taking genetic tests over the past 10 years has grown considerably especially with tests becoming more readily available and less expensive.
But he said that if a person comes to an insurance company considering taking a genetic test, the insurer will provide that person with a plain-language warning, advising the person to talk to their doctor or genetic counsellor to find out any potential repercussions.
In July, the Office of the Privacy Commissioner of Canada released a statement outlining its concerns with the insurance industry’s argument that genetic test results are necessary to allow them to accurately and fairly examine the level of risk.
Two papers commissioned by the Privacy Commissioner stated that the industry would not face a “significant impact,” stating that genetic testing “would not appear to be necessary for the legitimate business needs of the industry at the present time.”
A report from the Canadian Institute of Actuaries this past summer indicated that some legislative bodies in Canada are thinking about prohibiting insurance companies from getting the results of genetic tests once the client knows the results.
Doing so, said the report, “would create an imbalance of information between the applicant and the insurance company.” As well, once word got out about the prohibition, more people would jump on the insurance bandwagon, with a significant impact on insurance companies and consumers.
“The valuation strain (pricing loss) for the industry from those who test positive in a single year (based on the assumptions) would be about 12% of the total death claims for the year. The impact on consumers is likely to be even greater. As a result of the prohibition the average mortality rates are likely to increase by about 35% for males, and 60% for females in the age range 20–60; there would be a concomitant increase in term insurance premium rates.”
Zinatelli pointed out that once clients purchase insurance it cannot be taken away from them unless they stop paying the premiums.
“One of the reasons why we really take care about the use of genetic tests is that we made the promise [to pay insurance benefits] and that promise is going to stay for 20 years, 30 years, 40 years – as long as the person pays their premiums.” He suggested clients buy their insurance before taking a genetic test. Even genetic testing may not immediately cancel out a person’s ability to get more insurance, depending on the situation, he said.
“Insurers will go out of their way to sell the product – it is only when the risk is so high that it wouldn’t make sense from a business or actuarial perspective.”