UPDATE: Understanding Genetic Testing and Life Insurance

Posted on January 18, 2017 in Life Insurance Canada News

 
genetic testing insurance

The life insurance industry in Canada recently announced new measures it will take to protect clients from discrimination in regards to genetic testing. However, skeptics caution that the changes will not protect consumers from being unfairly targeted.

Anyone applying for coverage up to $250,000 will not be required to provide genetic testing information or results from previous tests. Companies may ask individuals for genetic testing information for greater insurance amounts, but not if the tests were taken for medical purposes or if the outcome is unknown. Family members of the applicant will not be required to undergo genetic testing.

“What we wanted to do is ensure the vast majority of Canadians would be able to buy life insurance and not need to worry about this issue of genetic test results,” Frank Swedlove, president and CEO of the Canadian Life and Health Insurance Association, said in an interview.

The advancement of technology in the medical field in Canada has opened the door to new testing methods and new information about our makeup as humans. One area that has grown significantly in recent years is genetic testing.

Genetic testing uses blood and body tissues to detect genetic disorders. When doctors identify these disorders, they can begin treatment immediately — whereas in the past, treatment would commonly not begin until signs of the genetic disease were present.

Currently, there are more than 33,485 genetic tests available. Many of these tests positively impact the way people approach their lives. According to MedCan, approximately two-thirds of people who take part in genetic testing make a change in their diet and level of physical activity. Additionally, about half of these people also take part in more medical screening tests.

The Impact of Genetic Testing on Life Insurance

One hot-button topic that has received a lot of attention recently is life insurance and genetic testing.

The passing of Bill S-201 in April, 2016 to prohibit discrimination based on genetic predispositions has started a great debate. On the surface, the bill sounds great. Discrimination should not be tolerated on any level and genetics are extremely sensitive and personal.

The Bill has been vocally contested by the life insurance industry, however after being passed by the Senate, it is now under the consideration of the House of Commons.

Is “genetic discrimination” such a huge problem that an Act of Parliament is needed? The proposed law, spearheaded by MP Robert Oliphant and Senator James Cowan, has three main points:

  • The creation of a Genetic Non-Discrimination Act that would prohibit the disclosure of genetic test results as a condition of providing goods and services, specifically health and life insurance.
  • An amendment to the Canada Labour Code preventing employers from demanding genetic testing or the disclosure of results from employees.
  • An amendment to the Canadian Human Rights Act prohibiting discrimination on the base of genetic characteristics.

The last two points are not overly controversial because existing legislation preventing discrimination technically includes genetics. The Canadian Human Rights Act prohibits discrimination on the grounds of genetic predispositions such as sex, race, colour, ethnic origin, sexual orientation and disability. A genetic condition can be considered a type of disability.

The main concern is the insurance issue.

Insurance companies use a certain amount of discrimination to determine eligibility and rates. They examine your medical history, the history of your family and current status (habits, occupation, age and weight) to evaluate your risk level. Factors such as a family history of cancer or high blood pressure could increase your premiums or cause your application to be denied.

Canadian insurance companies don't request genetic tests. However, if you have been tested, they can ask you to disclose the results.

Debate is More About Fear Than Genetics

Insurance companies fear that a potentially high-risk client – someone genetically predisposed to breast cancer, for instance – could buy a large insurance policy at the same rate as a someone without the cancer gene. With the ban in place, the industry might feel it's necessary to increase premiums across the board.

The side in favour of the bill, like the Canadian Coalition for Genetic Fairness, fears that being forced to disclose genetic testing and the results, will discourage people from being tested. This could lead to a delay in diagnosis and treatment. It could also discourage Canadians from getting life insurance due to the high premiums for being a higher-risk.

Timothy Caulfield, director of research at the Health Law Institute at the University of Alberta speaks of other fears: The rash of horrific predictions regarding the evils of tampering with genetics and the fears that followed the decoding of the human genome, such as an army of clones, designer babies and the creation of a genetic underclass.

Full human genomes can now be decoded for about $5,000 and there is data on over 32,000 genetic predispositions. However, the link between genes and the development of diseases is very complex.

In Policy Options, Professor Caulfield writes, “There is little evidence to support the idea that genetic discrimination is a big problem. If it does happen, it certainly doesn’t happen on a scale that would classify it as a pressing policy dilemma,”

A major argument for a genetic non-discrimination law in Canada is that many countries, including the U.S., already have such a law. The difference is that the law in the U.S. was created to prevent people from being denied health insurance coverage for medical care. We have a health care system in Canada that covers everyone, without discrimination. The only type of insurance at issue is supplementary health or life coverage where “discrimination” is part of the assessment process.

Insurance providers must be able to accurately assess the risk involved in providing someone an insurance policy — which can significantly impact insurance policy pricing. Logic would assume that if you were deemed higher-risk for a genetic disease, you would pay a higher premium. Plus, if after genetic testing, you are found to not have any signs of a genetic disease, you would be deemed low-risk and pay a lower premium.

From an insurer’s perspective, if an individual’s genetic information is available, then you could argue that it should be shared with an insurance provider to accurately assess risk as this form of testing can be very helpful in determining the probability of a future disorder. In this sense, genetic testing results are part of your medical history.

From the consumer’s perspective, there are obvious concerns about discrimination, even though it is difficult to determine the number of cases that have occurred. However, the main benefit of genetic testing is that you will understand the risks you are exposed to and will be able to take preventive actions much sooner.

The Canadian Life and Health Insurance Association (CLHIA) recently announced that as of January, 2017 life insurance companies in Canada will no longer request or use genetic testing information for new life insurance applications up to $250,000.

This change comes as the Canadian federal government considers legislation prohibiting the collection of genetic test results before providing consumers with goods or services, including a life insurance policy. Providers will be required to obtain written consent for such information.

CLHIA’s Stance on Genetic Testing and Life Insurance

Like many other organizations that have a vested interest in life insurance, the Canadian Life and Health Association (CLHIA) have taken a stance on genetic testing and its use within the life insurance industry.

Specifically, CLHIA has argued that in cases in which insurance applicants have had a genetic test that reveals a predisposition to various diseases, insurers need access to that data to properly assess the risk factors of the applicant. CHLIA says, “If the bill is passed, the result would be less predictable claims experiences and higher prices for all consumers.”

However, if an applicant has had genetic testing and has access to the results, it is reasonable for an insurer to request this information. Just like with any other health records and medical history, it is reasonable for insurance companies to request genetic testing information, if available. Applicants are expected to provide full disclosure about their medical history when applying for coverage and should provide genetic testing information as a sign of good faith.

Full disclosure is required in order for insurance companies to properly assess risk and assign policies. The CLHIA states, “Insurance is a good faith agreement. At the time of application, parties disclose any information that may be material to the contract so that the contract can be entered into on an equal information basis. This ensures that the applicant knows what benefits are being promised and that the insurer can properly assess the risk so that the premium reflects the degree of risk assumed. This principle is reflected in insurance legislation in every province and territory and makes it fair to the entire pool of insured persons.”

The CLHIA goes on to state their stance on specific issues involving genetic testing and life insurance:

  • All genetic information that is collected by insurers should only be used for risk assessment purposes and nothing else.
  • Genetic information is only collected by insurers with the consent of the applicant.
  • Genetic information collected will not be used for any unauthorized purposes. Applicant’s privacy will be upheld in accordance with provincial laws.
  • Insurers, while they do not use genetic information without consent, have used the information that is genetic in nature that has been discovered when accessing applicant medical records in the risk assessment process.

Other Factors to Consider About Genetic Testing

There are a number of additional factors and topics that are currently being debated when it comes to the discussion of using genetic testing information for risk assessment for life insurance policies. They include:

  • Confidentiality: Personal privacy and confidentiality are key issues. How insurers use genetic information, and how they protect individual privacy by managing this information brings up questions about access, accessibility, and storage of applicants medical history and information.
  • Discrimination: Discrimination and denial of coverage is something that could become a serious issue for Canadians. Hypothetically, you could be denied life insurance if your parents receive genetic testing and it is uncovered that they are prone to a specific disease, as you will likely be a carrier of the gene.
  • Information derived from genetic research: As genetic testing evolves and new discoveries are made in this area, it is important for the insurance industry to assess how new information is being used. The information needs to be accurate, backed up by sound research, and insurers must not act hastily when interpreting this information and applying it to insurance policy applicants.

Genetic testing and life insurance is an interesting dynamic. While it can provide people with information about potential health risks and allow them to take proactive steps to prevent disease, it could also prevent them from being accepted for life insurance. To identify an effective solution to this issue, further investigation is necessary before more Canadians become involved with genetic testing.

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28 Comments

  1. Ami Maishlish 12/05/2013 at 6:03 pm

    As a consumer, I am directly opposed to genetic test information being available to or used by insurance companies for numerous reasons, incl.:
    1. An individual who has elected to take a genetic test likely did so as a preventative measure – to know to take preventative action to reduce risk. The issue is that the insurance company, for profit purposes, will most likely use the results if it can thereby hike premiums but is unlikely to credit the individual for taking the test if adverse risks are not identified.
    2. The lines between the former “financial services pillars”, and particularly banking and insurance, have all but been erased. The banking industry likely has more information about the citizen than the KGB had during the Soviet era. Adding genetics to the banking and insurance industry databanks would serve as another blow to privacy and individual freedom.

  2. LSM Insurance 12/05/2013 at 6:04 pm

    Ami I’m with you on this point. If the consumer gets positive feedback they will get no additional benefit from a life insurance perspective and will be penalized for negative feedback. Seems like a win win for the insurance companies other than the cost of gathering this info

  3. Joseph R 12/06/2013 at 12:42 pm

    Personalized medicine with the help of genetic testing and EEGs will have a positive impact on treatment costs and disability prevalence and duration rates….this should translate into lower healthcare, disability and life insurance costs.

  4. LSM Insurance 12/06/2013 at 12:54 pm

    I appreciate your insights Joseph. But I’m not so sure those savings will be passed on to the consumer.

  5. daniel kahan 12/06/2013 at 3:08 pm

    Interesting question and I think the same question could be asked and be even more relevant when it comes to disability,CI and LTC coverage.On the flip side when it comes to annuities if someone has super healthy genes then they should be charged extra for the longevity risk.Unless insurers are non-profits I understand where the CLHIA is coming from, just like they have various exclusions such as for war and terrorism.
    Ultimately what they can and can’t do will be decided by the government and the regulators.

  6. LSM Insurance 12/06/2013 at 3:33 pm

    Thanks Daniel. Very good points. As genetic testing becomes more and more common it will be interesting to see how things shake out

  7. daniel kahan 12/06/2013 at 5:11 pm

    was this article prompted by this
    New York Times article
    link to nytimes.com

  8. LSM Insurance 12/06/2013 at 5:37 pm

    Thanks Daniel. Good article – appreciate you sharing it. What prompted our research was am inquiry for someone on the LSM site

  9. Melanie 12/07/2013 at 1:44 pm

    Can or should insurance companies that this into account though when approving or declining someone. I had a case that my client got declined because she has the breast cancer gen. I don’t think it is fair as not having perform the genetic test, she is currently very healthy and active. Any thoughts?

  10. LSM Insurance 12/07/2013 at 1:54 pm

    Hi Melanie,

    You make a good point but insurance companies are not always fair. Most are public companies with a mandate to maximize profits for their shareholders. The wording of the actual application questions is key and this can vary among carriers.

  11. Casey Cameron 12/08/2013 at 11:58 am

    Very interesting. Family history which is highly correlated with genetic predispositions is already being analyzed by underwriters, especially for critical illness. Genetic testing may be the next progression if it is not curtailed by the government. For example, no insurer would have had an interest in insuring Angelina Jolie with critical illness coverage with the knowledge if her genetic predisposition for breast cancer.

  12. Ami Maishlish 12/08/2013 at 1:42 pm

    I concur with Chantal. Voluntary genetic testing by people who wish to know risks and to take appropriate preventative measures are positive from a health perspective but are a Pandora’s Box from the perspective of life and health insurance. Unfortunately, the regulators are not in a hurry to catch up on matters such as this as these relate to the protection of consumer interests. Federal and provincial elections are on the horizon and politicians of various colours are already out shaking the bushes. IMO, the advocacy associations, incl. Advocis and IFBC should be picking up the ball on this issue. Whether they will or not remains to be seen.

  13. LSM Insurance 12/08/2013 at 2:04 pm

    You make a good point about Advocis and IFBC looking into this. I have heard nothing on this front

  14. LSM Insurance 12/08/2013 at 2:05 pm

    Thanks Casey. Good points – maybe a high profile decline is what is needed to get this issue looked at more closely.

  15. Peter 12/09/2013 at 6:43 pm

    Is there a chance genetic testing would be exempt as a from a life or living benefit policy ? Because as far as I understand, its considered a ‘medical test’ …

    An article on genetic discrimination featured on the Advocis website says: “Failure to disclose those results could prevent a benefit being paid out in the future.”

  16. LSM Insurance 12/09/2013 at 6:45 pm

    The challenge is with most traditional applications the genetic test results would be captured under one of the insurance applications catch all questions.

  17. LSM Insurance 12/10/2013 at 9:34 am

    Advocis shared their stance on the issue of Genetic Testing and Life Insurance via Twitter

    @LSMinsurance “Chantal, interesting article! Definitely a topic to explore further. No official stance yet!”

  18. LSM Insurance 12/11/2013 at 8:41 pm

    Thanks for your insights Jack and your kind words. Sounds like you to are pretty passionate about this issue.

  19. Jack Camperfeld 12/11/2013 at 8:42 pm

    for real insight, some links to this issue:

    link to clhia.ca

    link to clhia.ca

    link to clhia.ca

  20. LSM Insurance 12/12/2013 at 9:40 am

    Thanks Jack – You’re right there is a ton of good information there

  21. LSM Insurance - 12/31/2013 at 4:28 pm

    The following is an interesting article from the Globe and Mail “Do we need legislation to protect Canadians’ genetic rights? The Yes side” link to theglobeandmail.com

  22. Louise 01/03/2014 at 8:09 am

    Where can you go for Genetic Testing in Canada and is a lot cheaper in Us versus Can. Ty

  23. LSM Insurance 01/03/2014 at 8:12 am

    Thanks Louise.
    The CBC covered this topic.

    “Anyone can get a genetic test, but it is quite expensive — private clinics in the U.S. will do it for about $3,000 to $4,000. In Canada, provincial governments will cover the cost of the test, but only if the individual meets specific criteria.” link to cbc.ca

  24. LSM Insurance 01/03/2014 at 8:14 am

    Medisys Origin may also be another good Canadian Source for getting information on genetic testing in Canada link to medisys.ca

  25. Nancy 01/11/2017 at 6:41 pm

    …just because you have a genetic predisposition doesn’t mean you will contract said disease. In fact less than 18% of women who test positive for the breast cancer gene actually contract the disease, so I see this as just another reason for the insurance companies to raise premiums. It’s simply a money grab, but please, keep up the fear tactics. Incidentally the breast cancer gene is not restricted to women as men carry it too.

  26. LSM Insurance 01/12/2017 at 2:56 pm

    Thanks for the note Nancy

    This just came in link to theglobeandmail.com

    ” Canada’s life insurance industry will announce new measures Wednesday that it says will protect consumers from genetic discrimination. But critics warn the changes won’t stop Canadians from being unfairly targeted because of their genetic risk profile.

    According to details of the voluntary pledge, insurance companies will no longer ask individuals applying for life insurance up to $250,000 for genetic testing information or use any information from prior genetic tests. Companies may use genetic testing information for individuals applying for greater amounts, but won’t ask for results if tests were done for medical purposes and the applicant is unaware of the outcome and won’t require family members to undergo genetic tests.”

  27. Nancy 01/13/2017 at 3:21 pm

    … the percentage that I quoted you is incorrect it should show 8% not 18.
    Nancy

  28. Ami Maishlish 04/21/2017 at 12:16 pm

    It is HIGH TIME that consumer rights and protections, as well as human rights that are (presumably) protected under the Charter of Rights and Freedoms be given AT LEAST equal weight and consideration as the interests of shareholders in financial institutions!!! Regretfully, consumers in Canada are not as well organized as in the US, and are nowhere as well funded as the financial institutions’ special interest lobbies. “Money talks and clout shouts” in political circles of all colours.

    The matter of financial institutions or employers requesting or demanding genetic test information is purely and squarely a human rights and Charter issue. There is no question that genetic test information reveals (or may be interpreted to reveal) ethnic or racial heritage. Neither insurance companies nor banks nor other financial institutions – nor for-profit employers – have a right or special contra-Charter privilege to request or demand access to ethnic or racial origin in application for financial services or employment. Yet, forced access to genetic test information would provide such information – definitely or presumptive. Bill S-201 was formulated and presented to protect Canadians and the basic human rights and freedoms that are provided for under the Charter. Fortunately, the bill passed, despite Trudeau’s opposition to it.

    One of the arguments raised by the CLHIA (the Canadian Life & Health Insurance Association)was published in a recent article in the Investment Executive publication. The argument, copy-pasted from the article is that:

    “Blocking access to genetic information, CLHIA states, would lead to less predictable claims experiences and higher prices for all consumers. The association points to a study by the Canadian Institute of Actuaries that concluded that Bill S-201 would lead to price increases of 30% for men and 50% for women for term life insurance policies. That would make life insurance unaffordable for many lower-income and middle-class Canadians, according to CLHIA.”

    For the full article, see: link to m.investmentexecutive.com

    With all due respect to those making the argument that if insurance companies are denied the ability to demand genetic test information in applications for life insurance, the consequence would be a “price increases of 30% for men and 50% for women for term life insurance policies”, the proverbial “facts on the ground” do not support this argument, relegating it to the dump-heap of scare tactics. In fact, premiums for term life insurance policies in general have DECLINED by more than 50% over the most recent 25 year period. Moreover, pricing of term life insurance continues to decline as insurance companies compete for the business. See also http://www.winquote.net for further insight into life insurance costs in Canada (Please note that http://www.winquote.net is a consumer information service and not an insurance sales site. If you wish to purchase coverage, it is suggested that you consult with a professional consumer-interest focused life insurance advisor. For that purpose, http://www.winquote.net provides a postal code based lookup of such advisors by clicking on “Broker Search”)

    Speaking of information flow and fair and complete disclosure under the concept of utmost good faith, it is interesting that financial institutions would want the consumer’s personal “foundation blocks” in their push for the ability to demand and require genetic test information from applicants; yet, on the other hand, generally fail to disclose the effective financing cost rate for the payment of insurance premiums other than yearly. Some agents’ sales websites go even further – to “represent” the payment of premiums annually (yearly) instead of monthly as a “discount”. Yes, some even use that word as if it was true. It’s akin to someone trying to sell you something by saying that you get a “discount” if you buy an item with available money rather than charge it and pay for it in installments, with financing charged at 18% per year. Daaaah!!! Incidentally, when you visit http://www.winquote.net you will see the rates at which the premiums are financed if paid for monthly instead of yearly. In the majority of instances, the rate is higher than 18%, and normally paid for with net, after tax, earnings. For an individual in the Trudeau-special 53.53% marginal tax bracket (Ontario), that works out to just over 40% in terms of gross, pre-tax earnings. Now, show me a GIC or other guaranteed investment issued by ANY financial institution in Canada paying 40% interest pre-tax, or even one tenth of that rate.

    So, financial institutions want to be able to demand your genetic makeup but will not even openly disclose the rate that they charge to finance your premiums monthly. The regulators may be asleep at the switch on this but, as always, buyer beware.

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