Why Genetic Testing Has Insurance Companies Up In Arms
Life insurance companies in Canada are once again initiating new measures to help protect consumers from discrimination based on their genetic profile. Critics, however, are not convinced the changes will ensure fair treatment.
The voluntary pledge states that people applying for a life insurance policy of up to $250,000 will no longer be asked or required to provide information about previous genetic tests. Insurance companies are still allowed to use this information when applicants seek larger amounts, but consumers won’t be asked for the results of the tests if done for medical purposes and the person has not been informed of the outcome. Family members of the applicant won’t be required to undergo genetic testing.
According to Frank Swedlove, president and CEO of the Canadian Life and Health Insurance Association, “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.”
The issue of genetic discrimination has increasingly become a contentious topic in Canada as scientific advances and lower testing fees make it possible for anyone to know in advance if they may have a gene predisposed to certain diseases, cancer or other health conditions. Every year the number of diseases that can identified through genetic testing increases.
Proponents of the federal bill banning genetic discrimination content the new measures don’t reach to the root of the problem. Canadians could still be targeted by insurance providers, employers and others.
Liberal MP Rob Oliphant, who sponsored the bill in the House said, “Legislation is needed to protect Canadians from being unfairly targeted because of their genes. I don’t think voluntary efforts, when it comes to discrimination, are ever appropriate. The reality is there is a power imbalance.”
Noah Shack, director of policy at the Centre for Israel and Jewish Affairs stated, “They’ve known about the problem of genetic discrimination for years and chose to really do nothing until the 11th hour. Insurance is only part of the issue. Canadians need protection from the host of ways companies, landlords, employers and others may use genetic testing results.”
As of January, 2017 life insurance companies in Canada stopped requesting or using genetic testing information for new life insurance applications up to $250,000. The latest insurance industry policy is slated to become effective as of Jan. 1, 2018 and would only apply to life insurance, not critical illness or other products.
Wendy Hope, vice-president of external relations with the Canadian Life and Health Insurance Association, stated in an e-mail, “Such products are directly related to health status and that not using or having access to genetic testing information would make the cost of these products prohibitive.”
Mr. Swedlove said the commitment made by the industry will meet the needs of the 85% of Canadians with life insurance coverage of $250,000 or less, therefore new rules aren’t needed.
“The bill isn’t really necessary to meet the needs for the vast majority of Canadians,” he said.
Mr. Swedlove went on to say that the bill could present serious harm because applicants genetically predisposed to critical health conditions could drive up the costs for everyone if they are allowed to enter the “pool” or category from which premiums are set.
Bev Heim-Myers, chair of the Canadian Coalition for Genetic Fairness, said capping life insurance without genetic testing requirements at $250,000 is discriminatory in and of itself and unfairly targets those who might want or need more coverage.
Insurance issues aside, she said legislation is necessary because without it, Canadians may forgo genetic testing that could inform them of potential health risks and allow them to take preventive action. According to MedCan, the majority of people who have had genetic tests make proactive life changes such as healthier diets and more exercise.
“This is about the health and well-being of Canadians,” Ms. Heim-Myers said. “This is about Canadians being able to make their own choices.”
Debate is About More 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 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,”
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.
Legislation is Not Necessary
CLHIA president Frank Swedlove says legislation is not necessary. The industry is responding to concerns raised about the amount of personal information insurers can gather.
He says self-regulation pre-empts federal legislation. The industry doesn’t require new genetic testing during the application process, but customers must disclose all medical information and history when buying a new policy – including genetic tests.
Swedlove says collecting genetic test results for insurance policies of $250,000 or more is necessary in order to manage the industry’s financial risks.
“Our goal is to continue to ensure that all Canadians can access insurance at fair and reasonable prices,” Swedlove says.
Pros to Consumer and Cons to Insurance Companies
Bill S-201, the Genetic Non-Discrimination Act, seeks to revise the Canada Labour Code and the Canadian Human Rights Act to make it illegal for employers, insurance companies and anyone else entering into a contract or providing goods or services to require anyone to undergo genetic testing or to disclose the results of a genetic test.
The bill was designed to ban discrimination based on a person’s genetic makeup. For example, if tests reveal you have the Huntington’s disease gene, you could be fired or denied employment or insurance. Proponents of the bill, initiated in 2015 by Liberal Sen. James Cowan, argue that fear of such repercussions may prevent people from getting genetic testing.
The insurance industry disagrees with this legislation arguing that it could impede access to insurance for some Canadians and thereby severely compromise the viability of the industry. In theory, if a person knows he is genetically predisposed with a life threatening disease, he could buy millions of dollars worth of life insurance at essentially discounted rates, without telling the insurance company he may die early.
“The concept of equal information is absolutely at the core of insurance,” says Stephen Frank, senior vice-president, policy, at the Canadian Life and Health Insurance Association (CLHIA). “The rule is, if we’re going to offer you insurance, both of us need to understand the risk that we’re taking, so that we can enter into this in good faith. And this type of approach would break that chain.”
The industry states that if the bill passes the result would be higher premiums for everyone. “You’d have to write a lot of $300,000 policies to make up for a couple million dollars of unexpected loss,” says Frank. He points to a Canadian Institute of Actuaries study that estimated, over time, passage of the bill could result in 50% premium increases for women and 30% for men.
Others believe the impact would be less severe. The Office of the Privacy Commissioner of Canada, citing 2011 and 2012 studies, concluded the legislation “would not have significant adverse impact on the viability of the life and health insurance industry,” and that premiums would likely not rise more than about 3% overall and the industry could absorb this increase.
Dr. Michael Hoy, an economics professor at the University of Guelph who specializes in insurance market information, says, “No one can predict the precise impact of such legislation. The insurance industry is justified in arguing that people possessing devastating genetic information would be prompted to buy more insurance.”
“But the thing is,” he continues, “there aren’t very many people in the population who have such devastating information that they can keep [it] private from insurance companies.” Given that applicants would still have to disclose personal and family medical histories, insurance companies would know if someone had a strong family history of, for example, breast cancer or Huntington’s disease, and would rate policies accordingly.
“So, if you spread those extra costs across the entire insurance pool,” continues Hoy, “they probably won’t lead to very substantial increases. I’m not saying that 30% or 50% increases couldn’t someday be a sensible set of assumptions, but I think that’s very far down the road.”
Toronto insurance consultant David Wm. Brown is less sanguine. “Genetic testing is at its embryonic stage. Eventually, we’re going to be able to test for everything,” he says. “If we get to that point, and applicants can have more knowledge than insurance companies on almost every question they ask, then it completely skews a system based on mutual disclosure of information.”
Frank says insurance companies voluntarily agree not to ask applicants or existing policyholders to undergo genetic testing. And beginning January 1, 2018, CLHIA members won’t ask for the results for policies worth less than $250,000, which is about 85% of policies issued. Any amount over that, he says, “we would still want to understand why you are asking for so much coverage.”
He continues to say these measures take into account the importance of genetic privacy to Canadians. “It’s a compromise that will allow the industry and the market to be sustained at a price point that people find affordable, but that will protect industry from being taken advantage of by people who have information they are not disclosing.”
The way the bill stands now, insurance companies are not allowed to ask applicants for genetic testing results. Should legislation pass as it currently written, says Brown, advisors would be put into murky water pertaining to disclosure and ethics. The insurance application, he points out, directly asks agents if they know of any factors that might affect underwriting.
“If I know that somebody has had genetic testing, then I personally believe I am obligated to inform the [insurance] company that I do know that information. We have a certain fiduciary responsibility to both the provider and the purchaser, and I think anyone who wants to do the right thing has to disclose what they know. How [the legislation will] deal with that, I don’t know,” he says.
Liberal MP Randy Boissonnault has put forward several motions to amend Bill S-201, effectively removing the insurance industry from its scope. The amendments and the bill are up for vote in the House of Commons in early April.
In the meantime, the Genetic Non-Discrimination Act points to a more systemic problem for the insurance industry – public perception that insurance companies are predators.
“It’s a bit of a mis-perception from the advocates, that we use genetic tests as a way to say no,” says Frank. “Insurers want to write business. We’re in the business of covering people. So we’re never going to be looking for reasons to say no.”
Brown agrees. “People still don’t understand the concept of insurance as a spread of risk among a common ground of people,” he says. “All they see is, ‘The bad insurance companies want to get more information in order not to pay claims.’” He argues that Bill S-201 could pass solely on this emotional argument, which, ironically, could have negative repercussions for the industry and consumers alike. “We need to do a better job of explaining insurance to the public.”