Members of parliament have voted in favour of legislation allowing Canadians to keep their genetic information private, despite warnings from the life insurance industry that the new legislation will result in drastically higher insurance premiums.
Some consumer advocates are celebrating the development as a win for clients’ privacy and human rights: however, life insurers still are exploring ways of challenging the controversial legislation.
Bill S-201: An Act to Prohibit and Prevent Genetic Discrimination, passed in a vote in the House of Commons in early March. The pri
vate member’s bill, still to be ratified by the Senate, would prohibit any person or entity – including life insurers – from requiring an individual to undergo a genetic test or disclose the results of a genetic test as a condition of providing goods or services.
According to a statement from the Canadian Life and Health Insurance Association Inc. (CLHIA), the industry is “extremely disappointed” the bill was passed without significant amendment: “We believe that the bill would have unintended consequences, including on the affordability of insurance. The industry is reviewing the impact the passage of this bill will have on consumers and is considering its options in light of Parliament’s decision.”
Life insurers do not require insurance applicants to undergo genetic testing as part of the insurance application process. However, in cases in which applicants have had a genetic test that informs them of their predisposition to disease, insurers have stated, they need access to that information in order to assess the risks properly.
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.
However, other insurance industry participants doubt that the proposed legislation would have such a significant impact on premiums. Ami Maishlish, president of Markham, Ont.-based CompuOffice Software Inc. – the company that developed LifeGuide, the life insurance comparison and quotation software – notes that insurers were underwriting policies long before genetic testing was available without any negative financial consequences.
Furthermore, Maishlish notes, even without access to genetic test results, insurers can collect genetic information in other ways. For example, many life and health insurance application forms ask applicants whether their family members have been diagnosed with any hereditary diseases. “The insurance companies already gather this information,” he says.
In Maishlish’s opinion, the passing of Bill S-201 is positive for life insurance applicants. “I’m very glad that it was passed,” he says. “It’s a human rights issue more than anything else.”
Although having access to genetic test results could improve profits for insurers, Maishlish adds, he does not expect premiums to increase as a result of the implementation of Bill S-201.
In the event that genetic testing becomes more common as a way for individuals to determine their predisposition to disease, however, the negative impact of Bill S-201 on insurance companies could become significant, according to William Watson, acting chairman of the department of economics at McGill University in Montreal and senior fellow with the Fraser Institute. “I think people are just learning that they can go get these tests,” he says. “But once 30% of the population starts doing it, then [the test results] can become material.”
Watson says the proposed legislation creates a knowledge gap between applicants and insurance companies, putting insurers at a disadvantage: “You [as an applicant] are walking in knowing what the odds are and you’re asking the insurance company to sell you insurance against those odds, but without fully informing the company what those odds are. So, it just seems completely unfair.”
The implementation of the bill could face hurdles. The insurance industry, along with politicians that include Prime Minister Justin Trudeau and Justice Minister Jody Wilson-Raybould, has expressed concerns that the bill is unconstitutional because the provinces have jurisdiction over the insurance industry. Wilson-Raybould has indicated that she plans to put forward a reference to the Supreme Court of Canada on the constitutionality of the bill, which could put the fate of the legislation in jeopardy.
In the meantime, the insurance industry is taking steps to address clients’ concerns related to genetic testing. CLHIA, whose member companies account for 99% of Canada’s life and health insurance business, recently amended its industry code to include a commitment that its members won’t request or use genetic testing information for new life insurance applications up to $250,000 anymore, beginning in January 2018. That means approximately 85% of life insurance applicants won’t be asked for genetic test results.
In order to prevent the potential for prejudice in the underwriting process, however, Maishlish believes genetic testing information should not be accessible to insurers at all.
“Genetic testing invariably will provide information as to which racial and ethnic group the person belongs to. None of the insurance companies have a right to that information,” he says. “If it is allowed, we are opening a Pandora’s box that generations to come will regret.”
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