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About the moratorium

Background

  • In Australia, life insurers are legally allowed to use applicants’ genetic test results to discriminate – meaning that they can deny applicants life insurance cover or increase the cost of their cover based on genetic test results. This is called genetic discrimination.
  • Health insurance is protected from genetic discrimination by a specific Australian law and therefore applicants cannot be experience genetic discrimination when applying for health insurance.
  • Research shows that because of fears of genetic discrimination, many people who are at risk of genetic conditions choose not to have clinical genetic testing (which could lead to preventative action or early treatment), or choose not to be involved in genetics research.
  • Other countries have banned or restricted life insurers’ use of genetic test results to protect consumers.
  • In the UK, an agreement (which is called a moratorium) between the UK government and the life insurance industry bans life insurers from using genetic test results in most circumstances.

The events leading to the Australian Moratorium on Genetic Testing

  • In 2018, an Australian Parliamentary Committee affirmed that genetic discrimination is a problem of increasing significance and recommended that the use of genetic test results in life insurance should be banned in Australia, using a moratorium like the one in the UK.
  • The Australian government hasn’t responded to these recommendations, but in July 2019, the life insurance industry body, the Financial Services Council, introduced an agreement which is self-regulated and restricts life insurers’ use of genetic test results up to certain policy limits.
  • The Financial Services Council fact sheet can be found here and a summary is set out in the box below.

Summary of the Australian Moratorium

  • The Australian moratorium prohibits life insurers from using genetic test results for policies up to thresholds of
    • $500,000 for death/total permanent disability,
    • $200,000 for trauma/critical illness, and
    • $4000/month for income protection cover.
  • Above these thresholds, all genetic test results must be disclosed if requested by the insurer. This includes genetic results from research studies.
  • Importantly, favourable genetic test results, which show an applicant does not have the genetic variant which causes their family history of disease, can be submitted with any policy application. These can be used to counter any negative underwriting consequences of a family history of disease.
  • The moratorium applies to life insurance policies only (this includes death, Total and Permanent Disability (TPD), trauma/critical illness cover and income protection cover).
  • The moratorium does not apply to health insurance (which is already protected from discrimination by the Private Health Insurance Act 2007 (Cth)), or travel insurance, which is not regulated by the FSC.
  • The FSC moratorium is due to be reviewed in 2022, and will expire in 2024 unless renewed.