Almost two thirds (61%) of Australian adults say they are unwilling to pay any extra life insurance premiums to subsidise people who have had an adverse genetic test result, according to findings of a survey published by the Financial Services Council (FSC).
A small minority are prepared to pay a little extra (A$5 [$3.61]), but this reduces dramatically as the subsidy increases. People most opposed to shouldering the cost are more likely to be older and with lower incomes.
The research findings also show that:
- Just over half of the Australian community (51%) are in favour of setting insurance premiums based on the likelihood of making a claim in the future. For life insurance, this is based on a range of factors such as a person’s age, gender and health history. Only one in five Australians (22%) oppose individually set premiums, and one in three are unsure.
- Almost two thirds of Australians (63%) would be prepared to take a genetic test that could tell whether they have a higher chance of getting a serious disease in the future. Within this group, the overwhelming majority would take a test through the established medical system (for example, Medicare), whereas a few would prefer to pay A$200 to take the test anonymously.
The FSC undertook a survey of 1,000 Australians in July 2018 to gauge the community’s appetite for an element of cross-subsidy that would occur through the introduction of a moratorium to stop insurers using the results of previously taken genetic tests for life insurance products up to $500,000.
The moratorium, which the FSC announced in October, is part of the proposed new Life Insurance Code of Practice and follows calls from geneticists and recommendations from the 2018 Parliamentary Joint Committee inquiry into the life insurance industry. From July 2019, every Australian will be able to get up to A$500,000 ($361,000) of life insurance cover without having to disclose an adverse genetic test result. It will help ease consumer concerns about taking a genetic test which might impact the ability to get life insurance and will also help geneticists continue their scientific research without barriers.
FSC Senior Policy Manager Nick Kirwan said, “Life insurers need to balance the interests of all Australians, and not just act in the interests of those who have had an adverse genetic test result. The moratorium is designed to help get this balance right.”
Mr Kirwan said with increasing government support for genetic testing and falling costs, the number of Australians being tested is set to increase.
“The life insurance industry wants to promote genetic inclusion. However, the moratorium cannot be open-ended, because the cost of helping customers who have had an adverse genetic test result falls to the other customers to pay for it. The experience of other countries shows that the cost in the short term is likely to be small but, with the science advancing so rapidly, no one knows the long-term cost.
“Australian life insurance policies are for the very long term and can last for 40 or 50 years or more. The industry needs to have caps for the different types of life insurance and regular reviews to ensure the balance is right and the long-term costs are manageable for all customers.”
The FSC is a leading peak body which sets mandatory standards and develops policy for more than 100 member companies in Australia’s largest industry sector, financial services. Full members represent Australia’s retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies.