Insurers lose genetic testing fight

Canadian insurers can no longer ask applicants to disclose genetic test results.

Bill S201 — The Genetic Non-Discrimination Act (GNDA) — received Royal Assent on May 4, 2017. It prevents employers, insurance companies and anyone else providing goods and services via a contract from asking people to undergo genetic testing or to disclose genetic test results. Attempts to remove the insurance industry from the bill’s scope were unsuccessful.

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The industry’s longer-term approach to the law will be tempered by the federal government’s decision to refer the GNDA to the Supreme Court of Canada. The Liberal government (along with several provinces) has expressed doubts as to the law’s constitutionality, saying it may infringe on the provinces’ jurisdiction over health insurance.

Supporters of the legislation say it will help protect people who would otherwise not be tested for fear of discrimination. Insurers, unsurprisingly, are concerned about potential increases to the price of insurance and threats to the industry’s viability.

“When you move to an environment where […] the applicant knows more than the insurer, then you run the risk of anti-selection,” says Stephen Frank, senior vice-president, policy, at the Canadian Life and Health Insurance Association (CLHIA). “So people who know they are at higher risk of becoming ill or dying earlier than the general population will seek out insurance, and will seek out more than they otherwise would. And that raises costs for everybody.”

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Over the long term, says Frank, as genetic tests become better and more prevalent, increases in premium costs could price average Canadians of the market. He points to a study by the Canadian Institute of Actuaries that projects, over time, a 50% rise in premium costs for women and a 30% rise for men.

Others are less concerned: genetic testing is only a small part of assessing risk in an increasingly sophisticated underwriting process; even without genetic test results, insurers currently do an effective job of analysing a person’s predisposition to disease. Further, supporters of the legislation say rates haven’t increased in countries where genetic information is protected by privacy laws.

Frank, however, says those markets differ significantly from Canada’s. European policies, for example, tend to have shorter terms: 5 to 10 years, as opposed to 30 or 40.

“That’s a totally different reality. If I can re-underwrite you every five years, then I’m not that concerned about genetic test results not being disclosed, because I’ll catch [the condition] five years down the road. When I’m locking myself in for a generation, then obviously I need to be more careful about the underwriting at day one.”

Canadian insurers could respond to the new legislation by moving to shorter terms, raising premiums, excluding certain conditions or putting death benefit caps in place. The industry, he points out, years ago decided voluntarily not to ask applicants to undergo genetic testing, although it had required people to disclose the results of tests already taken. More recently, in response to the proposed legislation, Canadian insurers decided not to ask for results for policies under $250,000, a move that would have accounted for approximately 85% of policies. “We thought that was a good compromise,” says Frank. “Now that the bill is law, that cap is irrelevant.”

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Susan Goldberg

Susan is an award-winning freelance writer and editor based in Thunder Bay, Ont. She has been writing about personal finance for more than 20 years.