Thought leadership from our experts

Next generation genome technology – will insurers get the sequence?

Since the completion of the Human Genome Project in 2003, advances in gene technology have exploded. Next generation sequencing technology now allows an individual's entire Genome to be sequenced at once.

The benefits, particularly for those suffering rare genetic conditions, are significant. Testing that previously could have taken years can now be completed in weeks at a fraction of the cost and with significantly improved accuracy – diagnosis rates tripling from around 20% to up to 60%1. Not only does this assist patients and their families looking for answers, but it also ensures more timely delivery of appropriate treatment and associated savings for public health budgets.

However, this "tremendous revolution in healthcare"2 does not come without many ethical and practical difficulties. One of the issues relates to the possibility that individuals could find themselves discriminated against due to their genetic characteristics, particularly by life insurance companies. This has been an ongoing concern for consumer groups around the world for some time.

The insurer's position

Life insurance involves pooling of risk. It may be difficult to assess the likelihood that a particular individual will become sick or die in a given year, but "when several individuals are pooled together, their aggregated financial risk may be predicted with some accuracy", and individual premiums priced accordingly.3

For risk pooling to work, both parties must have the same information to allow accurate assessment and pricing of the risk. This is one of the concepts that underpins the obligations of utmost good faith and disclosure in any insurance contract.

Life insurers argue that genetic information should be treated the same as any other information provided to them as part of the underwriting process. Arguments include:

a) Genetic test information is health information that is part of the individual's history and should not be treated in an exceptional way in the insurance context.4 Indeed, genetic information is already collected through questions related to family history. Genetic testing may be seen as a more accurate way to gather this information.
b) There is already a number of people who cannot be offered insurance based on personal and family history, and this number may not be increased by access to genetic test results. In fact, there may be times where genetic testing will assist in obtaining insurance against a poor family history.
c) A socialised insurance system would involve significant cost subsidies between different groups of policy owners and could risk escalating costs and reducing participation rates, as witnessed in the private health system in Australia.5

Individuals' concerns

It is probably fair to say that individuals seeking insurance understand the obligation to disclose information to enable the insurer to assess their risk and associated premium (and if they don't there is an obvious educational piece to be addressed by the insurer). The concern is that genetic information will be used to unfairly discriminate against individuals, and this fear could have both individual and social consequences. This is particularly so for predictive testing in asymptomatic individuals, as opposed to diagnostic testing for individuals demonstrating symptoms. For example:

a) We already know that gene changes may cause disease in some people and not in others, and the severity and age of onset when it does occur can vary significantly. This is known as incomplete penetrance, highlighting the fact that genetic testing deals in probability, and on the whole is not deterministic.6
b) This issue has recently been highlighted with the significant increase in genetic studies relating to healthy populations which have demonstrated the following:
i. Many changes previously thought to cause disease are in fact benign and commonly found in the healthy population.
ii. Combinations of genes may be more important than changes in one or two genes, and we are only just starting to understand what those combinations might look like.
iii. Environmental factors can have a great role to play in determining if and when gene mutations become symptomatic.
vi. We currently have insufficient healthy population data to enable robust statistical analysis.7
c) Further, the rise of direct-to-consumer genetic testing means that an increased number of consumers are obtaining genetic information, but the accuracy of that information is variable.8
d) From the above, the potential is obvious for genetic test information to be misunderstood, misinterpreted, and treated as having greater probative value than it deserves.
e) This potential for unfair discrimination may deter individuals from taking health or other related genetic tests. For example, in one study, when informed of insurance implications, the number of people who declined predictive testing more than doubled.9

In summary, insurers could be making decisions on poorly understood genetic data, which could have implications for both the individual and the health system more generally.

International response

Canada's Genetic Non-Discrimination Act received royal ascent on 4 May 2017.10 The Act prohibits insurers imposing a requirement to undergo a genetic test or to disclose the results of a genetic test, and prevents the collection, use or disclosure of the results of a genetic test without the individual's written consent.11 The Act also amends the Canadian Human Rights Act to specifically prohibit discrimination on the basis of "genetic characteristics".

In the UK, a Concordat and Moratorium has been in place since the 2000s in relation to predictive genetic testing.12 Life insurers have agreed not to ask customers to undergo predictive genetic testing or to ask for genetic test results where the life insurance cover sought does not exceed £500,000. Life insurers may seek predictive genetic test results for policies above this limit in agreed circumstances, but at this stage this only extends to Huntington's Disease.

In the EU, the Council of Europe's Convention on Human Rights and Biomedicine prohibits discrimination on grounds of genetic characteristics and states that insurers "should not require" this data unless specifically authorised by law. While EU members have taken different approaches, many have enacted legislation that prohibits the use of genetic information by life insurers.

Australian position

With the current Australian Federal Government enquiry into the life insurance industry being conducted by the Parliamentary Joint Committee on Corporations and Financial Services, this issue has again come to the fore in the Australian life insurance industry. The Joint Committee is due to report on 31 October 2017.13

In Australia, the life insurance industry complies with the Financial Services Council's Genetic Testing Policy.14 The Policy prohibits members asking applicants to undergo genetic testing, but if genetic test results are known to the applicant they must be disclosed. This is generally considered to be consistent with the principles of utmost good faith and equality of information which underpin the insurance industry.

The Policy otherwise acknowledges the public utility in scientific research and an individual's right "not to know". Applicants need not disclose that they have had a genetic test as long as they will not receive any personal or family information from the research.

It is also generally accepted that, if insurers are to use genetic or other health information to offer varying premiums, they will need to be able to demonstrate a sound actuarial basis for the use of the information in the underwriting process to ensure they do not breach the Disability Discrimination Act 1992.15

An example of how this might play out is a reported case of an individual who had a gene associated with increased colorectal cancer, but was also able to demonstrate that appropriate screening reduced his cancer risk to equal to that of the general population. The life insurer refused cover and then refused to provide information to support that refusal. The individual had to commence proceedings in the Human Rights Commission before the insurer would engage with him, eventually issuing a policy, suggesting that the insurer did not have a sound actuarial basis for its original position.16

Should insurers get the sequence?

It is probably this last comment that is most relevant. Next generation sequencing technology on healthy populations is calling into question the reliability of so-called predictive testing. Until improved actuarial estimates based on sound statistical data are established, even in jurisdictions where its use is permitted, underwriters should proceed with caution in the manner in which they use genetic testing. If such information is to be used, underwriters should seek information from expert geneticists to assist with actuarial modelling.

Unless life insurers can demonstrate sound actuarial analysis, individuals are likely to continue to view the use of genetic information by insurers with suspicion, and insurers may find themselves guilty of unjustifiable discrimination. To move regulators, life insurers will need to convince the regulators that they are using sound data, which will be challenging given the current state of the science.

Finally, studies seem to be indicating the greater influence of environmental factors in determining whether many of the gene sequences we have associated with disease actually give rise to disease. Given this, underwriting based on lifestyle and other environmental factors may continue to be more important to the underwriting process than gene test results.

  1. Dr Marcel Dinga, Head of Gavin's Kinghorne Centre for Clinical Genomics quoted in "Australian patients to get access to genome tests used to diagnose rare genetic disease" Meredith Griffiths and Sophie Scott ABC News 27 July 2016
  2. Professor John Mattick, Executive Director Garvin Institute quoted in "The test that could change your life: Genome testing available in Australia from the Garvin Institute" Sun Dunlevy Newscorp Australia Network 26 July 2016
  3. Ahwaz Chagani and Philippe Michaud "Genetic Testing and Insurance" 28 October 2015
  4. Investment and Financial Services Association (IFSA) Submission G049 to the Australian Law Reform Commission Report No. 96 14 January 2002).
  5. IFSA Submission G049 to the Australian Law Reform Commission Report No. 96 14 January 2002.
  6. National Health and Medical Research Council "Medical Genetic Testing - Information for Health Professionals" April 2010 pp9-10.
  7. Australian Genetic Non-Discrimination Working Group Life Insurance Industry Submission 60 to the Parliamentary Joint Committee on Corporations and Financial Services Inquiry November 2016
  8. Ibid
  9. Keogh, L et al (2009) "Is uptake of genetic testing for colorectal cancer influenced by knowledge of insurance implications?" Medical Journal of Australia, 191(5), 255
  10. The Act may be referred to the Supreme Court over concerns that the Act is unconstitutional.
  11. There is an exemption for healthcare practitioners and those conducting scientific research.
  12. The Concordat has been in place since 14 March 2005 and the Moratorium since 1 November 2001. The agreement has been extended to 2019
  13. See: Parliamentary Joint Committee on Corporations and Financial Services website:
  14. FSC standard number 11 genetic testing policy. Members of FSC are required to comply with the Policy but non FSC members also follow the Standard
  15. National Health and Medical Research Council "Medical Genetic Testing - Information for Health Professionals" April 2010 p57.
  16. Keogh and Otlowski "Life Insurance and Genetic Test Results: a Mutation Carrier's Fight to Achieve Full Cover" the Medical Journal of Australia, 199(5) pp363-366.