Genetic testing could ‘destabilise’ insurance industry
***Updated*** The rising availability of genetic testing to ordinary Australians could result in significant increases in life insurance claims costs, according to a new report.
Interest in genetic testing has grown in recent years due to lower costs and, coupled with a greater desire for Australians to track their ancestry, this poses challenges for the life insurance industry, according to BT Financial Group director of insurance Jessica Chen and former actuary Alan Doble.
“Consumers who don’t disclose their health risks, or those who withdraw from life insurance because genetic tests show they are unlikely to suffer heritable diseases, could destabilise the insurance industry,” the pair warned in their paper Genetics - A Testing Time for Insurers.
The paper said even a small increase in the number of genetic tests being carried out would have a “significant” impact on the industry and pushing claims costs higher.
“For the life insurance industry, if health information known to the insurance applicant is not disclosed, it may be expected to lead to anti-selection, increasing premiums and ultimately impacting the financial sustainability of the industry,” the paper said.
“Conversely, if it is known that genetic test information may need to be disclosed for use in underwriting life insurance policies, that may deter people from undertaking a test that could benefit their wellbeing.”
The authors said this created a “fundamental tension” between insurers’ desire not to discriminate between applicants and the sustainability of their business model.
Correction: A previous version of this article mistakenly attributed Genetics - A Testing Time for Insurers to the Actuaries Institute. It has since been amended to clarify that the paper and its views are those of authors Jessica Chen and Alan Doble and not the institute
Government announces royal commission road map
The government’s royal commission road map has been released to the public to ...
Super reforms don't go far enough: ISA
New legislation attempting to close a loophole estimated to cost Australians $1....
Adviser portal launched by WA Super
WA Super has launched a new digital adviser portal in a proactive move to better...