FSC reports on the genetic testing moratorium

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The Financial Services Council (FSC) has released its findings on genetic testing data from the risk insurance industry. It was found there was no influence or a positive influence from disclosing a genetic test result for all the life insurance applications below the moratorium limit, even if an adverse result was inadvertently disclosed.

The purpose of the research was to ensure Australians were not being penalised for disclosing genetic information, or conversely, withholding it. Genetic tests may be an important health indicator for policyholders, with the goal to not dissuade people from getting tested or participating in research for fear they will have their insurance claims rejected as a result.

The life insurance industry has been collecting genetic testing information since early 2021 for the purposes of the moratorium. Over 800 cover applications were made that included a genetic test result in the six months to 30 June 2021.

Key findings of the data

  • In 653 cases, the genetic test result had no impact on underwriting

  • In 111 cases a favourable genetic test impacted the results positively

  • Forty-nine of the cases were over the moratorium limit and were adversely affected, but terms were offered and the person could re-apply for a lower amount of cover and have the genetic test ignored

  • Twenty-four cases were over the moratorium limit and were adversely affected without terms being offered

  • In nine cases an inadvertently disclosed adverse genetic test result had no influence

  • No applicant who was under the moratorium limit and had an adverse genetic test result saw a negative impact on their insurance coverage

The FSC is to conduct a review of the moratorium in 2022 to consider its objectives, cover levels and the impact on other policyholders. The moratorium ends in June 2024.

The moratorium

  • Every Australian can get up to $500,000 in life insurance cover without the requirement to disclose an adverse genetic test result

  • Consumers are not required to take out a genetic test when applying for life insurance

  • Consumers are not required to disclose genetic tests taken as part of research if the consumer does not receive the results

  • Insurers can ask for or use adverse genetic test results if the test is relevant and the applicant is applying for over $500,000 in cover for life or total and permanent disabiity cover, over $200,000 of trauma cover, or $4,000 per month of income protection cover

  • Consumers may disclose a favourable genetic test if they wish

  • Insurers will take into account relevant protective treatments an applicant has had

  • The standard applies to all life insurers that are members of the FSC, covering every individually assessed application for life insurance that can be taken out in Australia today