ACCC decision maintains life insurance bar on genetic testing

The Australian Competition and Consumer Commission has allowed a two-year extension of an agreement between life insurers which provides that they will not require applicants for life insurance to undergo genetic testing. 

"The ACCC considers that there is a benefit in authorising* part of the Investment and Financial Services Association’s Genetic Testing Policy** for a two-year period to allow a detailed evaluation of the recommendations made by a joint inquiry into the use of genetic information and to allow time for the implementation of any appropriate self-regulatory or legislative mechanisms", ACCC Chairman, Mr Graeme Samuel, said today. 

The inquiry, conducted jointly by the Australian Law Reform Commission, the Australian Health Ethics Committee and the National Health and Medical Research Council, issued its final report titled Essentially Yours: The Protection of Human Genetic Information in Australia on 29 May 2003. The inquiry made a number of recommendations relating to the use of genetic testing information in insurance.

IFSA, whose members account for the majority of life insurers in Australia, sought re-authorisation of part of its Genetic Testing Policy. Life insurers have been operating under arrangements authorised by the ACCC since November 2000.

"The ACCC continues to accept that there is a public benefit in life insurers not coercing individuals to undergo genetic testing", Mr Samuel said.

The ACCC considers that the agreement between life insurers not to initiate genetic tests is likely to result in some anti-competitive detriment as it prevents life insurers from offering differentiated premiums to consumers. 

"While the ACCC is concerned that the arrangement may have a detrimental effect on competition it has concluded that the arrangement is likely to result in a net public benefit".

Background

*The Trade Practices Act 1974 prohibits certain forms of anti-competitive agreements including agreements between competitors which limit their ability to deal with who they choose or on the terms they choose (including price). Authorisation provides immunity from court action under the Act arising from certain anti-competitive agreements.

Authorisation can only be granted where the ACCC is satisfied that the public benefit arising from the conduct outweighs any competitive detriment.

**IFSA has sought re-authorisation only for clauses 10.1 and 10.3 of its Standard No. 11.00 – Genetic Testing Policy.  Clause 10.1 states that insurers will not initiate any genetic tests on applicants for insurance. Clause 10.3 states that in order to prevent indirect coercion to undergo genetic tests, insurers will not use genetic tests as the basis of 'preferred risk underwriting', (i.e. offering individuals insurance at a lower than standard premium rate).