ACCC authorises life insurance bar on genetic testing

22 November 2000

The Australian Competition and Consumer Commission has granted authorisation* for two years to a proposed agreement by life insurers that they will not require applicants for life insurance to undergo genetic testing.

"The ACCC considers that there is benefit in authorising for two years the proposed agreement to provide a 'breathing space' during which the issues surrounding testing can be debated and government policy developed", ACCC Chairman, Professor Allan Fels, said today.

"The ACCC believes that government policy making would be more difficult if compulsory genetic testing was introduced now. The proposed agreement between life insurers should stop this.

"It should be noted that on 9 August 2000 the Government announced that the Australian Law Reform Commission and the National Health and Medical Research Council are to inquire jointly into human genetic information privacy and discrimination issues.

"The ACCC also sees public benefit in avoiding the coercion of applicants for life insurance to undergo genetic testing.

"The ACCC became involved in this issue because the proposed agreement between life insurance companies involved a likely reduction in competition between them in premiums, which risks breaching the Trade Practices Act 1974. However, an anti-competitive agreement of that kind can be authorised by the ACCC if the parties seek authorisation and can show sufficient public benefit results from the proposed agreement. Accordingly, the matter has arisen for the ACCC to determine under its authorisation processes.

"The ACCC considers the benefits of the proposed agreement outweigh the anti competitive detriment. Without the agreement, it is possible that required genetic testing could be introduced soon and that discounts and surcharges would be applied to insurance premiums on the basis of those tests.

"On 30 August 1999, the Investment and Financial Services Association (IFSA), whose life insurer members account for nearly all life insurers in Australia, sought authorisation of a proposed agreement on genetic testing. The original application was significantly wider than the proposed agreement approved by the ACCC today. In particular, that original application sought authorisation for a proposed agreement that life insurers could require applicants for life insurance to disclose any results of genetic testing they had already undergone, for example, for medical or any other reasons.

"That original application was opposed by the Australian Health Ethics Committee, the Human Genetic Society of Australasia, the Australian Medical Association and the Commonwealth Department of Health and Aged Care. That opposition was a significant factor in the ACCC's draft decision.

"In its draft decision, the ACCC proposed to dismiss this application. However, in October 2000, IFSA consequently amended its application to seek authorisation only for an agreement not to initiate or induce any genetic testing on applicants.

"This amended proposal was broadly supported by most interested parties, including the above, although most had concerns about the use of any genetic testing information at all.

"The proposed agreement between the life insurer members of IFSA is that not only will they not require applicants for life insurance to undergo genetic testing, but also they will not induce applicants to undergo such testing by offering discounts off standard premium rates based on favourable test results.

"The ACCC has not been asked to authorise the practice of life insurance companies to require applicants to disclose the results of any genetic testing already undertaken on them. IFSA has contended that, rather than being an anti-competitive agreement between its life insurer members requiring ACCC authorisation, this practice is a requirement of the law under the Insurance Contracts Act 1984. Accordingly, the ACCC has taken the view that this practice is outside the scope of its consideration, at least for the time being.

"Assuming the authorisation is given effect to, it will not cause life insurance companies to discontinue their present practice of requiring disclosure of results for any genetic testing known to their customers. At the present time, life insurance companies do not discount premiums on account of any 'favourable' outcomes from any genetic tests (eg, that the tests disclose that a applicant is likely to have a very long life). They do, however, vary policies for applicants whose tests show that they are an insurance risk, by charging higher premiums or even by refusing to provide any cover.

"The ACCC considers that there are complex issues involved in this matter. The ACCC therefore welcomes the proposed government inquiry into human genetic information privacy and discrimination issues. There is a need for some consideration of all the issues by government. An important part of the debate would also include the issue of whether or not industry self-regulation is appropriate in respect of the issues involved".

The determination is available by clicking here.

* Organisations who engage, or propose to engage, in certain anti-competitive business arrangements or conduct that could breach the Trade Practices Act, may apply to the ACCC for authorisation of such arrangements or conduct.

When an application for authorisation is made, the ACCC is required to make a determination in writing either granting or dismissing the application. It is also required to take into account any submission made to it in relation to the application. The ACCC is first required to issue a draft determination. The applicant or any interested party dissatisfied with the draft may request that the ACCC hold a conference with the applicant and interested parties to discuss the operation and effect of the application. After any such conference the ACCC reconsiders the application and publishes its final determination.

The ACCC may grant authorisation where the public benefit of the subject arrangements or conduct outweighs the public detriment, including the anti-competitive detriment. If granted, an authorisation provides immunity from legal proceedings under the Act in respect of the arrangements or conduct. This protection extends only from the time the authorisation is granted. Consequently, an organisation would not be protected from legal action under the Act in respect of any business arrangements or conduct engaged in prior to the granting of authorisation of such arrangements or conduct.

Release number: 
MR 327/00
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