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Tuesday, 29 August 2000
Page: 19573

Mr KELVIN THOMSON (9:31 PM) —The object of the Gene Technology Bill 2000, as set out in proposed section 3, is to protect the health and safety of people and to protect the environment by identifying risks posed by or as a result of gene technology. A number of previous speakers—my colleague the member for Reid, the member for Gellibrand and other speakers—have made very thoughtful contributions covering many of the areas canvassed by this legislation. I will not endeavour to retrace the steps so ably marked out by them, but I do want to go to one aspect of gene technology—in particular, implications of the human genome project and other genetic research in the area of insurance.

Let me say to the House that I am indebted to the Investment and Financial Services Association for work they have done in developing a draft policy on genetic testing. Lest there be any allegations of plagiarism, I want to make it clear from the outset that I intend to draw on their work in some detail. It is expected that the human genome project and other genetic research will eventually give rise to several broad categories of genetic information. The first relates to the identification of genes for specific diseases that are known to be transmitted either by a single dominant gene or by a pair of recessive genes. Such information would enable prediction with a high degree of probability, but not necessarily absolute certainty, of whether an individual would develop that particular disease. Tests are already available for some specific diseases—for example, Huntington's disease and cystic fibrosis. There is no doubt that many more will become available over the course of the next decade. The predictive value of such tests is likely to improve over time as the sophistication of our knowledge grows.

The second very broad category of information likely to emerge is genetic information that predicts a general predisposition to a certain disease or group of diseases—for example, a general predisposition to coronary artery disease or cancer. That risk will often be determined by the status of multiple genes. Since the development of many, perhaps most, diseases is influenced to some extent by behavioural or environmental factors, this category of genetic information will not predict with certainty that a particular disease will develop but rather will give the probability that such an event will occur. A third category will be the identification of genes that influence the course of various diseases that are not genetic in nature. An example would be the gene that influences the progression from HIV infection to AIDS.

The human genome project is an international research effort directed towards mapping the entire human genetic code. Completion of this work is expected early in the new millennium. The detailed genetic information that is starting to become available as a result of this project has very substantial implications for society in general and for the health of individuals in particular. It will have substantial implications for the insurance industry world wide. We have already seen consumers expressing concern about the implications of genetic testing for the availability of health insurance, but the issue that I will now focus on and the issue that has been focused on by the Investment and Financial Services Association is the area of life insurance—in using this term, we are talking about life insurance, disability insurance, crisis insurance, critical illness insurance, trauma insurance and those sorts of things.

Consumer groups and the media have drawn attention to what they perceive as the potential for misuse of genetic information by insurance companies. The Investment and Financial Services Association, or IFSA, considers that it is essential that consideration of genetic testing issues should recognise the balance that is required between the legitimate interests of patients, policyholders and insurance companies. Life insurance safeguards the financial security of many millions of Australians by a process of risk pooling. For life insurance to remain viable, it is essential that the vast majority of the population have access to insurance at normal premium rates. It is fortunate that Australian insurance companies have historically been able to offer insurance against death risk to approximately 93 per cent of the population at normal or standard premium rates. One of the objectives of IFSA is that life insurance remain available to as many people as possible at these standard premium rates. IFSA's approach to the issue of genetic testing has the specific objective of maintaining this availability in the genetic testing era. At the same time, the process of risk classification should be free to evolve and reflect the current state of medical knowledge in the interests of all policyholders, both present and future.

A life insurance company's ongoing capacity to pay claims relies on its receiving sufficient premiums to cover the cost of both claims and administrative expenses. Insurers measure the future cost of claims by a process referred to as underwriting or risk classification. Each applicant for insurance is placed in a pool of similar risks and is charged a premium commensurate with the predicted future costs of claims for that pool. Effective underwriting relies upon an assessment of all factors that impact upon the risk of death, disablement or serious illness for the life to be insured. So information, including the applicant's occupation, financial circumstances, recreational pursuits and health, is considered, which leads to an overall risk classification. Of course, the same principles apply in general insurance, where the cost of insuring a car is determined by the value of the car, the driving record of the driver, and so on.

The vast majority of Australians can be insured at normal or standard premium rates. There are some people, however, for whom the risk of death or disability is well above the average, and in those cases a higher premium is charged, and in a small percentage of cases insurance cannot be provided. Genetic information, like all health status information, may influence a person's propensity to apply for insurance cover. An individual aware of genetic test results indicating that they are at high risk of premature death, for example, may find life insurance a very attractive option. On the other hand, if armed with genetic test results that indicate a very low risk of early death, some people would no doubt choose not to take out insurance because they would not consider it to represent good value. So if the results of genetic testing are not disclosed to life insurance companies, there is likely to be a shift in the average risk of people taking out insurance. So you would get more of those with high risk and fewer with low risk taking out cover, and the result would be a significant increase in the cost of claims, leading in turn to insurers having to increase premium rates. Higher premium rates cause people who judge their risk to be low to drop out, leading to a further increase in the average cost of claims. In this way you might get an upward spiral of claims and premiums being created.

The second key issue is whether it is appropriate for life insurance companies to request or coerce an applicant for insurance to undergo genetic testing as part of the risk classification process. To their credit, in my view, the Investment and Financial Services Association, on behalf of insurers generally, have taken the view that this is not appropriate and have made a submission to the ACCC endeavouring to have an authorisation for a proposed code of conduct by which insurers would not require people seeking insurance to undergo genetic testing. I think that is an entirely appropriate position for them to arrive at and to seek approval for. As they pointed out, in practice many of us would prefer not to know what risk we are at from various genetic diseases, particularly diseases for which there is no prospect of prevention or cure. On this basis, I think it is inappropriate for insurance companies to request or coerce applicants for insurance to undergo genetic testing. There may be further technological or other developments or changes in community attitudes that cause this situation to be revisited, but it does seem to me right that insurance policy follows community attitudes on these matters.

Another element of their genetic testing approach that I draw to the attention of the House concerns the issue of privacy. IFSA considers that, in the interests of privacy, the results of genetic tests should be used only to classify the risk of the individual on whom the tests were conducted, certainly not to use that information in relation to other family members or to make that information known to others, and that strict standards of confidentiality in the handling and storage of all medical information should apply. So, based on those considerations, the policy that IFSA have put forward concerning genetic testing is that insurers will not initiate any genetic tests on applicants for insurance. Insurers may request that all existing genetic test results be made available to the insurer for the purposes of classifying risk and, in order to prevent indirect coercion to undergo genetic tests, insurers will not use genetic tests as the basis of preferred risk underwriting—that is to say, offering an individual insurance at lower than the standard premium rate if they are prepared to undergo genetic testing. Insurers will ensure that the results of existing genetic tests are obtained only with the written consent of the tested individual. The results of genetic tests will be used only in the assessment of insurance applications in respect of the individual on whom the test is conducted. So it is not used in the assessment of insurance applications, for example, from relatives. Insurers will ensure that strict standards of confidentiality will apply to the handling and storage of the results of genetic tests, and access to the results will be restricted to the insurers, underwriters and reinsurers.

I think that policy makes quite a lot of sense and I note that it has support from the AMA, the Human Genetic Society of Australasia, the Australian Health Ethics Committee, and from others I will come to in a moment. That policy was submitted to the ACCC earlier this year on the basis that a `balance needs to be achieved which addresses the interests of insurance policyholders and patients with genetic conditions'. It was put forward as a code that might evolve over time, and the issue of what additional components or changes might be made to be the subject of continuing consultation. But their desire was to prevent what they refer to as an `insurance genetic testing free-for-all' and allow continuing research, evaluation and debate.

Given what I thought was a pretty reasonable position, it was a matter of some disappointment to me that the ACCC issued a draft ruling, a draft determination, saying that these arrangements, this code, would not be supported by them. They said that the proposed arrangements were not likely to result in benefit to the public which would outweigh the detriment from any lessening of competition likely to result from the arrangements and that they were not likely to result in such a benefit to the public that the arrangements should be allowed to be given effect to. So their draft determination denies to IFSA the authorisation for the code they have developed.

I have read the ACCC draft determination to try to ascertain why this is so, and the only points I can take out of it are comments by the commission that it is not satisfied that an insurance genetic testing free-for-all would eventuate if the code was not approved. They make the point that each member of IFSA would unilaterally decide whether or not to initiate genetic tests on applicants for insurance and that the net effect of the code is that IFSA member insurers would agree not to offer discounts on premiums based on genetic test results. The commission says that that sort of agreement, concerning pricing practices, would be anticompetitive and likely to result in significant detriment to the public.

What the ACCC is really saying is that they would be quite happy to see insurers offer lower premiums to people who are prepared to undergo genetic testing. As I indicated, that is a view about which I am not persuaded in the slightest. I think it is quite significant that consumer bodies, far from supporting the ACCC's position, have come out in support of the IFSA position. For example, the Financial Services Consumer Policy Centre has corresponded with the ACCC and sent them a submission which says:

The FSCPC is concerned at the ACCC's draft determination which deems IFSA's draft code guidelines as being anti competitive. We are of the view that this determination ignores the fact that what IFSA are advocating for will generally regulate life insurance practice in such a manner as to prevent a potential breakout in the number of industry players seeking a genetic test and likewise the number of individuals volunteering a genetic test.

The Financial Services Consumer Policy Centre says, and I agree:

Both those scenarios could have an adverse affect on a majority of consumers. We are totally opposed to any industry practice whereby companies would initiate further testing as part of their health assessment. This practice will considerably increase the cost of insurance and may lead to either anti-selection or otherwise the imposition of prohibitive premiums on those consumers.

They urge the ACCC to reassess their draft determination, because they think that the application does give rise to effective consumer protection and a discernible public benefit which outweighs any potential anticompetitive behaviour. That is my view as well. I think that it is not in the public interest for insurance companies to decide that genetic testing is necessary for people wanting to take out insurance or for insurance companies to offer lower premiums for people who are prepared to undergo genetic testing. I think that would be quite harsh on many Australians who seek life insurance for good reasons but who do not wish to be involved in genetic testing, also for good reason. So I think that the approach which the insurance industry has come up with in relation to this is an eminently sensible and practical one—certainly at this point in our technological development and history—and I hope that the ACCC will, in terms of its final resolution of this matter, see its way clear to supporting authorisation for the code which IFSA has developed.