Why Insurers Are Wrong about Canada's Genetic Non-Discrimination Law

By Hoy, Mike; of, Professor et al. | The Canadian Press, September 13, 2017 | Go to article overview

Why Insurers Are Wrong about Canada's Genetic Non-Discrimination Law


Hoy, Mike, of, Professor, Guelph, University of, The Canadian Press


Why insurers are wrong about Canada's genetic non-discrimination law

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This article was originally published on The Conversation, an independent and nonprofit source of news, analysis and commentary from academic experts. Disclosure information is available on the original site.

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Author: Mike Hoy, Professor of Economics, University of Guelph

Most western European countries have banned insurance companies from accessing privately held genetic test results on individuals since or even before the UNESCO Declaration on Human Genetic Data 2003.

The United States passed legislation in 2008. It covers health insurance and employment, but not life and other forms of insurance, although some states have passed regulations about use of genetic tests by life insurers.

Canada was the last member of the G7 to pass its own genetic discrimination law, Bill S-201, in May. It prevents insurance companies from using results of any genetic tests to determine coverage or pricing.

In other words, if you're a woman with a genetic predisposition to breast cancer, a health or life insurer cannot deny coverage, restrict coverage or hike premiums.

So although life or health insurance companies may continue to ask for access to medical records, they're prohibited from using information from genetic tests when offering insurance to potential clients.

Why the controversy?

That's really what the bill is all about. So why has it been controversial given Canada's late entry into the game?

The Canadian Life and Health Insurance Association warned of higher costs and reduced coverage if the legislation passed. Insurers also argued no ban was needed; they would do it themselves via codes of conduct.

Others dismissed the ban as mere "virtue signalling" and argued there's no evidence Canadian insurance companies were engaging in genetic discrimination to begin with.

Despite the worldwide popularity of such bans, it's still worth asking whether they're a good idea.

Groups that include the Canadian Coalition for Genetic Fairness (CCGF) support the law, but there are still misgivings in the insurance industry.

Insurance companies selling life insurance and other related products, including long-term care insurance, believe they should have access to the same information that their customers have. They say that's in order to avoid high-risk individuals buying excessive amounts of insurance at the same price as those with low risks.

Higher claims?

The insurance industry argues the law will lead to higher claims costs and result in higher prices and a smaller market for the insurance industry, a phenomenon known as "adverse selection."

Adverse selection occurs if more insurance is purchased by people deemed to be a higher risk -- say, those with Huntington disease -- than the average person with low risks.

That increases the overall claims costs to insurers, and if they can't provide coverage to those with a higher risk of serious illnesses by charging a higher price, then those with scant health risks won't buy insurance because it becomes too expensive.

Essentially, insurers argue, prices are driven up and the quantity of insurance available is reduced.

Canadians opposed

Organizations like the CCGF, however, represent the interests of people who would feel discriminated against if charged a higher price for an insurance product based on their inherited genetic makeup. …

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