Around 50 percent of consumers believe life insurance premiums should be based on the likelihood of making a claim but nearly two third have rejected the idea of paying higher premiums to subsidise people with an adverse genetic test result, according to the FSC.
The Council released the numbers as part of research it conducted with 1000 Australians in July 2018 which was used to guide its decision to introduce a moratorium on the use of genetic test results in life insurance (see: Life Insurers Place Halt on Use of Genetic Tests).
The FSC stated it conducted the survey to measure community appetite for the element of cross-subsidisation that would occur through the introduction of the moratorium for life insurance products up to $500,000.
The research found that 51 percent of those surveyed were in favour of setting premiums based on the possibility of a future claim, 22 percent were opposed to individually set premiums, and 33 percent were unsure.
On the issue of cross-subsidies, 61 percent of Australian adults surveyed were opposed to paying any extra premiums at all, and while a small minority were prepared to pay around $5, this figure reduced as the subsidy increased.
FSC Senior Policy Manager, Nick Kirwan said the research also found that 63 percent of Australians would be prepared to take a genetic test if it could reveal a higher chance of getting a serious disease in the future, and there was a need to balance this interest in genetic testing with appropriate premium pricing.
“…many Australians are open to taking a genetic test…but also support the principle of setting insurance premiums individually…”
“Our consumer research shows many Australians are open to taking a genetic test to predict the likelihood of becoming ill in future, but also support the principle of setting insurance premiums individually based on the likelihood of making a claim,” Kirwan said.
“Life insurers need to balance the interests of all Australians, and not just act in the interests of those who have had an adverse genetic test result. The moratorium is designed to help get this balance right,” he added.
The moratorium will only run for five years and cannot be open-ended according to Kirwan, who said the the number of people being tested would increase as Government support for genetic testing increased and costs associated with the tests decreased,
“The life insurance industry wants to promote genetic inclusion. However, the moratorium cannot be open-ended, because the cost of helping customers who have had an adverse genetic test result falls to the other customers to pay for it. The experience of other countries shows that the cost in the short term is likely to be small but, with the science advancing so rapidly, no-one knows the long-term cost,” he said.
Since the announcement of the introduction of the moratorium, the FSC has held public meetings in Brisbane, Melbourne and Sydney and will now consult further with a range of stakeholders, including geneticists, mental health advocates, consumer groups, the Life Code Compliance Committee and the Australian Financial Complaints Authority.
The sad reality is that many people will not get a genetic test, as any adverse result will be used against them.
A moratorium is just a delay and does not solve anything.
The Life Insurance Industry operates in a world of contradiction.
On the one hand, they just give out Life and Disability Insurance cover with no health questions, then to make up for that, they come down hard on people who are prepared to be medically underwritten.
The Life Insurance Industry needs consultants that can talk and explain in PLAIN ENGLISH to the Government and the Regulators how the Industry works in the real world, which immediately removes Lawyers from any discussions.
The Legal eagles have advised the Banks and Life Companies for many years and what results have we ended up with?
Answer.
Multi Billion dollar compensation and remediation costs that easily could have been avoided if advisers with Common Sense backed up with ACTUAL experience had been listened to and proper systems and protocols introduced that would have cost a fraction and by the way, this is not even a cost, it is an Investment.
When you have Lawyers and University qualified people with very little practical experience running the show, the result is always the same.
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