Genetic Testing Ban Grabbed the Headlines, But it’s Not the Whole Story

Australia is set to ban life insurers from soliciting or using protected genetic information in life insurance underwriting, a ban that will be backed by both criminal and civil penalties. There’s one narrow, consumer‑led exception and that is – applicants may voluntarily supply favourable results with consent, and never to their disadvantage.

Many across industry and medical professions see this as a win because Australians can now pursue testing without fear of discrimination when applying for cover. Reasonable concerns remain about sustainable pricing and the pooling of unknown health risks and under the draft, diagnosed conditions and family history remain in ordinary underwriting.

For consumers, though, neither of those debates is top of mind. What they are most confused and uncertain about is how family history is considered at application stage, and how little of the reasoning behind non‑standard terms seems specific to them. In other words, they want to know how their family history will be treated, and then they want someone to explain the decision made about them.

Applicants …must still disclose factual, non-genetic information such as preventive treatment or intensified screening

There’s also an issue the draft doesn’t settle. Applicants aren’t required to disclose protected genetic information and not disclosing it isn’t misrepresentation. However, they must still disclose factual, non-genetic information such as preventive treatment or intensified screening. If those proactive health actions trigger exclusions or loadings, people will still feel penalised for engaging with genetics – just indirectly, via their prevention efforts. This could recreate a fear of genetic testing by proxy. Getting this nuance right is critical to consumer confidence.

A real case from my desk makes the point. A healthy woman, aged 40. Her mother was diagnosed with breast cancer in her late 30s. My client’s genetic test was favourable and, regular preventative screening history is clear. Yet this didn’t improve the underwriting outcome for trauma cover – she was offered cover with a breast cancer exclusion. When I asked whether the risk was reduced given the favourable result and  screening history, the response was, “not all mutations can be detected.” When I asked if a small loading could be considered instead, the answer was no, citing “global reinsurer data.”

Too often the responses to advisers sound the same across insurers. A mix of, “there’s not enough medical evidence”, and “the data says no”. These answers sit at odds with each other and don’t give advisers the confidence or detail we need to reassure a client that an exclusion is fair or how it applies to them specifically.

As an adviser, I respect risk management. But my clients rely on me to guide them through setting up cover. I need reasons from the insurer I can explain; reasons clients can relate to. If a personal history is clear and a genetic test is favourable, clients think, “Shouldn’t that reduce risk, even a bit? If not, why not?” To educate them at that point, I need insurer evidence that demonstrates why it wouldn’t.

Under the draft ban, if a favourable result is volunteered with consent, it can only be used to improve terms. If an insurer solicits it, using it at all would breach the ban. Either way, the “why didn’t a favourable result help?” question only gets more pressing.

…we have an opportunity to strengthen trust where it’s built

With the ban drafted, we have an opportunity to strengthen trust where it’s built: in how family history will still be treated, how preventive management will be handled, and how amended terms are communicated.

A few practical steps would move us there.

1. Genetics versus family history versus diagnosis

Most Australians don’t know the difference. As the client-facing agent, adviser-led education is an obvious necessity. A practical support tool is an adviser guide with a family history and genetics interaction note, showing where positive results (when volunteered with consent) may support less restrictive terms, and where they usually wouldn’t.

This guide should be principles-based and not prescriptive, providing enough guidance to help advisers set client expectations. This avoids any ‘collusion’ worry and the ‘never-ending list’ trap, gives advisers a consistent starting point, keeps pre-assessment lines clear, and helps prevent inadvertent disclosure of a client’s genetic results during adviser pre-assessment calls.

2. Clear boundaries for prevention actions and consent

Set clear boundaries so prevention disclosures during applications aren’t treated as automatic proxies for undisclosed genetic results or non-diagnosed illnesses. A practical guiding idea: no penalty for prevention, supported by evidence. Confirm consent processes for any applicant volunteered favourable results to match the draft (written consent, approved form, no disadvantage).

3. Make amended terms consistent across the market

In the same spirit as ASIC’s prescribed IDR responses (RG 271.53 to RG 271.54). If we want consumers to have confidence in insurance, every amended-terms letter should include, in plain English:

• Variation proposed – exclusion or loading
• Reasons – a short explanation a client can understand
• Evidence – reasonable and reliable information relied on in making the decision
• Review timing – when the terms can be revisited, if at all, and if not – why not
• Review criteria – what the client must demonstrate health wise for terms to be reconsidered
• Precision – exclusions drafted narrowly to avoid ambiguity

This is simple transparency – it is expected of policyholders entering the insurance contract, but they are rarely afforded the same transparency or specificity when amended terms are offered to them.

4. A framework for measurement

A cross‑industry framework (insurers, reinsurers, regulators, advisers, consumer reps) that records how family history and favourable results volunteered by applicants are considered.

Three measures would help:

1. Principles that prioritise the least restrictive, most specific terms supported by relevant data, and which discourage default, catch‑all exclusions.
2. A Minister’s five‑year statutory review published with metrics on how often favourable results lead to improved terms, and to track outcomes following prevention disclosures.
3. Build in periodic review so family history disclosures used in underwriting keep pace with current national medical evidence.

Insurers and reinsurers keep the risk pool viable, advisers keep clients informed and engaged, clinicians help people act early and most importantly clients gain clarity and confidence in the purchasing of life insurance. Alignment is the path to confidence.

The draft ban removes a powerful reason to avoid testing. The next step is making underwriting decisions about family history and prevention transparent, specific and explainable. Trust in life insurance isn’t created by law alone. It’s earned every time a person can see how a decision about them was made, and what could change it. The draft clears space for that work, we now need to lean into it.

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