Will group life trump adverse genetic testing?
Group insurance offered via superannuation would represent a means of people obtaining life insurance cover for people who have undertaken genetic testing and obtained a negative result, according to the Financial Advice Association of Australia (FAAA).
The FAAA has told Treasury it continues to favour a model where the existing moratorium on insurers using genetic testing in life insurance below certain caps is legislated, but with indexation of the thresholds.
“We think this would provide a sensible balance, allowing people with high risk genetic test results to still access life insurance, but not at a level that would unreasonably impact the life insurance pools and increase costs for existing life insurance policyholders,” it said.
The submission said that advocates of a complete ban on the use of genetic testing, compared life insurance with health insurance, highlighting that health insurance is community-rated but pointed out that the model “is not the norm in insurance”.
“In most forms of insurance, access to cover and the cost of premiums are determined by the level of risk and the insurer’s willingness to accept that category of risk,” it said.
The submission also pointed out that life insurance are permitted to take into account many forms of risk such as weight, blood pressure and previous illnesses and to have blood tests.
“Equally, it is accepted that applying for life insurance requires the disclosure of family history, particularly with respect to issues such as heart attacks, strokes and cancer,” it said.
“Our key point is that it seems perverse that the ban on the use of relevant health information only applies to genetic testing, and not any other form of predictive health information. It would appear that this debate has been driven more from the perspective of promoting genetic testing specifically, rather than improving access and the affordability of life insurance,” the submission said.
“It is important to note that once someone has life insurance in Australia, that it is guaranteed renewable. This means that as long as the policyholder continues to pay the premiums, they can retain the cover, despite any deterioration in their health or later discovery of a risk factor.
“The life insurer cannot refuse to renew the cover just because the level of risk has increased significantly. For many people who have experienced a deterioration in their health, retaining their existing cover is a high priority. It is also the case, that people who already have cover, can already undertake genetic testing without the fear of losing their existing insurance as a result.”
“There are also other options for obtaining life insurance that do not involve the need for underwriting and disclosing a persons’ health status. Group superannuation schemes, or employer superannuation schemes offer insurance on what is known as an ‘automatic acceptance limit’ basis, where members can obtain cover up to a certain limit without needing to be underwritten,” the submission said.
“This type of cover would still be available to people who have undertaken genetic testing and obtained a negative result. It is also available to those with a family history of medical conditions.”
Group Cover: An Admission of Market ExclusionThe FAAA’s suggestion that group cover—typically offered through superannuation or employment—can address the challenges faced by individuals with adverse genetic test results is an implicit acknowledgment that genetic testing will exclude people from the insurance market. They present group cover as a workaround, allowing those who might face steep premiums or denials in individual policies to still obtain coverage. However, this reliance on group schemes exposes a core weakness in their stance: it accepts that genetic testing creates significant barriers rather than ensuring fair access for all. Moreover, group cover is not a sustainable solution; insurers could eventually apply genetic scrutiny to these policies as well, closing this so-called loophole. By leaning on group cover, the FAAA highlights the exclusionary impact of their proposal rather than resolving it.
Racial Bias and the Echo of EugenicsA compelling argument against the FAAA’s position is that genetic testing in insurance underwriting introduces a clear bias against certain racial groups, with troubling historical parallels to eugenics. Genetic markers for diseases often differ in prevalence across populations—for example, sickle cell anemia is more common among individuals of African descent, while cystic fibrosis predominantly affects those of European ancestry. If insurers use this genetic data, these groups could face systematically higher premiums or outright denials, effectively embedding racial discrimination into insurance practices. This approach uncomfortably mirrors the principles of eugenics, a movement that sought to “improve” humanity through selective breeding and discriminatory policies based on hereditary traits. Although modern genetics distanced itself from eugenics after World War II, the FAAA’s proposal risks reviving its logic by tying insurance eligibility to genetic characteristics that vary by race. This historical echo underscores the ethical flaws in their position, revealing its potential to foster an unfair and racially skewed market.
A Flawed and Self-Defeating ArgumentThe FAAA’s reliance on group cover as a solution is not only inadequate but also exposes the broader weaknesses in their advocacy for genetic testing. By conceding that genetic data will bar individuals from individual policies, they admit their approach is inherently discriminatory and impractical for many. Proposing group cover as a fix merely postpones the problem, as insurers could later extend genetic criteria to group schemes, rendering the workaround obsolete. This lack of a long-term strategy undermines their position, making it appear more like a temporary patch than a reasoned policy. Worse, it fails to address the ethical concerns—like the eugenics-like discrimination noted above—further highlighting the shaky foundation of their argument.
ConclusionThe FAAA’s push to incorporate genetic testing into life insurance underwriting, coupled with their dependence on group cover as a remedy, collapses under scrutiny. It tacitly admits to market exclusion, overlooks racial biases with disturbing ties to eugenics, and offers a flimsy solution that cannot endure. Rather than endorsing a system that judges individuals by their genetic makeup—a practice with a dark historical precedent—a outright ban on using genetic data in underwriting would better safeguard fairness and access for all.