Genetic non-discrimination: What will be the impacts on the life insurance industry?

By Hubert Roy | March 13 2017 01:30PM

Photo: Freepik

Many have concerns following the passage of the genetic non-discrimination bill. The impacts of the bill on the life insurance industry in Canada could be substantial.

On March 9, Justice Minister Jody Wilson-Raybould said she would go to the Supreme Court to review the constitutionality of the bill, which she believes infringes on provincial jurisdiction. Justin Trudeau, Prime Minister of Canada, tried to get the caucus to support this position, but most Members of Parliament ignored his will and voted in favour of the bill.

Has created uncertainty in the life insurance industry

The bill provides for protection of genetic characteristics under the Canadian Human Rights Act and prohibits anyone from requiring an individual to undergo a genetic test or disclose genetic test results.

Though it is to be reviewed by the Supreme Court, the bill has created uncertainty in the life insurance industry, many sources told, a sister publication of The Insurance and Investment Journal. They all requested anonymity.

One of these sources told that he is worried that if someone gets a genetic test and discovers they have a predisposition for multiple sclerosis for example, they might decide to purchase critical illness insurance. This kind of situation could add a new layer to anti-selection problems.

Increased anti-selection

“What we see happening with genetic testing is another trend towards anti-selection. If you allow access to a life insurance product, without the person having to reveal if they are ill or at risk of being so, they will purchase it. Other healthy individuals will not necessarily buy it. This is how anti-selection can occur,” explained the source.

Since product pricing is based on a wide pool of insured individuals, increased anti-selection leads to higher overall pricing.