We have today made a submission to Treasury on use of genetic test results in insurance underwriting.
Life insurance is a mechanism for aggregation and distribution of costs associated with mortality and morbidity risks. Pooling risk benefits the insured by spreading costs associated with death, illness and injury amongst all the insured. Pooling risk also contributes to community cohesion when insurance in community risk-rated (Armstrong 2001). When insurance is individual risk-rated, this generates a variety of perverse incentives and harmful consequences, which are further explored below. The fact that voluntary life insurance can be individually risk rated, while default insurance provided through a superannuation fund or employer is not individually underwritten, also creates a two-class system that in itself, is detrimental to social cohesion.
This submission therefore argues that life insurance in Australia should operate in accordance with community rating principles similar to the those forming the basis of Australia’s health insurance system. IHRA does not argue that there should be no exceptions to a general principle of community risk rating in life insurance. It does argue that such exceptions need to be justified on their own terms, and should not detract from community cohesion or underlying principles of accessibility and portability. Other principles on which universal health care systems are based such as universality and comprehensiveness should also be considered.
The submission was led by Dr Alice de Jonge. Alice is a senior lecturer in law at Monash Business School. She has been a director on the board of IHRA since December 2021. She is author of four books and over 50 peer-reviewed journal articles and book chapters. Her research focuses on issues of human rights, equity and social inclusion in national and international law.