Introduction

25.1 The Australian insurance industry is one of substantial economic importance. Across the full range of products, general insurers collected $16.5 billion in premiums and paid $11.4 billion in claims for the year to September 2002.^[1] During the same period, life insurers operating in Australia received $41 billion in premiums and paid $38.5 billion in claims.^[2] During the 2001–2002 financial year private health insurers collected $7.2 billion in contribution income and paid over $6.5 billion in benefits.^[3]

25.2 The purpose of insurance is risk distribution, that is, to spread risk across a large pool of individuals. Insurance provides a mechanism by which individuals who pay an agreed sum, known as a ‘premium’, can be indemnified against future events that may cause loss. The predictive nature of genetic information means that it is potentially very significant in this context. Insurance companies, especially life insurers, have collected and used family medical histories for well over a century.^[4] More recently, access to information derived from genetic testing has drawn attention to the potential use of genetic information by the insurance industry in Australia and overseas.^[5]

25.3 Concern about the use of human genetic information by the insurance industry was one of the factors that led to the establishment of the present Inquiry. The Terms of Reference expressly require an examination of the use of human genetic information in the insurance sector and ask whether further regulation is necessary to protect the privacy of such information and to prevent inappropriate discriminatory use of the information.

25.4 In response to IP 26^[6] and DP 66^[7], the Inquiry received a large number of submissions that focussed on insurance. The submissions indicated a high level of interest in this area and identified some significant concerns.

25.5 This chapter provides background information about the insurance industry in Australia and about the use of genetic information by the industry. In Chapters 26, 27 and 28 the Inquiry examines the concerns raised in submissions and makes a range of recommendations to address those concerns. The Inquiry is of the view that a shift away from the fundamental principles of voluntary risk-rated insurance, based on parity of information between the applicant and the insurer, is not warranted at the present time. The Inquiry recognises, however, that there are legitimate concerns in the community about the way in which insurers use, or are perceived to use, genetic information. The Inquiry’s recommendations are directed toward addressing those concerns by ensuring that the use of genetic information by insurers is fair, transparent, subject to independent oversight, and consistent with anti-discrimination and privacy legislation.