Premiums

Calculation of premiums

33.16 The first issue identified above is the use of genetic information to calculate an employer’s insurance premium for a workers’ compensation scheme. Workers’ compensation schemes are funded primarily by compulsory insurance provided by government or private insurers, or through self-insurance.^[16]

33.17 Comcare determines the annual premiums for employer agencies by obtaining actuarial advice on the ‘premium pool’ needed each year,^[17] and calculating each agency’s premium having regard to the development of that agency’s claims over a number of years. To reduce its future premiums, an agency must reduce its claims frequency, its average claim cost, or both.^[18]

33.18 Under other Australian schemes, employers (other than self-insurers) must pay an annual premium as a condition of the issue or renewal of an insurance policy. In New South Wales, Queensland, South Australia, Victoria and Western Australia, a central authority recommends premiums having regard to the employer’s risk and industry classification, the number of employees, and their remuneration. Premiums may also be loaded or discounted having regard to a particular employer’s circumstances.^[19] In the Australian Capital Territory, the premium is subject to limitations imposed by legislation but otherwise left to the insurers.^[20]

Issues and problems

33.19 In future, it is possible that employers might seek to reduce the number of workers’ compensation claims lodged by their workers—in order to minimise their annual premiums—by screening out persons with a genetic predisposition to an injury or disease that could arise in the course of, or out of, the particular employment. Depending on the circumstances, such practices may constitute a form of unfair discrimination.

33.20 As discussed in Chapter 31, Australian employers may lawfully request information from a job applicant or employee for the purpose of determining whether a person can perform the inherent requirements of a job—including the ability to work safely; or to identify any reasonable adjustments required in the performance of work.

33.21 The Disability Discrimination Act 1992 (Cth) (DDA) permits an employer to discriminate against a person only in limited circumstances. The employer may lawfully exclude the person if, because of his or her disability, the person is unable to carry out the ‘inherent requirements’ of the particular job or would, in order to do so, require services or facilities that would impose an unjustifiable hardship on the employer.^[21] If an employer otherwise wishes to discriminate against a person with a disability, it must obtain a temporary exemption from the operation of the DDA.^[22]

Submissions and consultations

33.22 In its submission, the Victorian Automobile Chamber of Commerce commented that employers in its industry currently do not appear to be using genetic tests for several reasons, including the fact that workers’ compensation insurance premiums presently are not affected by employees’ genetic susceptibility to certain workplace health hazards; and insurers providing coverage have not pressured employers to implement genetic screening of future employee.^[23]

33.23 During consultations the Construction, Forestry, Mining and Energy Union expressed concerns that workers’ compensation premiums might, in future, be linked to genetic testing for predisposition. They emphasised the importance of ensuring that premiums are not based on health information because of the potential for discrimination.^[24] In a subsequent submission they commented:

The Union believes that there is the real capacity for this potentially invasive technology to be used to reduce the cost of premiums for workers compensation insurance, at the expense of workers. It is the Union’s view that there is already gross underpayment of workers’ compensation insurance premiums, and the capacity for employers to use this type of technology may well aggravate that problem.^[25]

Inquiry’s views

33.24 The Inquiry is concerned that in future employers might seek to obtain genetic information from a job applicant, or an existing employee, to screen out persons whose genetic status suggests that he or she might in future suffer an injury, leading to a workers’ compensation claim and, potentially, to higher insurance premiums. While there is no existing evidence of such practices, the increased availability of genetic tests might create an impetus for employers to use this technology as a means of minimising administrative costs.

33.25 The Inquiry is of the view that this concern is addressed by Recommendation 31–3, which provides that the Commonwealth should amend the DDA to prohibit an employer from requesting or requiring genetic information except where the information is reasonably required for a purpose that does not involve unlawful discrimination.

33.26 In addition, Recommendation 31–1 provides that the Commonwealth should amend the DDA to provide that an applicant or employee’s ability to perform the inherent requirements of a job is assessed on the basis of his or her current abilities, or those which he or she has the potential to acquire within a reasonable timeframe. This will strengthen the prohibition on employers discriminating against workers because they might, in future, suffer a work-related injury or death.