Australian Life Insurance Industry Research Articles

Genetic discrimination by insurance companies in Aotearoa New Zealand: experiences and views of health professionals.

Genetic discrimination in insurance is a significant clinical, research and consumer issue. Recently, the Australian life insurance industry introduced a partial moratorium on the use of genetic test results. However, in Aotearoa New Zealand, both life and health insurers can still use genetic results legally to discriminate against applicants. We aimed to document experiences and concerns of New Zealand-based health professionals (HPs) around the potential misuse of genetic test results for insurance purposes. We administered an online survey to New Zealand HPs who discuss genetic testing with patients, their experiences regarding the use of genetic test results in insurance and views on regulation. Twenty-three New Zealand HPs responded, 15 of whom worked in genetics clinics, representing >60% of the total New Zealand clinical genetics workforce. Eleven respondents reported having patients who experienced adverse outcomes related to insurance based on genetic results. Respondents reported patients sometimes/often delayed (n=11) or refused (n=4) genetic testing due to insurance concerns. Over 80% of those who answered (n=17/21) believe insurers' use of genetic results should be legally regulated. New Zealand HPs have concerns about insurance companies using genetic test results in underwriting, including the effect on patients, and strongly believe government legislation is required.

Health professionals’ views and experiences of the Australian moratorium on genetic testing and life insurance: A qualitative study

Australian life insurance companies can legally use genetic test results in underwriting, which can lead to genetic discrimination. In 2019, the Financial Services Council (Australian life insurance industry governing body) introduced a partial moratorium restricting the use of genetic testing in underwriting policies ≤ $500,000 (active 2019–2024). Health professionals (HPs), especially clinical geneticists and genetic counsellors, often discuss the implications of genetic testing with patients, and provide critical insights into the effectiveness of the moratorium. Using a sequential explanatory mixed methods design, we interviewed 23 Australian HPs, who regularly discuss genetic testing with patients and had previously completed an online survey about genetic testing and life insurance. Interviews explored views and experiences about the moratorium, and regulation, in greater depth. Interview transcripts were analysed using thematic analysis. Two key themes emerged from views expressed by HPs during interviews (about matters reported to or observed by them): 1) benefits of the moratorium, and 2) concerns about the moratorium. While HPs reported that the moratorium reassures some consumers, concerns include industry self-regulation, uncertainty created by the temporary time period, and the inadequacy of the moratorium’s financial limits for patients’ financial needs. Although a minority of HPs felt the current industry self-regulated moratorium is an adequate solution to genetic discrimination, the vast majority (19/23) expressed concern with industry self-regulation and most felt government regulation is required to adequately protect consumers. HPs in Australia are concerned about the adequacy of the FSC moratorium with regards to consumer protections, and suggest government regulation is required.

A step forward, but still inadequate: Australian health professionals’ views on the genetics and life insurance moratorium

BackgroundIn 2019, the Australian life insurance industry introduced a partial moratorium (ban) limiting the use of genetic test results in life insurance underwriting. The moratorium is industry self-regulated and applies...

General trends and competitiveness of Australian life insurance industry

General trends and competitiveness of Australian life insurance industry

Genetic discrimination by Australian insurance companies: a survey of consumer experiences

We report previously undocumented evidence of genetic discrimination by Australian insurance companies, obtained through direct consumer reports. We surveyed 174 consumers with cancer-predisposing variants, recruited by cancer organisations Lynch Syndrome Australia and Pink Hope. Questions related to experiences accessing risk-rated insurance after genetic testing. Results indicate that both legal (permitted under current regulation) and illegal discrimination is occurring. Although some respondents had not applied for risk-rated insurance, or had insurance in place before genetic testing (n = 100), those seeking new policies (n = 74) commonly experienced difficulties obtaining insurance (86%, 64/74). Of those experiencing difficulties, 50% (32/64) had no prior history or symptoms of cancer, and had undertaken risk reduction through surveillance and/or preventative surgery. Seventy-seven percent (49/64) reported difficulties related to life insurance. Follow-up telephone interviews with four respondents further described cases of apparent illegal breaches. All reports of discrimination identified were, to our knowledge, previously unreported in the literature. The number of cases suggests a systemic problem with the Australian life insurance industry. We support calls for government oversight of the inherently conflicted model of industry self-regulation in Australia, and an immediate ban on the use of genetic test results in insurance underwriting.

Should Australia Ban the Use of Genetic Test Results in Life Insurance?

Under current Australian regulation, life insurance companies can require applicants to disclose all genetic test results, including results from research or direct-to-consumer tests. Life insurers can then use this genetic information in underwriting and policy decisions for mutually rated products, including life, permanent disability, and total income protection insurance. Over the past decade, many countries have implemented moratoria or legislative bans on the use of genetic information by life insurers. The Australian government, by contrast, has not reviewed regulation since 2005 when it failed to ensure implementation of recommendations made by the Australian Law Reform Commission. In that time, the Australian life insurance industry has been left to self-regulate its use of genetic information. As a result, insurance fears in Australia now are leading to deterred uptake of genetic testing by at-risk individuals and deterred participation in medical research, both of which have been documented. As the potential for genomic medicine grows, public trust and engagement are critical for successful implementation. Concerns around life insurance may become a barrier to the development of genomic health care, research, and public health initiatives in Australia, and the issue should be publicly addressed. We argue a moratorium on the use of genetic information by life insurers should be enacted while appropriate longer term policy is determined and implemented.

The curious case of the Occidental and Regal: the evolution of solvency and disclosure standards in the Australian life insurance industry

In 1990, the Australian life insurance industry was rocked by a scandal that threatened to destabilize consumer confidence in the ability of insurance providers to meet policyholder liabilities. The incident highlighted the nature of the agency problems that arise when conditions of asymmetric information exist. It revealed systemic weaknesses in accounting, solvency and disclosure standards as they applied to life insurers. This article uses an evolutionary concept of agency to analyse government and industry responses to this event. It is argued that initial adaptive responses stabilized the industry and averted a more serious crisis. Longer term innovative responses led to the introduction of a new and more rigorous approach to reporting and solvency standards, which has improved information flows and agency outcomes.

In the service of the society: The labour management practices of an Australian life Insurer to 1940

This article considers the labour management practices in use in the Australian life insurance industry during the inter-war period. Using the Australian Mutual Provident as a case study, it is argued that the specific human resource management practices evolved to deal with separate sets of problems arising from the functions of the life insurance business and the manner in which the principal/agent problem was manifested. The differing nature of work associated with the sales and management of life insurance fostered the development of primary and secondary labour markets in which the benefits flowing to one were superior to those accruing to the other.

CONTROL OF THE AUSTRALIAN LIFE INSURANCE INDUSTRY: AN EXAMPLE OF REGULATORY EXTERNALITIES WITHIN THE AUSTRALIAN FINANCIAL SECTOR 1870-1945

The regulatory environment in which the Australian life insurance industry operates has its antecedents in two major periods of legislative intervention. The first established the principle of ‘freedom with disclosure’ in the 1870s, which has since formed the basis of the regulatory approach. In the 1940s, the second refined the concept in the context of a general recognition of an interventionist approach to financial markets. It is suggested that regulation of the life insurance market in Australia came about not in response to problems associated with market failure but in reaction to external influences not directly related to conditions in the Australian life insurance industry. This was impacted not only on the timing of intervention but on the approach taken as well.

Adaptation and change in the Australian life insurance industry: an historical perspective

In the wake of the deregulation of the financial sector in Australia in the 1980s and 1990s the life insurance industry has undergone a period of rapid change and reorganisation. Part of this adjustment has been the move towards the integration of financial service provision and the rise of bancassurance. This paper investigates the strategies adopted by Australian life insurers as they moved into the increasingly competitive environment triggered by the lifting of government restrictions on banking practices. It compares the approach of life insurers with that adopted in an earlier period of expansion and change. During the 1950s and 1960s an influx of foreign owned insurance companies into the Australian market precipitated the diversification of domestic life insurers into other insurance markets. The catalyst for change in both cases was the change in information costs brought about by the change in the competitive environment. The experience of the Australian life insurance market would suggest that there is a link between changing information costs and changing organisational structures. However this link is circumscribed by the institutional environment.

Determinants of Derivative Usage in the Life and General Insurance Industry: The Australian Evidence

Core business and financial market risks are not easily reduced by standard operating procedures in insurance companies. Derivatives theoretically provide a cost effective vehicle to hedge these risks. This paper provides an empirical analysis of the determinants of derivative usage as well as the extent of derivative usage in the Australian insurance industry in both life and general insurance companies for the period 1997–1999. Empirical results for the Australian life insurance industry in general confirm the findings of UK and US based research. However, the Australian general insurance industry does not appear to follow the conclusions of previous literature. Our results indicate that for life insurers, the determinants of derivative usage were size, leverage and reinsurance. For the general insurance industry the determinants were size and the extent of long tail lines of business written. As regards the determinants of the extent of derivative usage, these were size and asset-liability duration mismatches for life insurers. For the general insurance industry the determinants of the extent of derivative usage were size, the extent of long tail lines of business written, and the reporting year.

The evolution of the Australian life insurance industry

The evolution of the Australian life insurance industry

The evolution of the Australian life insurance industry

The life insurance industry in Australia has traditionally been an important source of long term finance for both the public and private sector. However, very little historical analysis has been undertaken into an industry that constitutes a fundamental part of the economy's financial sector. The present climate of deregulation has initiated an irrevocable process of change within the industry. To comprehend the full implications of this change it is necessary to have an understanding of how the industry has evolved. This paper seeks to provide a background account of the growth of the life insurance industry in Australia highlighting the influences that have determined the structure of the industry.

Returns to Scale in the Australian Life Insurance Industry: A Comment*

Returns to Scale in the Australian Life Insurance Industry: A Comment*

Returns to Scale in the Australian Life Insurance Industry

This paper seeks evidence of economies of scale for superannuation, ordinary and total business of a sample of 38 Australian insurance companies. It was motivated by the work of Rutledge and Tuckwell, but in contrast to their results, significant evidence, of economies is found.