Matt Keogh (Burt, Australian Labor Party) Share this | Hansard source

This is another unanimous report of the Parliamentary Joint Committee on Corporations and Financial Services. This inquiry was into the life insurance industry, which includes life insurance, trauma, and total and permanent disability insurance as well as income protection insurance, whether purchased directly, on an advised basis or through group arrangements, such as through superannuation. I would like to thank all those individuals who took the time to make submissions to the committee and to attend hearings, speaking about their engagement with the life insurance industry. Your contributions have helped to shape the recommendations which we are making in this report today. I would also like to thank my fellow committee members for their collaborative approach to the committee's work, and to the committee secretariat staff for their very diligent and helpful work; I'm sure they felt at times that they were herding cats.

In particular, I would like to acknowledge the contribution made by a group of academics associated with Monash University and beyond, who shone a light on the issue of genetic testing and its implications on life insurance, an issue which until now has received too little attention. Currently, insurance companies are allowed to use genetic test results to discriminate against applicants for life, permanent disability and income protection insurance with little independent oversight or consumer transparency. This information seems to only be used against insurance customers, not for their advantage. This discrimination can deter people from getting genetic tests and being involved in medical research that could prove useful in their own future health as well as for scientific understanding of diseases.

In the course of our hearings, we heard the story of a woman who had discovered that she was born with the BRCA gene, which is known to increase a person's risk of breast cancer. She elected to have a double mastectomy in order to reduce her risk. When she later applied for life insurance, the outcome of the woman's original genetic test was taken into account, but her consequent significant risk reduction wasn't. Ultimately, the insurer chose to exclude any cancer coverage from her policy and imposed a 50 per cent premium loading for death cover. The effect of this and many other instances is that Australians will be less likely to access lifesaving genetic tests so that they do not limit their access to affordable life insurance. Indeed, an oncologist remarked to me recently that, in her consultations with patients, even more time is spent—and indeed wasted—on the ramifications for insurance from the tests that they discuss than on actually discussing the health ramifications themselves.

This report recommends that the Financial Services Council, in consultation with the Australian Genetic Non-Discrimination Working Group, assess the consumer impact of imposing a moratorium on life insurers using predictive genetic information unless the consumer provides genetic information to a life insurer to demonstrate that they are not at risk of developing a disease. We also recommend a number of changes to the life insurance code of practice to support this. This borrows from the UK model, often touted as global best practice in this space. We propose a moratorium be placed on the use of predictive genetic information while this technology is still in its early stages, and until it is better understood. However, if the Financial Services Council and life insurers are unable to get to this position and achieve compliance, legislative intervention will be required. Indeed, in my view, this should happen in any event and should not just be limited to the predictive genetic information.

Another key area of the report's recommendations focuses on the application of the government's Banking Executive Accountability Regime legislation, the BEAR. In particular, we have proposed that the scheme apply to the life insurance industry and that the BEAR scheme be expanded to include consumer related conduct issues, enabling ASIC to take action on these matters, as is the case under the UK senior executive accountability regime upon which the BEAR is supposed to be based.

The report also contains progressive recommendations in relation to the accessing and use of medical information as well as expanding prohibitions on unfair contract terms into the life insurance sector. There are many other very worthwhile recommendations; in fact, all of the other recommendations of this report are worthwhile.

While this consensus report highlights that it is entirely possible for members of opposing political parties and from different chambers to agree recommendations in a key area of public policy, I have to say I have little confidence that this government will be implementing all, if indeed any, of these proposals. Just six months ago I spoke here on the tabling of this committee's last report, into whistleblowers. The report made a number of key recommendations—including the introduction of a reward scheme, the establishment of a whistleblower protection authority and changes to the powers held by a number of government regulatory and enforcement agencies—none of which were included in the legislation subsequently proposed by the Minister for Revenue and Financial Services.

I commend the report and its recommendations to the House and hope that it is actioned by government and by industry for the benefit of so many Australians that rely on the life insurance sector.

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