Insurance companies must tread carefully with proper policies and procedures to honour requirements for consent
Recently, the Supreme Court of Canada upheld federal legislation that prevents third parties from demanding genetic information from individuals. Those third parties include insurance companies, which effectiveky face prospective prosecution unless they take appropriate precautionary measures.
In a recent article, Bernice Karn, Katie-May O'Donnell, and Gordon Goodman of legal firm Cassels explained that under the Genetic Non-Discrimination Act, it is a crime to force an individual to get genetic testing, as well as collect, use, or disclose results of genetic testing without the individual’s written consent.
As defined in the act, a “genetic test” is one that “analyzes DNA, RNA or chromosomes for purposes such as the prediction of disease or vertical transmission risk, or monitoring, diagnosis or prognosis.” A breach of the act can result in a fine of up to $1 million, prison time of up to five years, or both.
The authors said that insurance legislation in each jurisdiction of Canada requires prospective insureds to fully disclose facts material to the insurance, including medical history, when they apply to life insurance companies for coverage. If they don’t disclose the information, their contract could be rendered voidable by the insurer.
“Following the Decision, the courts will now need to determine how the Act affects this fundamental principal at law,” they said.
While the act allows insurers to seek consent to collect an individuals’ genetic test results, the Privacy Commission of Canada has made public comments to clarify the limits to that consent. Among other things, insurers should seek consent only for explicitly specified and legitimate purposes, and remember that consent is valid only if it’s “reasonable to expect customers will understand the nature, purpose, and consequences of the collection, use, or disclosure of their personal information.”
Insurers must also view obtaining consent as an ongoing process rather than just a one-time event. In relation to that, the Privacy Commission said that consent may no longer be valid when there’s a material change to the subject matter of the consent, including using the information for a new purpose or revealing information to a third party not considered in the original consent.
The authors also touched on one counter-argument by the Canadian Life and Health Insurance Association (CLHIA), which held that individuals with genetic test results that disclose a genetic disorder may apply to obtain more life insurance coverage, frustrating efforts to ensure premium costs are contained as appropriate as the risk is not properly spread across a pool of individuals and.
“The implications of the Decision have already been felt in the insurance industry, which previously warned that the general cost of insurance premiums would need to increase to fund the cost of the insurers being less able to predict claims with accuracy,” the authors said.
To stay onside of the act, they said insurers must have permanent practices to make sure they’re not collecting, using, or divulging genetic test results in violation of the act. Aside from that, they should establish appropriate practices, policies, and procedures to give applicants the opportunity to give meaningful consent.
“Apart from disclosure of genetic test results, applicants for insurance coverage are still expected to provide full disclosure of facts material to the coverage when applying for life insurance coverage,” the authors said, noting that insurers may face significant challenges when they receive results from doctors that are solely based on genetic tests, or combine genetic tests with other medical examinations.
