Life Insurance in Australia - Terri Butler MP, Labor for Griffith

Life Insurance in Australia

I recently spoke in the Federation Chamber in relation to the Parliamentary Joint Committee on Corporations and Financial Services’ report on the Life Insurance Industry.

You can read the full speech below.

Ms BUTLER (Griffith) (11:54): I rise in respect of the recent report on life insurance that was tabled in the House this week. It's a report that was released by the Parliamentary Joint Committee on Corporations and Financial Services, of which I'm a member, and I was part of the inquiry that gave rise to the report. I wanted to make just a few observations about some of the issues that we canvassed in the submissions and hearings in this inquiry. Of course, there were a really wide and interesting range of issues raised by submitters, so I certainly can't touch on all of them in the short time available to me, but there are a few that I thought would be worth commenting on today.

The first one is mental health. Mental health is an issue that affects many Australians. Understanding of mental health has been evolving over recent decades. The way mental health interacts with life insurance and with insurance generally has attracted significant attention in our inquiry and more broadly. There is significant value in continuing discussions about the role of insurers in respect of prevention when it comes to mental health. Once someone has developed a mental health issue, it's complicated to have insurers involved in rehabilitation, for various reasons, the obvious one being the potential for conflict of interest: if you're paying the claim and are also responsible for determining whether somebody has been rehabilitated then that can give rise to some fairly obvious concerns. Prevention is a different category of work. It is worthwhile giving some thought to what contribution insurers might be able to make towards work preventing people from developing mental health issues in the first place. That won't be determined in any kind of hurry, but it should be considered and further discussed.

We also had significant material before us about mental health exclusions—provisions in insurance policies that exclude people from coverage in respect of mental health issues—and obligations to disclose pre-existing mental health issues. We had a useful discussion on that in this inquiry. We need to ensure that (1) people can get coverage in respect of mental health issues and (2) people are not dissuaded from seeking help and getting diagnoses in respect of mental health issues because they're concerned about the potential impact on their insurance. I look forward to continuing public debate about what can be done to make insurance and mental health prevention work better and to ensure that people are not prevented from obtaining insurance because of mental health issues and, similarly, not dissuaded from seeking help with mental health issues because of insurance issues.

There was some discussion about doctors on one hand and insurers on the other having different perspectives when it comes to the production of medical information and records. I encourage doctors and insurers to work together on this issue. There are recommendations about it in our report, but disagreements over disclosure will ultimately lead to poorer outcomes for consumers and patients, because the cost of disagreement will be visited upon them. I encourage doctors' organisations, whether it's the AMA or the RACGP, and insurers' representatives to collaborate, open a dialogue and continue to discuss what can be done to serve consumers' and patients' interests.

The next issue is genetic testing. This was probably one of the most hotly contested issues in this inquiry. Patients who have genetic tests don't want a potential propensity towards a particular disability, illness or disease to affect the premiums they pay or their ability to get insurance in the first place. Similarly, those who undertake genetic testing for research reasons have legitimate concerns about the potential for insurers' use of genetic testing to lead to a chilling effect on people's willingness to participate in genetic testing for research purposes. There are also, quite rightly, concerns about the potential impact on consumers more broadly. If insurers are unable to consider genetic testing results, will they assume that a proportion of the insured population have particularly propensities and price that risk into premiums for everyone, and if so, is that fair to all consumers?

The use of genetic testing is not a simple issue. We have sought to strike a balance in respect of this issue in the report. I think that reasonable minds could quite easily differ about how this issue could be dealt with. I wanted to put on record my thanks to all submitters who raised issues about that particular topic, genetic testing, because it is a complex question and it can have a real impact on people's lives—patients, consumers, beneficiaries of research, potential beneficiaries of research, people who undertake research, and, of course, firms and shareholders. A range of different interests arise, and we need to make sure that we take them into account.

The other thing I briefly wanted to touch on before ceding the floor to my friend the member for Forde, who was also on the inquiry, is the issue of insurance in superannuation, particularly insurance that is a default product in superannuation. There have certainly been some concerns raised with people in the public debate about the potential for insurance premiums to eat away at your superannuation balance, particularly if you have a low balance. I just wanted to mention the corollary to that perspective, which is that, if you were to take away default insurance products, that would leave people in a situation where they are quite likely to be uninsured in the event of some catastrophic injury or illness. For example, if you develop cancer and have to take a year off work, you might never have thought about income protection insurance, life insurance, TPD—the insurance products that might be in your superannuation. You might never have bought those insurance products. But suddenly you've got multiple sclerosis or you have cancer or you've had a terrible injury that's not covered by workers compensation or motor accident compensation, and it can be an absolute godsend to have that insurance that you never would have thought to get and you wouldn't have if it weren't for it being a default product in your superannuation fund. So I am very pleased that we considered this issue in the inquiry. I certainly have had family members who've had to take long periods of time off work unexpectedly because of serious illness. If you don't have the insurance and you are then forced to refinance your house because you couldn't afford to work and you didn't have any income support, that's a pretty significant issue. I wanted to mention that, again, I think there are a range of considerations in this question, but I did want to emphasise my own perspective on that particular issue and my concern to ensure that people do have the support that they need in the event of catastrophe.

I want to record my thanks to the chair of the committee, the deputy chair of the committee, the other members of the committee and of course the secretariat. We have an excellent secretariat in the Parliamentary Joint Committee on Corporations and Financial Services, and I am very grateful to them for all the work they continually do. I also want to express my thanks to all of the submitters to the inquiry, particularly those who took the time to come and give evidence in person. But my thanks go to everyone who made a submission; some made more than one submission. These were complex, detailed issues that we dealt with over a long period of time. We received significant support from experts in the community, many of whom were just there out of altruism and community-mindedness. Some also had some private interests that would be served by recommendations made, but I have to say there was a lot of willingness to be involved in this inquiry and to really give time and effort to try to help us to reach the right conclusions and give the right recommendations. I place on record my appreciation for all of them.

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