The change comes into effect on January 1, 2018 and will be rolled out by all members of the Canadian Life and Health Insurance Association
In an effort to reach a greater number of consumers, insurance companies are working to streamline underwriting for new applications. The process has been criticized as unwieldy and burdensome for clients in the past, but advancements in technology have allowed insurance providers to alleviate some of these concerns. Following the announcement on genetic testing, CLHIA President and CEO Frank Swedlove
welcomed the change, explaining its implications for the industry.
“As part of the underwriting process for individual life insurance policies, companies would routinely ask for medical history, and that would include genetic test results,” he says. “This change will come into effect on January 1, 2018, but it’s possible that some firms will implement this sooner. It will take time to put all the proper procedures in place and train all the insurance agents – there are 95,000 in Canada.”
While those seeking policies above the $250,000 threshold may still be required to take a genetic test, this will only affect a relatively small number of those seeking life insurance coverage – about 85% of life insurance policies are for coverage of $250,000 or less."
This latest development is further sign that the life insurance industry is now committed to change and making products more accessible to the general public. This will ultimately reduce costs for the providers, which in turn should be reflected in the premiums consumers pay.
“As companies refine the underwriting process, they are finding ways of reducing the things they ask for,” says Swedlove. “For some policies under certain levels, companies no longer do blood tests. Greater sophistication in the underwriting process means companies can more effectively determine risk in areas where the data doesn’t necessarily lead to increased underwriting costs.”
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As part of the evolution of the underwriting process in the Canadian life insurance industry, providers will not request or use genetic testing information for new applications for policies with a value up to $250,000.