Swiss insurance companies show growing interest in genetic data

A lawmaker’s current initiative in Switzerland on the required disclosure of genetics tests to insurance companies is raising a number of moral, legal and philosophical issues. If passed, the law would give a green light for insurance companies to receive genetic data of natural persons who wish to enter into a life insurance contract and who have previously had a genetics test.

Under currently applicable Swiss laws, insurance companies have no access to such data.

Under the draft law which is currently pending before the federal parliament, an applicant for an insurance policy would be required to inform the insurance company of the results of a completed genetics test if that person wishes to conclude a life insurance contract.

Nowadays, it is becoming more and more easy as well as cheaper to have a genetics test carried out and quite a few individuals take advantage of this possibility. For such individuals, these tests will often serve the purpose of knowing the risk of any inherited diseases and whether they are otherwise predisposed to certain illnesses.

Supporters of the draft law argue that a person who completes a genetics test will be aware of its results whereas the insurance company will not. This causes, they argue, “information asymmetry” between the parties since the customer is in the possession of information which the insurance company does not have. Thus, the insurance company would necessarily not be in a position to precisely assess the risks which the insurer would have to take into account when concluding a contract which means, in turn, that the insurance company would not be able to set the insurance premium properly. One of the arguments of the supporters of the draft law is that nobody would wish to enter into a contract if the other party hides information which may have a significant importance from the perspective of the conclusion and performance of a contract. In other words, the principle of justice requires, they argue, that the customer informs the insurance company of the results of the genetics test prior to the conclusion of the life insurance contract.

It is important to note that, of course, the draft law does not require anyone to have a genetics test conducted and the insurance companies may not require the customer to obtain such a test for the purpose of concluding a life insurance contract either. The draft law simply provides that in the event that a person has in fact completed a genetics test and then wishes to enter into a life insurance contract, then he / she is required to inform the insurance company of the results. The draft law also provides that this disclosure requirement would only apply with respect to private life insurance and not compulsory life insurance.

The Alliance of Swiss Insurers argues that the reason it is necessary to inform the insurance companies of the results of actually completed genetics tests is that this is how the insurance companies are best placed to properly set the amount of the premium, i.e. this is how the premium can be determined in proportion with the relevant risks. In their view, in the absence of such information, the premiums will increase since there may be persons who would conclude a life insurance contract knowing that there is a high risk that they have inherited a certain kind of disease but would not disclose this information to the insurer.

At the same time, politicians opposing the draft law are afraid that if the proposal becomes law, it may divide the society into two. This is due to the fact that such a regulation may subsequently lead to a situation where life insurance will only be available to those whose genetics test results the insurance companies find satisfactory.

Representatives of the sick people have also expressed their concerns about the draft law. Namely, genetics test results reveal extremely sensitive data about the individual and his / her family, and there is no valid justification for handing over such data to insurance companies on a mandatory basis. At the same time, they also emphasize that a genetics test is by no means a diagnosis but merely about the likelihood of the existence of a risk, i.e. such a test is not about the medical identification and description of a certain state that has already taken place. It is completely unjust to discriminate individuals on the basis of the existence of a risk, they argue.

The Alliance of Swiss Insurers has indicated that they are well aware of the fact that a genetics test is not equal to the diagnosis of a disease and also added that they wish to draw up a list of suitable tests with the help of authorities and experts. These authorities and experts would assist in determining the genetics tests that are relevant for the purposes of the conclusion of life insurance contracts. Any such efforts by the insurers have, however, so far been unsuccessful.

The proposal will certainly trigger some serious disputes in Switzerland, including also the federal parliament. The issues that have been raised and need to be resolved will surely be addressed by applying the usual thoroughness and care, and, thus, may well result in an amendment that is acceptable from both legal and moral perspectives.

In addition to a number of other issues, the initiative described above could raise a further issue from the perspective of the European Union’s general data protection regulation (GDPR), which will be applicable from 25 May 2018.

The GDPR will apply if a Swiss insurance company concludes a life insurance contract with a person who is in the European Union which means, in this case, that the Swiss insurer is required to abide by the rules of the GDPR.

The GDPR lists the possible legal bases for processing genetic data. This list, however, does not seem to include the legal basis which would allow the processing by Swiss insurers of genetic data for the purpose as described above.

Thus, it raises the issue that if a Swiss insurance company concludes a life insurance contract with a person living in, for example, Germany (who can even be a Swiss citizen) and who hands over the results of his / her genetics test to the insurer upon concluding the contract, then what is the legal basis under the GDPR for the processing by the insurer of the genetic data?

Zoltán Balázs Kovács, LL.M. (McGill University), Partner, Szecskay Attorneys at Law, Budapest (zoltan.kovacs@szecskay.com)

(based on the article on srf.ch)

the author is a lawyer and author of the blog at eugdpr.blog.hu

The contents of this post are intended to provide only a general overview of the subject matter and do not qualify as legal advice.