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Disability discrimination and insurance

Disability Disability Rights

Disability discrimination
and insurance

Australian Life Underwriters Association and Claims Association
conference
5 November 2000
Graeme Innes AM
Deputy Disability Discrimination Commissioner

Graeme Innes

Although it is a long time now since I studied insurance law, I can at
least still recall the principle that insurance contracts ought to be
approached with the utmost good faith, with parties to the transaction
being able to rely on each other disclosing anything that might be relevant.
So in that spirit, let me start by disclosing that although I was very
happy to accept the invitation to speak today, at the outset I was rather
uncertain about what I should say.

I was happy to be invited here because of the importance of equitable
access to insurance as a key aspect of equal participation by people with
disabilities in the economic and social life of our community. It seems
to be one of the laws of life that anything which carries rewards also
carries risks, and insurance is no less important to people with disabilities
than to other members of the community in dealing with those risks - whether
it is the risk of being injured at work as a member of the paid workforce,
or the financial risks which we accept in being responsible for a family
or buying a home, or risks in travelling, or - most topically - the physical
risks which we accept in playing sports.

During the Paralympics public attention has been drawn in all sorts of
dramatic ways to people with disabilities as people with abilities and
aspirations, goals and achievements, skills and determination. Sometimes
the public and media enthusiasm has seemed like the excitement of discovery
of a new continent, of people with disabilities being newly charted territory.
But just as Australia was already well known to its prior owners before
being "discovered" by Europeans, there have in fact been people living
in this brave new world, this world where the population includes people
with disabilities, for quite a long time - all our lives in many cases.

I confess that I have been surprised by people appearing to find new
and surprising some things which I had come to think were already more
common knowledge - about what people with disabilities can do and aspire
to do, and also about unnecessary barriers to access and participation,
like barriers in the built environment in Australia, or barriers in people's
attitudes and expectations, and the importance of continuing work to remove
those barriers and avoid building new ones. The lesson perhaps is not
to be shy about stating the apparently obvious. I'm sure I remember something
along those lines from contract law lectures, too.

I'm not suggesting that the insurance industry is among those in the
position of discovering people with disabilities as uncharted territory
- although I believe there is some new experience being charted, literally
in actuarial experience and in the less predictable waters which underwriters
often navigate, as expectations of and possibilities for people with disabilities
expand.

Another reason I was happy to accept the invitation to be here today
is because in the Human Rights and Equal Opportunity Commission's work
under the Disability Discrimination Act we have always tried to recognize
that our role in assisting industries to meet.their responsibilities is
at least as important as our role in assisting people with disabilities
to gain access to their rights.

But as I have already confessed, I was initially uncertain about what
I should say here, because I wondered how to make remarks which were both
relevant and to be relied on. Before you all get up and leave, I hasten
to say that I did ending up deciding there are some important things I
can discuss here today. However, in the spirit of full disclosure, let
me share with you my initial uncertainties.

The Disability Discrimination Act has been in force for over seven years
now, since 1993, making discrimination unlawful in insurance and in many
other areas of life. Similar provisions of State anti -discrimination
Acts have applied even longer in most cases, since the 1980s, even if
these were found by the courts to have been excluded by Commonwealth coverage
of the field so far as life insurance is concerned. So there is not very
much new in saying, at greater or lesser length, that disability discrimination
is unlawful and that your industry, like others, has obligations in this
respect.

Essentially all of the Commission's work in administering the Disability
Discrimination Act is disclosed for all to see on our website www.hreoc.gov.au.
(When I say "for all to see", I do mean all. Internet publication delivers
a revolution in information accessibility for blind and vision impaired
people so long as some pretty basic rules on web design are followed.
It has also enabled a small agency like HREOC to reach far more people
than we ever could afford to relying on paper and other physical formats,
and allowed us to make budget savings out of which my own position as
Deputy Commissioner was funded.)

Our web site, then, contains summaries of complaint outcomes to date
on insurance, answers to policy questions which have arisen, and guidelines
on insurance developed some years ago in consultation with industry and
consumer representatives. Far be it from me to deny the importance of
access to information in whichever format the user requires or finds most
effective. But I do not imagine you invited me here in the belief that
it would be an efficient use of your time or taxes to have me recite to
you what can be read on line at any time.

Where perhaps we reach more interesting issues is in considering what
we have not published on line, because it does not yet exist. I mean,
we have not published any definitive and detailed statement on what is
and is not unlawful in the insurance area.

The legislation recognises that the nature of insurance is one of making
differentiations based on risk - at least, that is the case outside of
the health insurance area where the community rating principle applies.
Even there, exclusions on payment for pre-existing conditions recognize
that insurers are in the business of insuring against risks, not already
known certainties. Of course, insurers are no more entitled than any other
industry to act on basis of prejudices, misconceptions or inaccurate or
outdated information about people with disabilities. But the Disability
Discrimination Act does permit distinctions and exclusions based on disability
if and where this is reasonable. Reasonableness can be established on
the basis of actuarial data that is reasonable to rely on in the circumstances,
or by reference to other relevant factors.

But this obviously does not answer the question: what is reasonable?

The Commission's insurance guidelines were issued in 1998 after extensive
discussions with community and industry representatives and were intended
to assist in decision making consistent with the legislation. Although
these Guidelines were designed specifically to apply to the life insurance
and superannuation industries, it was hoped that they would also assist
providers of other types of insurance. We indicated when issuing the guidelines
that the Commission would consider making guidelines to cover other types
of insurance such as travel, credit card or mortgage insurance.

We know that these guidelines are being referred to - in that they are
receiving about 60 hits per month on our internet site. Complaint outcome
summaries on insurance cases are also receiving around 50 hits per month
and the Frequently Asked Questions on insurance are receiving around 40
hits per month. But these statistics do not tell us who is referring to
these materials or how useful they are being found to be.

A great deal of effort went into guidelines from all concerned, including
the Commission's staff. But reading through them now, they seem to reduce
fairly easily to two basic propositions: 1. Disability discrimination
in insurance is unlawful. 2. Reasonable distinctions in insurance are
not discriminatory for this purpose.

There has been little or no feedback on these guidelines since 1998 from
either industry or community members although an invitation to provide
comments and a commitment to consider these was published with the guidelines.
I would encourage all interested parties to provide comments, including
on these questions:

  • Are there issues where further guidance is desirable and possible?
  • Are the guidelines having an effect in reducing impermissible discrimination?
  • Where complaints are arising, are the guidelines assisting parties
    in defining and resolving issues?

I mentioned a fair degree of interest in the complaint outcome summaries
which we published on line last year and which will be updated from time
to time. These summaries mostly reflect settlements which have been arrived
at only on an individual basis and most definitely without admission of
liability or setting of firm precedents.

This capacity to resolve the individual matter at hand without having
to resolve once and for all the underlying legal and factual issues is
clearly a strength of the conciliation process built into Australian anti-discrimination
law, from the perspective of parties to any individual dispute. It is
less of a strength if what is desired is clear definition of rights and
responsibilities, or broader resolution of contentious policy issues.

The conciliation process, though, is not the only mechanism available
under the Disability Discrimination Act. The legislation also provides
for complaints to be investigated. It is not always recognised that investigation
and inquiry processes can be also be effective and appropriate methods
of alternative dispute resolution alongside mediation and conciliation
approaches.

Investigation of discrimination complaints in Australia is generally
confined to private discussion with the immediate parties to the complaint,
but - subject to appropriate respect for privacy of personal information
- there is no legislative restriction to this approach either in the Disability
Discrimination Act or in other Australian anti-discrimination laws. In
a small number of cases over the last year HREOC has begun applying a
public inquiry process of investigation to complaints, mainly using the
very cost effective approach of issuing a notice of inquiry and receiving
and publishing submissions through the internet.

This method has been applied to complaints where

  • important policy issues are presented;
  • the issues appear to require consideration of views and information
    from people and organisations beyond the immediate parties to the complaint;
    and
  • public inquiry process can be undertaken without infringing privacy.

The purposes of a public process of investigation of a complaint are

  • To assist the parties to the complaint in identifying options for
    resolution;
  • To inform the Commission in its exercise of its powers regarding
    complaints, including the power to terminate handling of a complaint
    on the basis that the matter does not involve unlawful discrimination
    or has another more appropriate remedy available;
  • To allow for participation of other interested parties in these processes
    so as to allow all relevant interests and information to be taken into
    account.

We are yet to apply this approach to an insurance related complaint,
but I anticipate that some insurance complaints would present issues appropriate
for investigation in this way. I encourage insurance industry participants
to consider this type of process as a positive opportunity for involvement
in decision making under discrimination legislation, and not as a threat,
or some sort of Spanish Inquisition.

An investigation, as I have noted, could provide the parties to the complaint
with a suitable basis for an agreed resolution. It might alternatively
lead to the conclusion that the conduct complained of is not in fact unlawful,
or has been adequately remedied, or that there is another more appropriate
remedy reasonably available, so that the Commission's handling of the
matter should be terminated.

In the event of a termination decision, complainants retain the right
to pursue the matter in the Federal Court if they wish. The Commission
also has power to terminate investigation and attempted conciliation of
a complaint precisely on the ground that the complaint raises a matter
of public interest which ought to be considered by the Federal Court or
by a Federal Magistrate.

Possibly, the insurance industry will be content to continue to rely
on its own assessments of what is lawful decision making (assisted by
non-binding guidelines from HREOC) to avoid complaints arising, to seek
to conciliate complaints where they do arise, and to abide the risks of
adverse results in possible Federal Court proceedings. This is an approach
which is open to any industry in managing compliance with the Disability
Discrimination Act.

If, however, members of the industry are interested in achieving a greater
degree of certainty, the legislation does provide mechanisms for this.
In particular, the Commission has the power to grant applications for
temporary exemptions, for five years at a time, from most provisions of
the legislation including those which apply to discrimination in insurance.

In keeping with general administrative law principles, the Commission
will grant exemptions using this statutory power where it is satisfied
that this would promote the objects of the legislation which confers the
power. In the interests of accountability and sound decision making we
conduct public processes of publishing notices of inquiry and taking and
publishing submissions before making decisions on whether and in what
terms to grant an application.

The temporary exemption process is an inherent part of the scheme of
the Disability Discrimination Act and in my view has the potential to
be more widely used than we have seen so far. The objects of the DDA are
better served if organizations with responsibilities bring forward measures
for meeting those responsibilities over time for consideration by HREOC
and discussion with interested parties in the context of the exemption
process than if those organizations elect instead to defer any positive
action until successful complaint action is taken against them. The Commission
will therefore continue to encourage organisations with responsibilities
under the DDA to bring forward positive measures to meet those responsibilities
in the context of temporary exemption applications under section 55, and
grant exemptions where this advances the objects of the legislation.

The Commission has refused, in a number of decisions, to grant exemptions
where there is no reasonable prospect of unlawful discrimination being
found. This is because using the exemption power simply to certify that
an action or situation is already lawful does not in itself do anything
to advance the objects of the legislation. However, it is a proper use
of the exemption process for an applicant to seek to convert a possibly
good defence (including under the insurance exemption regarding reasonableness)
into a certain defence by putting forward measures it is prepared to undertake
to achieve greater compliance with the objectives of the DDA.

A number of exemptions have been granted to public transport operators
on the basis of very concrete commitments, to percentages of vehicles
and facilities to be accessible by certain dates, pending which the operators
in return are given protection against complaints. In the insurance industry,
this sort of concrete measure might be rather less applicable. More to
the point might be an agreed approach to decision making, including the
possibility that an exemption from the legislation might be granted to
allow an industry based complaints system to prove itself if there were
grounds to believe that such a system was capable of achieving better
results in terms of the objects of the legislation than continuing to
rely on the complaints machinery of the legislation itself through the
Commission and the courts.

I am not saying that a system suitable for recognition through the exemption
process is yet in place - for one thing, I understand that insurance industry
based remedies are limited in their coverage to policy holders and do
not extend to people whose problem is precisely that they were refused
coverage. I believe though that this exemption based approach is worth
discussion, in relation to insurance among other industries.

This sort of approach seems still to be regarded as uncharted territory
and perhaps an excessively brave new world in most discrimination law
circles in Australia , but it has been discussed extensively in the United
States, particularly in relation to environmental law, under the name
of "regulatory relief". I think that name could be misleading. The issue
for the Commission is not one of industry being relieved of burdensome
obligations, but of finding more effective and efficient ways for reasonable
obligations to be fulfilled.

Before I conclude today I want to mention an issue which would much more
generally be regarded as meriting the "brave new world" tag. I'm referring
to issues of discrimination by insurers on the basis of genetic information.

A Genetic Privacy and Discrimination Bill proposed by the Australian
Democrats party has recently (October 2000) received its second reading
in the Senate after being the subject of a Legal and Constitutional Committee
report in March 1999. The position appears to be that further consideration
of any legislation in this area will be deferred pending an inquiry by
the Australian Law Reform Commission and the National Health and Medical
Research Council, announced by the Attorney General and the Minister for
Health in August and for which terms of reference are expected to be released
shortly. I expect that the Commission will be making a submission to that
inquiry but I think it would be useful to note a few points today.

The Legal and Constitutional Committee report noted that in the context
of risk assessment, genetic information is no different to any other type
of information and for that reason, insurers believe they should have
access to all relevant and available information that impacts on risk
assessment. The report noted the proposed code of conduct for the insurance
industry on the use of genetic testing, developed by the Investment and
Financial Services Association. The main points of the code as I understand
it are that insurance companies:

  • will not initiate any genetic tests on applicants for insurance;
  • may request that existing test results be made available to the insurer
    for the purposes of classifying the risk;
  • will ensure that the results of existing genetic tests are only obtained
    with the written consent of the individual concerned;
  • will ensure that strict standards of confidentiality apply in the
    handling and storage of the results of genetic tests;
  • will only use the results of genetic tests in the assessment of the
    insurance application of the individual on whom the test was conducted
    - the results will not be used in the assessment of insurance applications
    of relatives of the tested individual;
  • will not make the results of genetic tests available to third parties
    other than reinsurance companies that may be directly involved in assessing
    the risk.

I would make two comments on this. First, as noted by the Committee,
and unless I am missing subsequent developments, it is not clear what
if anything happens if this code is not complied with. Second, these points
seem to me to be all about privacy - in terms of how information will
be acquired and how it will be protected from further transmission.

I am happy to leave to others, including the Privacy Commissioner and
his staff, issues of what restrictions on access to genetic information
are necessary, how counterproductive effects of any restrictions can be
avoided, and how protection of information can best be made effective.
My point is that these points do not seem to deal at all with issues of
discrimination.

Now, it may be that the lack of specific provisions about genetic discrimination
will not prove to be a problem. Certainly, the Legal and Constitutional
Committee noted that the need for any specific legislation on genetic
discrimination required further thought in the light of the fact that
the Disability Discrimination Act already covers the issue - another one
of those facts which I thought would be obvious fairly quickly to people
interested in these issues but which seems to have been missing from some
of the debate.

At the same time, there is clearly strong concern emerging about genetic
discrimination, with references in the media to mergence of a disadvantaged
or excluded "genetic underclass". Although issues of genetic discrimination
raises images of Aldous Huxley's Brave New World in its most sinister
sense, I have to say - at the risk of overworking my metaphor - that the
newly discovered, uncharted territories of this harsh new continent, too,
are ones where some of us have been living for a considerable time.

So one possible response from people with disabilities to concerns from
people who do not have a disability yet but are worried by possible genetic
discrimination on the basis of a disability they may develop in future
would be a fairly unsympathetic "welcome to the club".

On a more principled level, I see no reason at this stage for a body
administering the Disability Discrimination Act to give much support to
legislative or industry based measures offering enhanced protection against
genetic discrimination unless these measures also extend to people whose
disability is not predicted but present, not hidden in the genes but experienced
in daily life.

I think that a debate over genetic discrimination does offer an opportunity
for a broader focus on what should be accepted as reasonable in the Australian
community in relation to people with disabilities more generally. It is
usually far easier to accept some disadvantage or exclusion from opportunity
as reasonable when it happens only to "them" than when it reaches out
to include "us". It may also offer some impetus to consideration of needs
and possibilities for improved measures to define and protect rights and
responsibilities in relation to disability discrimination and insurance.

Whatever the course and whatever the duration of the pending Australian
Law Reform Commission inquiry on genetic issues, HREOC's door is open
now to industry and other interested parties for discussion, and decisions,
on options available right now under the Disability Discrimination Act.

As part of the request for this presentation I was asked to prepare a
set of problems for discussion in your workshops. If you were hoping that
I would provide the answers to those problems in this presentation then
you have been sadly disappointed. What I have tried to do is raise some
broader issues for industry consideration, which is far more the role
- in my view - of conferences such as this. However, if as insurance explorers
you are feeling lost in this new continent of disability all of the navigation
information which we have - which doesn't provide all the answers but
does give much information - is on our website. So go to your workshop
armed with your laptops and internet connections.