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The Canadian Life & Health Insurance Association (CLHIA) represents much of the life and disability insurance industry in Canada. CLHIA states that it has always believed that it is important to clarify the implications of human rights legislation for insurance practices and to create awareness of these issues.
The Commission met with representatives from CLHIA and several of their member organizations in December 1999 to discuss issues raised in CLHIA’s response to the Commission’s Discussion Paper. CLHIA indicated that it has had a long-standing commitment to dialogue with government and other public sector organizations in support of progressive change in the life and disability insurance industry. Early on, CLHIA provided comment on federal legislation regarding retirement age. CLHIA was involved in extensive consultations regarding the application of age, sex and marital status provisions of the Ontario Code, and gave input to a government task force that brought about changes to the employment standards legislation in the use of age, sex and marital status in employee benefit plans. CLHIA was also involved in consultations when the concept of “handicap” was introduced in the Code. More recently, CLHIA has worked with both the Canadian AIDS Society and the AIDS Committee of Toronto on insurance issues related to HIV-AIDS. One result of these efforts was the preparation of a booklet called HIV-AIDS: A Guide to Insurance Benefits. CLHIA also provides funding for some research in the area of HIV-AIDS and rehabilitation, and is supportive of workplace policies that provide accommodation for employees with HIV-AIDS needs. In addition, CLHIA has participated in focus groups on asthma and diabetes.
The HIV-AIDS Legal Clinic-Ontario (HALCO) and other advocacy organizations for persons with disabilities prepared comprehensive submissions regarding insurance issues and individuals with HIV-AIDS.
The Independent Financial Brokers of Canada-IFBC (formerly the Independent Life Insurance Brokers of Canada and the Independent Financial Services Brokers of Canada), in its response to the Commission’s Discussion Paper, states that many of its issues are of a consumerist nature. IFBC is a voluntary, not-for-profit association representing independent insurance, mutual fund and other financial service brokers and other professionals.
The Commission received several other submissions from organizations including the Coalition for Fair and Just Treatment of Ontarians (CFJTO) which support the position and recommendations taken in the 1996 Marvin Baer study[4] on the insurance industry. The Financial Services Commission of Ontario (FSCO) provided comments to the Commission as well.
"Bona Fide" and Reasonable Risk Assessment
CLHIA emphasizes that flexibility in risk classification and management practices is extremely important, not just in setting rates, but in providing access to insurance services for as broad a segment of the population as possible.
CLHIA admits that there is still confusion in the industry with respect to disability. CLHIA advocates looking at each individual case and not making assumptions about a diagnosis.
However, CLHIA contends that the assessment of risk in the industry is thorough and utilizes the latest information. For example, the assessment of risk associated with HIV-AIDS has changed significantly as additional information has become available. As well, with HIV-AIDS, the potential availability of any offsets, such as Canada Pension Plan benefits (though modest relative to long-term disability claims), is certainly considered in assessing the relevant risk. At the present time, CLHIA is not aware of any individual insurance company that has underwritten life insurance policies for persons with HIV-AIDS.
The industry would not agree that it treats all types of diabetes as a high-risk condition as suggested in the Commission’s Discussion Paper. The type of diabetes, its duration, current status and the individual’s age are used to assess risk and results in insurance being issued to many individuals with this condition. There is an organization in Chicago that provides limited underwriting in life insurance for individuals who have diabetes and for those with multiple sclerosis as well.
With respect to treatment of claims for mental disabilities versus physical disabilities, CLHIA states that any differentials in insurance contracts have been removed. At the same time, the evidence required to establish a claim and its continuance can differ between different types of physical disabilities and / or mental disabilities.
In contrast, IFBC contends that disability claims are processed and approved much more slowly for clients suffering from so-called “soft” problems such as chronic pain and mental health conditions. As well, in its submission to the Commission, CFJTO maintains that the insurance industry often places consumers in high-risk categories that are not warranted.
CLHIA acknowledges that there is considerable flexibility in establishing underwriting criteria, but believes this is beneficial for consumers, providing better access to insurance services and encouraging innovation including a search for alternative variables. An example would be smoking: 20 years ago insurers charged the same rate whether a person smoked or not. Now, that has changed, arguably, due to competition. The same can be said for blood pressure, exercise and general fitness, which were previously ignored as important determinants of health in risk assessment.
CLHIA admits, however, that there is an inherent conflict for the industry between a preferred underwriting approach to attract the most ideal low-risk consumer, and broadening a risk classification category as much as possible to avoid identifying individuals based on a Code ground.
Pre-existing Condition and Exclusionary Periods
With respect to pre-existing conditions, CLHIA explains that no one measure by itself, such as blood pressure tests from a regular visit to the doctor, determines degree of risk. Rather, it is a set of indicators and the amount of insurance being sought that determines the degree of risk. CLHIA emphasizes that pre-existing condition clauses are used in limited circumstances. They offer coverage immediately for all other losses and usually offer coverage of the pre-existing condition after a relatively brief period. Because of competition, CLHIA reports that exclusionary periods are rather short, at a standard six months. If the pool is big enough, as it would be with the Ontario Public Service for example, there is no need for exclusionary periods.
HALCO claims that under pre-existing condition limitations and the typical two-year post-hire exclusion period, persons with HIV-AIDS are denied benefits if found to be disabled in this post hire-period. HALCO explains that persons with HIV-AIDS will attempt to keep working through an exclusion period, even against the advice of their doctors, in order to be eligible for benefits. At the end of two years they then have to sue if insurers claim their condition pre-existed their employment. This is an inadequate strategy. Most people in this situation cannot access the necessary legal assistance in order to launch the kind of civil action required to address this problem. CLHIA reports that it is following up with HALCO on these matters.
Advances in genetic testing (including the Human Genome Project) to identify particular conditions, are making it more and more difficult to define “genetic information”. For example, something as simple as blood test results can lead back to information about genetic makeup. CLHIA strongly believes that access to all relevant information should not be limited, and asserts that the industry protects the confidentiality of such information very carefully. IFBC and other groups are concerned that as affordable tests for tissue typing become more available, insurance companies might deny insurance to some healthy consumers on the basis of “bad genes.”
In its 2000 Annual Report, the Information and Privacy Commission of Ontario acknowledged similar concerns, including unauthorized disclosure of genetic information. “An individual may consent to a particular test and the use of the resulting information by his or her doctor for certain defined purposes, but may not want that information shared with an employer or insurance company. This level of control by the data subject must be protected.” The Annual Report further states that, “Having an identified genetic disability or predisposition to a disease could create a social stigma that adversely affects an individual's life. The concern is that an entire class of genetic "undesirables" might be created, with the resultant discrimination in the context of employment, housing and insurance.”
Confidentiality and Disclosure
The industry asserts it has a long history of protecting the personal information of consumers. An industry-wide privacy code was adopted in 1980. Recently the industry was involved in the development of a related Canadian Standards Association (C.S.A.) code, which forms the basis of federal privacy legislation.
Regarding disclosure of material facts, CLHIA points out that the Insurance Act requires both parties to a contract to act in utmost good faith. Access to relevant information by either party should not be limited, though it may be proper to ensure that such information is used appropriately.
HALCO reports that some employers do not provide necessary and appropriate information to employees about their health coverage and limitations. As a result, HALCO believes that the vast majority of employees have a poor understanding of their health benefits. The insurance industry refuses to provide detailed contracts to employees directly, referring them to their employers. Often, the employer does not have the complete or detailed contract either. HALCO reasons that it is to the industry’s benefit to keep consumers unaware of their benefit entitlements making them less likely to make claims or succeed when they do. HALCO contends that this practice has adverse consequences for people with disabilities who are particularly vulnerable at the point where they need to access their benefits. HALCO recommends that insurers be required to disclose benefit contract details to employees.
It has been HALCO’s experience that there is a huge variation among insurers as to how a claim is adjudicated and handled. Some insurers simply ask for medical information once and the claim is granted and the claimant is left alone. Other insurance companies are extremely aggressive and will demand new medical documents from persons with AIDS on a regular, if not monthly, basis. The submission of any new medical documents is an automatic excuse for some insurers to discontinue the claim on the grounds that the beneficiary is no longer disabled. HIV is a disease that is worsened by stress and as a result this practice is particularly harmful to persons with AIDS. In HALCO’s opinion, the requests for new medical reports can amount to harassment in the delivery of services on the grounds of disability.
Because of concern by individuals with HIV-AIDS that they will be denied employment or face discrimination and harassment on the job if their status is revealed, HALCO is advocating for an option where health information for benefit plans can be exchanged directly with insurers rather than through employers. This same concern could arise with other disabilities as well.
IFBC also raises issues pertaining to confidentiality and disclosure. Since written disclosure to clients at time of sale is not the norm, the consumer should at least receive full disclosure from the insurer within the policy document itself. Unfortunately this is frequently not the case. Consumers should receive fair, written disclosure of the policy applied for, and a complete policy contract for review upon delivery.
IFBC further recommends that a life/disability policy should contain a "definitions" section, to clearly explain the meaning of important words within the policy. Finally, the policy delivered to the consumer must contain all the pages of the contract and should be properly numbered.
HALCO points to another inappropriate practice where some insurers share information about disabled employees in a manner that allows employers to identify high claim employees and their specific drugs.
Employers
CLHIA emphasizes that some human rights issues are not only matters for insurers. There is a need to have similar dialogue and distribute better information to the employer sector where benefit plans provide substantial life and health insurance services to a large number of Ontarians. Insurers play a major role, but do not always control the services or features that are purchased.
For example, coverage of maternity leave absences under short-term disability insurance plans has received extensive discussion by the insurance industry. Insurers generally offer broader coverage. There are products in the market that pay benefits during maternity leave and some plan sponsors have chosen to offer such coverage. However, CLHIA explains, very few companies buy them. Broader coverage is far from universal.
CLHIA reports that insurers have generally issued coverage for same-sex partners since the requirements under the federal Income Tax Act have changed. Ontario’s Bill 5[5] and federal legislation have provided the legal authority required to implement coverage more broadly. CLHIA had been awaiting changes to the Employment Standards Act to provide more guidance. The new Employment Standards Act, 2000 (ESA) came into effect on Sept. 4, 2001, and requires that benefit plans are provided to same-sex partners on the same basis as others.
CLHIA raises an issue of concern regarding employers who are looking for ways to control increasing drug costs. Employers may exclude certain high-cost drugs from employee benefit plans based on disability. HALCO elaborates on this issue and states that it is common for both insurers and employers to directly or adversely deny “expensive” claimants, such as persons with HIV-AIDS, extended drug and dental health benefits to new-hire, active or long-term disabled employees. Some employers offer off-side plans (e.g. pay the Ontario Trillium program user-fee cost); while others set up a tiered plan so that employees who require a certain category of expensive drugs (such as those for HIV-AIDS) pay a very large premium for their tier of the benefit; or, employers may stop paying benefits altogether for all employees because of the high cost related to few employees. This can have an adverse impact on some employees with disabilities who may have to turn down a job offer or quit their job because they cannot afford the high drug costs and must go on social assistance where drug benefits are provided.[6]
HALCO mentions another concern, namely that insurer practices do not foster graduated return to work. This would be helpful to employees with disabilities as gradual return to work is most successful where claimants initially remain on full or partial benefits.
Finally, IFBC raises a concern regarding the insurance industry as “employer” and the use of an “Application for Contract or Sponsorship”, usually required by the industry for independent brokers to obtain a contract to represent a life insurance company. The commonly used form contains questions regarding gender, marital status, place of origin, driver’s license and social insurance number that can lead to discrimination under the Code.
Advocacy
Auto insurance has an inexpensive alternative dispute resolution mechanism provided by the Financial Services Commission of Ontario (FSCO) in accordance with the Insurance Act. A similar legislated mechanism is not available to life and disability claimants who must go to court. HALCO believes that some insurers count on only a small fraction of those, who may have been wrongfully denied benefits, having the financial wherewithal to contest such decisions.[7] Moreover, individuals with HIV-AIDS who have the resources may not live long enough to do so. It is HALCO’s opinion that some insurers deliberately use this strategy to shift the burden of dying individuals onto government income maintenance schemes in order to reduce their costs.
In its submission to the Commission, the CFJTO took a similar position with respect to access to affordable dispute resolution mechanisms as well as better contract disclosure requirements.
CLHIA assures the Commission that human rights issues are on the industry agenda, although admittedly not to an ideal degree. And, its long-standing Committee on Human Rights has been in place for this purpose. CLHIA also notes that the life and health insurance industry has made available consumer complaint resolution services for over 25 years through its Consumer Assistance Centre. In 2000, the Centre dealt with approximately 1,000 concerns or complaints. They also offer an OmbudService which provides informal conciliation between a consumer and an insurer company.
There are also other sectors and groups involved in advising and advocating on matters of insurance. For example, the University of Waterloo Statistics and Actuarial Science Program and the affiliated independent Institute of Insurance and Pension Research (IIPR) might also be important sources of information and study.