Several insurance practices routinely distinguish between people based on, among other things, age, sex, marital status and disability. The exceptions or defences under the Code (see Appendix) justify many such practices if they can be shown to be for valid business reasons based on sound and accepted practices, such as actuarial evidence.
The insurance industry represented by both property/casualty and life/disability sector associations contends that its risk classification practices based on age, sex, marital status and disability are shown by studies and actuarial analysis to be sound, very effective and absolutely necessary. They further contend that efforts have been made by the insurance industry to avoid discriminatory practices and seek alternatives.
The Commission acknowledges that the insurance industry has the right to use sound and accepted insurance practices and to achieve the legitimate business objective of charging premiums commensurate with risk. The Commission also understands that a move away from age, sex and marital status or other enumerated grounds as rating factors might result in significant rate dislocation and a need for restructuring of the automobile insurance rating system, for example, and would require careful consideration and involvement of the insurance industry, consumer stakeholders and government.
Currently, actuarial science rarely establishes a causal relationship between the intended purpose of insurance products and certain risk classification variables such as age, sex, marital status and disability. The Supreme Court in the Zurich decision indicated that a causal relationship was not required in any case. However, if it were possible, the Commission submits that causal relationships would be preferable because they are a more bona fide and reasonable business practice. This means, though, that the insurance industry must at least continue to “strive” to find alternate variables to age, sex, marital status and disability that might effectively assess risk (also required by the Court in Zurich), and at least begin using any effective alternative criteria to ‘fine tune’ information about risk.
In addition to risk assessment and related Code defences, consumer groups consistently raised concerns about the human rights implications of many other insurance industry practices. These include reasonableness of exclusionary periods, frequency of requests for medical information, arbitrary distinctions between physical and mental disabilities, the duty to disclose material facts on the part of the insurer and sponsor through provision of detailed contracts and benefit plans, and access to affordable dispute resolution mechanisms.
The Commission encourages FSCO to offer its dispute resolution service, that it is currently mandated to provide under the Insurance Act only for auto insurance, to life and disability insurance as well. FSCO reports that it is now exploring offering dispute resolution services to life and disability insurance companies through pilot projects on a voluntary basis. Voluntary participation by companies would not require legislative amendment. As well, FSCO is considering expanding its Ombudsman complaint resolution process to other regulated areas and other FSCO operations. FSCO also pointed out that it has the capacity to issue Cease and Desist Orders where companies are engaging in inappropriate activity.
On the matter of clear and plain language wording for insurance contracts, FSCO recently commented that as a member of the Canadian Council of Insurance Regulators, it is developing a national consumer strategy on point-of-sale disclosure and policy contract wording in the life insurance industry which will see plain language insurance contracts as part of its finished product.
Other issues identified in this Report have also been recognized by the Insurance Ombudsman as areas of concern. For example, consumers under a group long-term disability insurance policy should receive full details of the policy in the event a claim is made.
The Insurance Ombudsman, in the course of receiving complaints about insurer practices, is developing standards for complaint handling in consultation with an industry and consumer working group. Once the standards are in place, the Insurance Ombudsman will be able to look more closely at practices among disability insurers.
Finally, FSCO reports that it engages in consultation with stakeholders via a broad range of mechanisms, depending on the subject matter, including the formation of a Consumer Advisory Committee announced in July. The mandate of the committee is to provide advice from the consumer's perspective on matters that affect FSCO's regulated sectors.
The Commission is supportive of these initiatives.
In April 2000, the Ministry of Health and Long Term Care announced the establishment of a Provincial Advisory Committee on New Predictive Genetic Technologies, a group that is studying issues related to genetic testing and patenting, particularly with regard to education of providers and the public, clinical practice, legal and ethical issues, evaluation of new tests, and individuals' requirements with respect to psycho social supports. The Advisory Committee is preparing guidelines, principles, broad criteria and advice to guide future decisions on how new genetic services should be incorporated into Ontario's health care system. The Committee is also working with other federal-provincial government and non-government agencies to ensure that Ontario's policies are consistent with other provincial and national initiatives.
As a result of the Supreme Court decision in Zurich that gave direction to the industry to strive for the use of non-discriminatory risk assessment criteria, and also because of the relative scarcity of human rights analysis on the insurance industry, the Commission is of the opinion that it is important to give renewed and ongoing consideration to human rights issues in insurance.
The Commission has already taken several steps to address human rights issues in insurance:
The Commission will undertake to develop policy strategies and actions to promote the protection of human rights in insurance, including the following: