Thank you, Chair.
I'm Stephen Frank, senior vice-president of policy for the Canadian Life and Health Insurance Association. I am accompanied by my colleague, Frank Zinatelli, who is vice-president and general counsel at the CLHIA.
The CLHIA represents life and health insurance companies that account for 99% of the life and health insurance in force across Canada. The industry protects 28 million Canadians and makes benefit payments of $84 billion a year.
We appreciate this opportunity to appear before the committee as it reviews Bill S-201. As drafted, we do not support Bill S-201. Our central issue is that, over time, it would likely result in an increase in the number of Canadians who do not have insurance. In addition, we do not believe that clauses 1 to 7 of the bill are constitutional.
Let me elaborate on these issues and also highlight what the industry is doing to address concerns over the protection of individuals' genetic information, while ensuring that insurance remains affordable for Canadians.
Insurance is a good faith agreement. At the time of application, parties disclose any information that may be material to the contract so that the contract can be entered into on an equal information basis. This ensures that the applicant knows what benefits are being provided and that the insurer can properly understand the risk in order to make an informed decision about whether to provide life insurance to that individual and at what price.
This principle is protected in insurance legislation in every province and territory. Under this principle, and with the express consent of the applicant, insurers use family history, lifestyle and medical information to set prices that fairly reflect the level of risk of insurance applicants. Using genetic test results already in the hands of the applicant is a logical application of this principle. This helps ensure that the costs of insurance reflect each individual's risk and that some individuals are not inappropriately paying for or subsidizing the cost of insurance for others.
Experience tells us that if an individual gets a genetic test result that confirms that they're more likely to develop an illness or other condition earlier in life than the general public, they will seek out insurance and they will seek out more of it than they otherwise would have.
Ultimately, this will result in higher premiums for other consumers as insurers will need to increase premiums for everyone to cover these unanticipated higher costs. As you've heard already, the Canadian Institute of Actuaries has concluded that not allowing insurers to have such relevant information would over time lead to increases in term life insurance of 30% for men and 50% for women.
We know that Canadians are price-sensitive. As prices rise, many thousands of them will likely decide not to purchase insurance due to cost considerations. Therefore, a likely result of any prohibition on insurers having equal information when assessing an application for insurance, is that fewer Canadians will have protection from unfortunate events than otherwise would have.
We also do not believe that section 1 through 7 of the bill fall within the constitutional jurisdiction of Parliament. The predominant effect of those sections would be to regulate the provisions of goods and services and the terms of contracts including in the insurance industry. Sections 1 through 7 of the bill, therefore, fall clearly under the property and civil rights head of power, for which the provinces have exclusive constitutional authority.
There have been previous testimony on this bill that it could be considered constitutional based on the federal criminal power. The federal Parliament has broad and plenary power in relation to criminal matters. However, the federal Parliament cannot legislate within an area of exclusive provincial jurisdiction, simply by casting the legislation as criminal. The Supreme Court of Canada has indicated that Parliament's ability to pass criminal law that addresses health is limited. Genetic testing information does not fall under this category.
As well, please note that sections 1 through 7 of Bill S-201 target a specific category in specific contexts, including insurance and employment, and do not have a criminal law purpose. They're not aimed at prohibiting genetic discrimination generally and cannot be supported under the federal criminal law power.
Our comments are supported by the views of the Torys law firm, in an opinion that we have obtained. We have provided copies of the legal opinion to the clerk to distribute to members of this committee.
As an industry, we understand that genetic testing information is sensitive medical information. This is why the industry already has in place an Industry Code, in which all life and health insurers commit to a variety of obligations, including that no Canadian will be asked to take a genetic test as a condition of obtaining insurance.
Beyond this, however, we are committed to proactively finding a solution that balances the concerns of Canadians regarding the use of genetic testing results with the need for fair and reasonably priced insurance.
As such we've been actively working on this for many months and recently initiated discussions with the provinces on an approach where insurers in Canada would commit to not asking for or using any genetic test results for applications for life insurance policies up to $250,000. At this level more than 85% of applications for life insurance would not require any disclosure of genetic test results, and therefore, will address the concerns around this issue for the large majority of Canadians.
This approach would also keep the cost of life insurance affordable for the average middle-class family. We hope to be in a position to make an announcement with respect to this initiative shortly.
In conclusion, Bill S-201 would undermine the critical principle of equal information and would likely result in an increase in the number of Canadians who do not have insurance over time. In addition, we do not believe that the sections of the bill dealing with insurance are within federal powers. However, we understand that genetic information is sensitive to Canadians. We've started discussions with the provinces about finding a balanced solution that will appropriately protect Canadians' genetic information while also maintaining fair and reasonably priced insurance.
We appreciate this opportunity to participate in the committee's review. We would be pleased to answer any questions you may have.
Thank you.