Assurance et réassurance
For the time being the status quo prevails and uncertainty remains, while we wait for the Supreme Court of Canada to decide the issue.
The Quebec Court of Appeal handed down a unanimous judgment on the validity of the Genetic Non-Discrimination Act, finding that this federal Act encroaches upon the exclusive constitutional jurisdiction of the provinces. For the time being, however, the status quo prevails and uncertainty remains, while we wait for the Supreme Court of Canada to decide the issue.
The Court of Appeal’s decision does not invalidate the impugned provisions, but is rather a legal opinion on their interpretation, and the basis for a potential challenge. The disputed sections are still in force and remain applicable. Individuals and entities therefore remain subject to the Act and the sanctions set out therein.
The origins of the contestation
Recall that in 2017, the Government of Quebec, by Order in Council, asked the Quebec Court of Appeal to rule on the constitutional validity of sections 1 to 7 of the Act, by way of referral. Unusually, the federal government announced that it would support the Quebec government on this issue.
In the field of insurance, the issue is specifically focused on section 3 of the Act, which prohibits requiring an individual to undergo a genetic test as a condition of entering into a contract. This provision also prohibits refusing to enter into a contract with an individual on the grounds that the individual has refused to undergo a genetic test. Contravening this provision is a criminal offence punishable by a maximum fine of $1,000,000 and a maximum term of imprisonment of five years.
This provision therefore has the potential to affect the policy underwriting model in insurance of persons, particularly life insurance, where underwriting standards may require genetic testing in order to properly assess the risk.
Insurance contracts are based on the assessment of risk by the insurer
The Court of Appeal reiterated and reaffirmed the principle that insurance contracts are based on the assessment of risk by the insurer. Indeed, the Civil Code of Québec provides that insureds are generally bound to represent the information likely to materially influence an insurer in the appraisal of the risk, the decision to cover it and the setting of the premium (arts. 2408 and 2409). Insurers are authorized to take into account certain factors specific to the insured person, including medical information, when such information provides a comprehensive risk assessment in accordance with accepted actuarial methods. The prerogative to legislate in this area falls exclusively to the provinces as a result of their jurisdiction over private law.
Moreover, the Court of Appeal noted that impugned sections 1 to 7 of the Act do not have the effect of prohibiting genetic discrimination, but rather prohibit requiring an individual to undergo or disclose the results of a genetic test as a condition of entering into a contract. Such a prohibition, enacted to promote the health of individuals, is not a criminal law object under federal jurisdiction. The Court therefore found that Parliament exceeded its jurisdiction and encroached upon the exclusive provincial jurisdiction over private law. It should also be noted that by this judgment, the Court of Appeal reaffirmed the principle that an insurer is entitled to a level of knowledge similar to that of the insured in regard to information relevant to the appraisal of the risk that it is planning to underwrite.
When it referred the issue to the Court of Appeal, the former Quebec government announced that it wanted to present its own law governing genetic discrimination. No bill has been introduced to date, and the new government has not yet taken a position on the issue.
Meanwhile, the Canadian Coalition for Genetic Fairness has brought an appeal as of right of the decision rendered in the reference. It will be up to the highest court in the land to decide.
Until then, we will have to monitor how the Genetic Non-Discrimination Act will be applied. So far, no case applying the Act has been identified before the Canadian courts, and no challenge based on the reference has been announced.