Insurance for transgender, non-binary clients still based on male and female pricing tables

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With sex being a key variable in determining the cost of insurance, providers are struggling to calculate premiums fairly for clients who identify as either transgender or non-binary.

Canadians applying for life and critical illness insurance products today must choose either male or female as their gender. Discussions about how to obtain the necessary actuarial data to assess risk more accurately and calculate premiums for trans or non-binary clients more fairly are underway, but still in the very early stages.

“There are conversations that are happening very quietly, but nobody seems to know where they’re going to go,” says Yvonne Bradshaw, a financial advisor and coach in Brockville, Ont., who has been exploring what insurance policies are available for trans and non-binary clients.

Clients applying for life or critical illness insurance products are generally required to select their birth gender in order for premiums and costs to be calculated, Ms. Bradshaw says, regardless of whether those clients still identify as that gender.

“I was kind of surprised to learn that was still the case,” she says.

Regulators, meanwhile, acknowledge the limited data available comparing the health and longevity of people with different gender identities makes it difficult for insurers to determine the risks facing trans and non-binary people in the same way they have long known, for example, that women tend to live longer than men.

The current rules allow insurers to set life and health insurance premiums based on sex, but only if the insurer has enough data to show that someone is at higher or lower risk because of their sex, says Russ Courtney, spokesperson for the Financial Services Regulatory Authority of Ontario (FSRA).

The insurer must also be acting in good faith and there must be “no other reasonable way to calculate the premiums,” he says.

“FSRA is monitoring this area as it continues to develop and evolve. And in every case, FSRA expects insurers and agents to treat customers fairly and with respect.”

In order to create another “reasonable way” to calculate premiums for trans and non-binary clients, Ms. Bradshaw says it’s important for advisors to start having those conversations with different providers.

“There are individuals within the 2SLGBTQ+ community who are not being honest with their advisor because they’re afraid of identifying who they are and how they live,” Ms. Bradshaw adds.

When Manulife Financial Corp., Canada Life Assurance Co. and Sun Life Financial Inc. were asked for details on their efforts to improve the accuracy of their underwriting for trans and non-binary clients, they all referred questions to the Canadian Life and Health Insurance Association Inc. (CLHIA). The trade group responded with a statement saying the “industry recognizes that it needs to adapt to the changing environment to ensure that everyone who applies for insurance will be assessed fairly.”

Fairly, however, doesn’t mean everyone is going to be treated the same, says Helen Kennedy, executive director of Egale Canada, a 2SLGBTQI advocacy group based in Toronto.

“What it boils down to is the medical data hasn’t yet proven to the insurance companies categorically the risks assigned to trans-feminine, trans-masculine and non-binary people,” she says. “The data are just not there.”

For example, Ms. Bradshaw says the long-term ramifications of things like hormone replacement therapy are still not understood fully.

“We don’t yet know what that looks like and we don’t have a large body of evidence to draw from and I think that is ultimately why we are still sitting in place,” she says.

What can be done

Vicki Zhang, associate professor of statistical science at the University of Toronto, who studies the life insurance industry and actuarial science, says Canada urgently needs a public discussion and policy-level response to serve the transgender population when it comes to insurance underwriting and pricing.

“This is an emerging issue and there hasn’t been a unifying standard on how insurance companies deal with it,” she says. “I haven’t seen any industry tables that address the transgender category, and the current non-unisex industry pricing tables on mortality and morbidities are still based on male versus female.”

However, some insurers in the U.S., such as Springfield, Mass.-based Massachusetts Mutual Life Insurance Co., offer policies based specifically on a person’s gender identity regardless of what gender that person was assigned at birth.

Still, Ms. Bradshaw says clients need to understand “it really is nothing personal” on behalf of the insurers that have yet to come up with such policies in Canada.

“Whenever you’re dealing with any insurance carrier, you want to know that they’re dealing with you as a person and not just as a case number,” she says. “That’s what I would communicate to my clients so they understand why it is the way it is.”

Eventually, Egale’s Ms. Kennedy says insurers will need to adjust those actuarial tables.

“It could work both ways, either in favour or against members of the community,” she says. “But it is a conversation that insurance companies need to look at in terms of how they’re assessing risk and how they can be more inclusive and treat transgender and non-binary folk better.”

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