Insuring the unborn - where we're at in Australia

Insuring an unborn child in Australia is not a thing on its own, but is specified as an add-on, and first is the insurance of the pregnant woman, but then is set up under child cover policies once the child is born. While it isn't necessarily the point in Australia, there is the possibility that once the child turns 21, the cover can be extended to an adult policy. 

In Asia, however, pre-natal insurance is alive and kicking, and is the idea that you can insure a foetus before it's born, and throughout it's life. Getting in early. 

There are some intricate issues that come up when dealing with the unborn, with the primary discussion being: when does a person become 'alive enough' to become an insured person? Clearly this doesn't make sense before the child even has a name, but this hasn't stopped anyone. This is where we step into the tangled and unknowable debate regarding when a foetus becomes a 'real person'. That is, in the eyes of, if not the law, then an insurance company intent on increasing its market share with no legal (or moral) impediment to doing so. 

A recent article by Irene Ng (Risk Insights, 2016) discusses the value of the juvenile market in Asia, which amounts to a whopping 15-20 per cent of all Asian insurance business, with some countries standing out as serial child insurers - Vietnam and the Philippines in particular, with a third of all insurance business being for children between 0-19 years of age. Catching them early seems to be key for competitive risk markets, capitalising on parental anxiety when the baby isn't even born. 

Normally, insurance add-ons that include a foetus is for the mother and covers certain pregnancy-related conditions. Pregnancy is a hazardous business, so insuring against complications, premature birth or the mother's death can be important for some families. Providing payouts for foetal death is not exactly encouraged, because it is such a fraught area - if the foetus is not longer viable, a refund of premiums can be offered, and the policy add-on is cancelled because there is no use for it. That seems straightforward enough and is not controversial. It makes sense to prepare for unforeseen issues. 

There are also policies that cover the dangerous period immediately after birth, plus a few years, which allows for the baby to have been born with anatomical abnormalities, congenital conditions, and childhood diseases that may land the child in hospital. It is also sometimes possible to have a (generally) modest payout if the baby is stillborn or dies during or after birth.

The low pay rate for non-viable foetuses (post-20 weeks gestation is usually around AU$10,000) seems sensible, since losses and damages are of the emotional variety, but are seldom the cause of financial ruin. This amount pays for a funeral and related costs, but is not considered 'foetal insurance' of any kind. It is the equivalent of funeral insurance, and also covers stillbirths and infant death. 

That is very different, however, to insuring a foetus as if it is considered a real person when most other definitions don't qualify it as such. 

Naturally there is a minimum number of weeks of pregnancy before these types of Asian insurance can begin, due to high miscarriage rates prior to 12 weeks gestation. There is also a maximum of about 35 weeks to allow underwriting time. There are a lot of tests that can be done by doctors at this stage (and beyond, which could be made mandatory by insurers) to establish the health of the foetus and mother, and determine some of the risks going forward. 

This leads us neatly into genetic testing, another controversial  area for insurers. Once we start trying to determine how viable a foetus is before they are born - blood work, scans, measurements, establishing normal parameters of growth and development - a simple blood test can easily determine at least possible ongoing health risks of the child post-birth. Parents may consider this type of insurance too valuable to reject, and therefore submit to the demands of an insurer regarding certain genetic tests. 

Soon enough, however, genetic testing will be more widespread, cheaper, and we'll have more data on outcomes, so in fact it will become a better indicator for many health problems, both present and preventable with positive health measures. This seems positive, though genetic discrimination is a possible negative outcome. 

This relatively new area of insuring the unborn may be one of the ways that genetic testing sneaks into the framework, as expectant parents are keen to prepare as much as possible for their baby, including any potential problems. 

Just to counter this, it has also been said that children - unless they have a condition that requires medical care - don't actually need to be insured, particularly in Australia where our healthcare system is pretty good. But having said that, if you insure them while there are not too many health questions that can be answered (like while they are hidden away in the womb), should they develop an expensive disease or come out with an unexpected problem, financial help is at the ready. This would apply to some people more than others, for example if genetic issues are a high risk. 

Opportunities for insurers

While it isn't necessarily ideal to insure foetuses, it is an area that could potentially be developed (with some stringent caveats to protect our ethical integrity) to gain clients and keep them for life, offering parents some back-up regardless of the outcome of a pregnancy. Catching people at a delicate time of their lives (and doing a good job) can help foster loyalty and a sense of satisfaction and safety. 

The idea of insuring a foetus in Australia is reasonably new and appears to be full of moral holes that insurers aren't willing to fill just yet. It's complicated, fraught with danger and controversy, and holds an elephantine weight of dire emotional straights with it. 

As birth rates and infant mortality decline - and parenting as a competitive sport increases - it may be a good time to revisit pre-natal insurance cover.