Mullan, Alex --- "Accident insurance and ethnicity" [1999] PrivLawPRpr 42; (1999) 6(3) Privacy Law & Policy Reporter 30
Accident insurance and ethnicity
This account from New Zealand is of an interesting case study in applying the collection principle in practice.
Should an individual be denied workers’ compensation for refusing to state his or her race? One might have expected this question to draw a resounding ‘no’. Answers offered to the New Zealand Privacy Commissioner by bureaucrats to such a question were somewhat more equivocal. As a result, the Commissioner, supported by the NZ Race Relations Conciliator, lodged a complaint with Parliament’s Regulations Review Committee concerning the Accident Insurance (Insurer Returns) Regulations 1999. In late August the Committee tabled its report in Parliament upholding the Commissioner’s complaint and, in an extremely rare move, recommended that the clause in question be revoked.
The regulations were made under the Accident Insurance Act 1998 which controversially privatised workers’ compensation. Employers are required under the statute to take out insurance policies for their workforce with an approved insurance company. The Act authorises the establishment of an accident insurance database to be furnished with information from the approved insurers. The regulations in issue specified the information required to be provided. The complaint concerned the returns required on every insurance claim in relation to persons who suffer personal injury — in particular, the requirement that the person’s ethnicity be given.
The Privacy Commissioner was consulted in relation to the making of the regulations. Discussions ranged over a number of matters, not simply ethnicity. However, the Commissioner’s concerns in relation to ethnicity were not assuaged in the process and his reservations were explicitly recorded in the relevant Cabinet Committee paper. The Commissioner was concerned that the regulations would compel the collection by private insurance companies of ethnicity on all relevant claim forms. He was not satisfied that the requirement was consistent with the approach of the information privacy principles and preferred that race not be collected at all. He questioned what purpose the details were needed for. As an alternative he suggested that individuals have the option to refuse to answer any question concerning ethnicity. The Commissioner noted that information about ethnicity would be collected for the database by the insurers on claim forms which were going to be copied to the individual’s employer. Ethnicity information is not actually intended to be obtained for, or used by, insurers or employers, but the method of collection would mean that both would have the information. The possibility therefore arose of the use of the information for a purpose other than the one intended, including discriminatory purposes. It has never generally been a mandatory requirement of New Zealand law for racial origins to be provided to employers and it may be seen as a backward step in terms of race relations for that to occur.
The Commissioner considered that it would be a radical notion to suggest that a refusal by a New Zealander to supply ethnic information should lead to a denial of medical services, accident compensation, or the opportunity for rehabilitation. Experience in other collections of ethnic information suggested that many New Zealanders object to providing details of their ethnic origin. Such concerns are strongly held by some individuals in both majority and minority racial groups.
In its examination of the matter, the Committee sought evidence from the Commissioner, the Race Relations Conciliator, Department of Labour, NZ Insurance Council and the Deputy Government Statistician. The evidence tendered makes interesting reading. The Insurance Council opposed the collection of ethnicity details and supported revocation of the requirement to do so. However, it took the view that if the Committee determined that ethnicity data should continue to be collected by insurers then this should be ‘mandatory’. The Insurance Council and Deputy Government Statistician also opposed giving claimants the option to object to answering an ethnicity question.
The Department of Labour, which was responsible for drafting the regulation, also took an equivocal position. Notwithstanding that the regulations required insurers to supply ethnicity details and made no allowance for returns to omit ethnicity, the department maintained that it was nonetheless voluntary for individuals to supply those details. The Insurance Council somehow also reached this conclusion. However that is fairly surprising, given that 500,000 copies had already been printed of a claim form stated that it was mandatory for all information to be supplied, citing the Accident Insurance Act as authority for the demand.
The Regulations Review Committee observed that from the design and wording of the claims form, a reasonable person would understand the provision of ethnicity information to be mandatory. There was no indication on the forms that provision of the information was voluntary. Both the Insurance Council and the Department told the Committee that under the Act a failure to supply information without ethnicity would not be grounds for refusing cover to an injured person. Despite this, both the Council and the Department had been involved in the issue of forms which state that it is mandatory to supply all information requested.
The Committee concluded with some ringing statements on data protection:
We believe that, if information is to be collected and retained, only that information for which there is a certain and defined need should be collected. The exact use for which the resulting data is intended should be precisely defined from the outset, as should the procedures under which it is to be handled and protected. To collect sensitive information and then determine the purpose for which it will be used is, in our view, unprincipled and fails to protect sufficiently the interest in individual privacy.In the case of the present regulations, we believe that adequate consideration has not been given to the need for collecting information on ethnicity, and that the exact purposes to which is collected have not been adequately defined. We consider it is not clear that information on ethnicity classifications is needed for those purposes stated in ... the Act. Nor has it been established that collection of such data will further any of the policy ends cited by the Department.
Furthermore it is not clear that, once collected, the information will actually be used for purposes described, and for those purposes only. We consider there is a significant risk that information will be used for other purposes, which may include discriminatory purposes. This is a consequence of the failure to define precisely the purpose for which the information is to be collected, and the failure to ensure control of the information so that it can only be used for the prescribed purposes.
The Committee upheld the complaints of the Privacy Commissioner and Race Relations Conciliator that the regulations trespassed unduly on personal rights and liberties. The Committee drew the special attention of the House of Representatives to the regulations and recommended that the Government revoke the offending clause. The Government’s position has yet to be announced.
The finding is an important one. Insurance claims information is being collected hundreds of thousands of times each year. Sensitive information is to be shared with private insurance companies, health service providers, and employers. Details are being fed into a centralised database which will grow larger by the year. The Committee’s determination may act as a reminder to bureaucrats, statisticians and insurers that they should not lightly disregard concerns about intrusive questioning on official forms. Nor should they mislead the public as to whether it is mandatory to answer particular questions.
Postscript: the administration strikes back
In mid-October the Government responded to the Regulation Review Committee’s report and rejected the recommendation to revoke the offending regulation. As the House of Representatives had risen for a November general election, there was no opportunity for any member of the committee to move a disallowance motion in Parliament. The administration wishes to leave any changes to regulations to some unspecified time after a review of information requirements scheduled for September 2000. However, the Government did support the Committee’s concerns that:
- claimants are given the impression that the supply of ethnicity information is mandatory;
- the wording on the insurer forms makes it difficult to collect data that can be validly compared with pre-1 July data; and
- employers are supplied with individual ethnicity data they do not need.
The Government directed officials to work with insurers to modify accident claim forms so that, among other things, they ‘preserve the privacy and option of choice for individual claimants’. This is to be done ‘as soon as practicable’ which may not bode well for quickly addressing the issue, given that half a million forms are said to be in circulation in hospitals and doctors’ waiting rooms.
The saga will continue, as there remain serious concerns about insurers’ compliance with the information privacy principles in this process. Furthermore, the recent major changes to accident compensation remain controversial and the continuing involvement of private insurers is likely to be an election issue.