There has been some pondering within the industry lately about smoking and e-cigarettes and whether the latter deserves more lenient treatment – specifically, should e-cigarette users (or ‘vapers’) be entitled to a reduction on the usual smoker premium surcharge?
The dangers of smoking cigarettes, cigars and pipes are well known and well understood. On the face of it, vaping is safer since e-cigarettes deliver nicotine without the dangerous tars and other toxins found in tobacco smoke. However, there are concerns about the safety of the nicotine-containing liquid that is vaporised for inhalation to the lungs. Some individuals have suffered acute allergic reactions – on occasion life-threatening. However, research suggests that diacetyl, which can be used to flavour the smoke and which was an early source of concern, does not cause bronchiolitis obliterans (so called ‘popcorn lung’), an irreversible condition in which inflammation causes extensive scarring that blocks the airways.
The problem is that vaping is a relatively new habit and thus there is no long-term data that can compare the health of e-cigarette users with tobacco smokers and indeed with non-smokers. Nevertheless a number of countries around the world have prohibited vaping and in January this year the US banned the use of certain e-cigarette flavours. On the other hand some health authorities, including the UK’s National Health Service, encourage the use of vaping as an alternative to tobacco smoking.
So what are the practicalities for life and disability insurers? On the face of it, e-cigarettes are a safer alternative to tobacco and one could argue a case for leniency, albeit stopping short of granting the same terms as for non-smokers.
However, if an applicant declares that he or she is a vaper, can that be believed? Of course insurers run up against this sort of issue already: can they believe applicants who say they don’t smoke? But if need be, testing in the laboratory for cotinine (a metabolite of nicotine) can distinguish between smokers non-smokers. Tobacco smokers and vapers, however, would both test positive.
And might vapers also be tobacco users as well? Might they give up vaping and return exclusively to tobacco? There is an analogy here with non-smokers in that they might return to the habit, but they are required to declare that they have been smoke-free for at least 12 months; if that can be believed (see above), it does indicate a reasonable degree of self-will, although relapse cannot be entirely discounted.
Any discussion of vaping, though, is a reminder that the whole issue of smoking risk is actually handled poorly – in a theoretical sense – by insurers everywhere. Addressing the relative risks of smoking versus non-smoking by a simplistic declaration and differential premium rates is truly scratching at the surface and, importantly, fails to deal with persisting extra risk. In this context the matter of vaping is perhaps trivial.
For a start almost all tobacco smokers are grouped together for rating purposes regardless of their tobacco consumption. Theoretically there is a need to deal separately with ‘occasional’, light and heavy smokers. True, exceptionally heavy smokers, if they are honest enough to declare themselves or unlucky enough to get found out via a GP report or some other source, will likely face an even higher surcharge.
Then there are non-smokers. Some are life-long, some gave up long ago and others quit sometime before the 12-month cut-off point.
But in medical circles it is well understood that the health and mortality risk of smoking is dependent on the amount of tobacco consumed over time, often conveniently referred to as ‘pack-years’. And extra risk does not go away immediately on cessation of smoking. Far from it: smoke 20 a day for 30 or 40 years and then give up and the extra risk never goes away. So insurers’ ‘non-smoker’ group contains a potentially diverse group of risks (including, no doubt, some ‘smoking amnesiacs’).
Ideally, insurers should want to know:
- Life-long non-smoker?
- Ex-smoker? When quit and prior tobacco consumption
- Current smoker? How many per day (or equivalent)
And vaper? Maybe when quit tobacco and prior consumption.
But we have to live in a practical world, and it is pointless asking for information and then not using it. And in reality it is very difficult to deal with smoking in the way that the theory suggests. But without complicating things too much, insurers could use the ‘pack-years’ information to stratify risk a bit better. And the additional detail may be useful in the assessment of impaired lives for whom smoking has a bearing on the risk.
And in the interests of balance it should be pointed out that with the decline in the popularity of smoking generally there must be fewer people quitting than hitherto, so it is less of an issue now than in the past. But smoking prevalence appears to be resisting further decline and it remains relatively popular among lower socio-economic groups. Thus pack-years among quitters might still be appreciably relevant in certain target markets.
Back to vaping though. 50 year-old who swapped 20/day for vaping 12 months ago anyone? At SelectX we have a very clear view of the risk.
