Holy smoke – the impact of e- cigarettes on life insurance
– the impact of e- cigarettes on life insurance
E- cigarettes don’t produce real smoke, yet they’ve ignited a firestorm of controversy. If your client thinks that smoking the popular and alleged ‘ healthier’ e- cigarette might reduce their life insurance premiums, then you, as a broker, need to nip that notion in the butt.
No conclusive evidence exists that validates e- cigarettes as the healthier alternative and as a result, insurers are in no rush to reduce life insurance premiums for smokers – whether the cigarette is electronic or not. Globally, smoking is on the decline. The Journal of the American Medical Association ( JAMA) states that, overall, age- standardised smoking prevalence decreased by 42 per cent for women and 25 per cent for men between 1980 and 2012. Yet, 1.1 billion smokers worldwide still find it hard to quit smoking. The South African Government’s tobacco control policy has halved adult smoking over the past 20 years, according to the Human Sciences Research Council ( HRSC). According to the latest national statistics in the South African National Health and Nutrition Examination Survey, smoking has decreased by 15.6 per cent ( from 32 per cent in 1993 to 16.4 per cent in 2012). The study also found that approximately 30 per cent of South Africans are classified as smokers. While the significant drop in smoking figures can be largely attributed to stricter smoking legislation, advertising limitations and steeper tobacco prices, many smokers are still looking for alternative ways to finally kick the habit. The use of electronic cigarettes is on the rise worldwide and considered a $ 1 billion revenue service in the United States. Electronic cigarettes have been lauded, albeit controversially, as a healthier alternative to normal cigarettes, which could help to lessen the burden of disease caused by conventional tobacco smoke. However, many ask whether the healthier label is merely ‘ smoke- and- mirrors’ and a ploy to help grow sales numbers. E- cigarettes are often seen as a safe substitute for regular cigarettes, and many smokers are using them as a stepping stone to quitting, once and for all. Nicholas van der Nest, divisional director for risk products at Liberty Retail, says that they do not believe e- cigarettes are necessarily any healthier than normal cigarettes, “The key difference between a conventional cigarette and an e- cigarette is that an e- cigarette does not contain tobacco. But, it isn’t just the tobacco in cigarettes that cause cancer or cardiovascular diseases.” For primary school teacher Riaan Bailie ( 30), e- cigarettes seem like a favourable alternative. A pack- a- day smoker since the age of 18, the Cape Town resident first learnt about e- cigarettes from a friend, and has since built them into his daily routine. “At work, there is hardly any time to go outside and take a smoke break,” he says, “So I’ll take a puff of an e- cigarette to take the edge off, because they don’t smell and you can smoke them inside.”
According to a new SA study, a team of doctors supplied 349 patients with e- cigarettes over a period of eight weeks, and found that 45 per cent of South African smokers who use e- cigarettes were able to quit tobacco smoking within two months. Despite positive reviews from e- cigarette users, very little is currently known about their safety and potential long- term health effects. For this reason, most insurance providers in South Africa will not regard you as a non- smoker if you use e- cigarettes and you will still be charged smoker’s rates, says Dr Pieter Coetzer, chief medical adviser at Sanlam. “The only thing that distinguishes e- cigarettes from traditional cigarettes is that they do not contain tar. In most cases, they still contain nicotine in liquid form, along with various other chemicals, some of which are used to vaporise the liquid. In fact, e- cigarettes may even contain more toxic chemicals than regular cigarettes. So, even though the vapour is tobacco free, it is probable that using e- cigarettes can still increase a user’s risk of cancer and other serious illnesses such as heart disease and stroke,” he says.
The health label myth
The device itself also falls under the Act, as it is considered a delivery device for a scheduled drug. According to Van der Nest, the proposal from the Food and Drug Administration ( FDA) in the United States to classify e- cigarettes as tobacco products, will technically categorize e- cigarette users as smokers. “Even if they don’t get classified as tobacco products, they still contain nicotine which most insurers will continue to classify as smokers,” he says. According to Van der Nest, conventional cigarettes contain chemicals that are harmful to your health, and e- cigarettes still contain some of these chemicals. “Nicotine is one of the chemicals found in both conventional and e- cigarettes. It is highly addictive and has been shown to reduce bone health,” he says. New regulations on e- cigarettes are set to take effect in New York City as of May 2014. Legislation in the ‘ Big Apple’ now sees e- cigarettes fall under the same set of regulations as tobacco cigarettes and other tobacco products, which means they may not be used at bars, restaurants and several other public areas, including city parks. The shift comes as the debate over the health benefits – or consequences – of e- cigarettes continue to wage on, between public health officials and the e- cigarette industry. In South Africa, the e- cigarette is regulated under the Medicines and Related Substance Act, that classifies nicotine as a schedule three drug, requiring it to be sold only at pharmacies and with a doctor’s script. According to an analysis done by the Food and Drug Administration ( FDA) in the United States, e- cigarettes contain detectable levels of known carcinogens and toxic chemicals to which users could be exposed. Since e- cigarettes also contain many of the same toxic chemicals as normal cigarettes, there is no reason to believe that they will significantly reduce the risks of exposure. A study by the French National Consumers Institute, has also found harmful chemicals in electronic cigarettes, sparking renewed concerns about the products that are often hailed as a healthier alternative for smokers. After testing for cancer- causing molecules in the vapour from 10 e- cigarettes, three types of e- cigarettes tested positive for the chemical formaldehyde, at levels close to those of typical cigarettes. The toxic compound acrolein, which changes to vapour when heated, and which
has been shown to damage the lungs, was also found. For some e- cigarettes, acrolein levels were higher than in normal cigarettes. Unfortunately, there are no long- term studies to back up claims that the vapour from e- cigarettes is less harmful than conventional smoke either. Cancer takes years to develop whereas e- cigarettes are a relatively recent invention. “It is almost impossible to determine if a product increases a person’s risk of cancer or not, until the product has been around for at least 15 to 20 years,” Van der Nest comments. In the South African Medical Journal, Dr Brian Allwood from the University of Cape Town’s ( UCT) Division of Pulmonology, argues that these tiny machines might be the lesser of two evils for those who struggle to kick the habit. “It is highly unlikely that e- cigarettes are as toxic to human tissue as conventional cigarettes,” says Allwood. He adds that e- cigarettes still allow potential quitters to participate in the psychological and social ritual of smoking. But fellow UCT Pulmonologist Dr Richard van Zyl- Smit disagrees. He states that current research has been limited to a few hundred people and also faults the design of some studies.“The evidence for there being an effective method for smoking cessation is unconvincing,” he says. “Safety has not been proven in large studies of long- term use. They may even encourage more habitual use of nicotine, which, in time, might encourage a switch to cigarette smoking … or act as gateway devices to cigarette smoking,” writes Van Zyl- Smit. “E- cigarettes may be less dangerous than tobacco, but given that tobacco kills 50 per cent of its users, what would not be safer?”
Insurers: there’s no smoke without fire
Coetzer says that most insurers in South Africa, and indeed, worldwide, have taken the view that the potential impact on a client’s risk profile for longevity- related products such as life insurance, dread disease and disability products, is the same as that of a smoker. “At Sanlam, we have recently adapted the application questionnaire we give to clients to include a question on e- cigarette use, along with traditional tobacco products. You will only be deemed a smoker if you have not used any of these products for longer than 12 months. This includes smoking cessation products such
as nicotine patches and chewing gum.” All clients who have indicated that they are non- smokers undergo a routine blood test to determine the level of cotinine ( a by- product of nicotine) in the bloodstream. Coetzer continues, “The premium differential for smokers is significant and depends on factors such as age and gender. The differential is based on our claims experience that smokers have more or less double the mortality rate than non- smokers, including causes of death not related to smoking.” Van der Nest also says that smoking e- cigarettes won’t allow policyholders to qualify for non- smoker rates or lower premiums, “The price difference in premium rates between smokers and non- smokers can be as much as double, depending on your age or gender. Nicotine products, such as cigarettes, cigars, pipes, e- cigarettes, snuff, hubbly bubbly ( hookah) and any other associated products, would qualify you as a smoker for life insurance purposes,” he says. “As e- cigarettes contain nicotine, their users will test positive for cotinine when the underwriting tests are performed. This means that those who use e- cigarettes will be classified as smokers and pay a higher premium than non- smokers,” says Van der Nest. He adds that it is not possible to say definitively whether there has been a rise in claims for smokingrelated diseases compared to previous years. “However, Liberty’s claims experience for 2013 shows that lung cancer was responsible for about one in six cancer claims for smokers but only one in 20 cancer claims for non- smokers. Smoking significantly increases the likelihood of being diagnosed and claiming, as a result of cancer. Experts say around 90 per cent of lung cancer cases are due to tobacco smoking.” Coetzer says that much more work needs to be done to determine the long- term effects of using e- cigarettes. “Because it is a relatively new product, there is no conclusive evidence that e- cigarettes are a safe alternative to regular cigarettes or, for that matter, effective in assisting smokers to kick the habit. Most insurers therefore prefer to err on the side of caution. However, none of our underwriting policies are cast in stone – if it is scientifically proven that e- cigarettes do not increase users’ risk of contracting dread disease such as cancer, we will certainly relook our policy and pricing model,” Coetzer concludes.
Killing himself with 30 a day.
Pays a packet for risk insurance as a smoker.