Could life insurance go up in smoke for some vapers?

LONDON/NEW YORK: Global reinsurers are stepping up their warnings to life insurer clients about the potential risks of vaping, putting pressure on underwriters to charge certain vapers higher rates than smokers, or even exclude them altogether. US authorities said last month that there had been 47 deaths this year from a lung illness tied to vaping. The health concerns about vaping have grown despite evidence showing e-cigarettes help smokers to quit, and has led to bans in some countries including India and Brazil.

Reinsurers insure the insurers, and often have large research arms which help their clients by modelling risk. They give broad advice to insurers, rather than specific policy or pricing recommendations, but can potentially refuse to provide reinsurance or can raise premiums if their guidance is ignored.

Most insurers have long treated smokers and vapers the same, meaning they can pay close to double the premiums of non-smokers or non-vapers. But three major reinsurers have provided updated advice on vaping in the past three months, with new warnings, while others are considering their approach. The new warnings focus on young vapers and the vaping of liquids containing marijuana ingredient THC, which is legal and prevalent in some US states and has been linked to lung illnesses in the country.

The shift in the reinsurance and insurance sector represents a further blow to the vaping industry, which markets its products as healthier alternatives to smoking. Hannover RE, which already advised life insurers to treat vapers like smokers, has asked them to be particularly cautious about insuring people aged under 25 following the “epidemic” of lung injuries in the United States, said Nico van Zyl, the reinsurer’s U.S. medical director.

The question of whether to offer coverage to this higher risk group should be a consideration for life insurers, he said. French reinsurer SCOR said in a paper on Oct. 24 that e-cigarettes contain nicotine which may have toxic effects, including on brain development in teenagers and young adults. SCOR recommends life insurers treat vaping like smoking, and exclude individuals who use vaping products considered by US authorities likely to cause lung issues - namely, those containing THC (tetrahydrocannabinol).

Swiss Re also treats vapers like smokers. In addition, Global Chief Medical Officer John Schoonbee said the reinsurer has told insurers in recent months to make extra checks on whether vapers are using cannabis products.

The US Centers for Disease Control and Prevention has urged people not to use e-cigarettes containing THC, some of which contain vitamin E acetate, a “chemical of concern” among people with the vapingassociated lung injury EVALI. Stephen Cooley, Chief Medical Underwriter at PartnerRe Life& Health, said more research on the long-term effects of vaping was needed and that life insurance rates for vapers would be the same as smoker rates “at best”.

Munich Re and Gen Re said they were monitoring the recent developments in EVALI. Proponents of vaping as a tool to stop smoking say the insurers’ and reinsurers’ approach is harsh. “Getting insurance is really expensive for people who have taken steps to quit tobacco,” said Simon Manthorpe, CEO of British vaping product manufacturer Vapemate. Vaping in Britain and elsewhere in Europe is more heavily regulated than in the United States. Vapes containing THC or cannabis oil of any kind are banned in Britain, and Public Health England says vaping is at least 95 percent safer than smoking.

Vaping switch

Twelve of 13 life insurers contacted by Reuters in Europe, South Africa and the United States said they already treated vaping like smoking. Most have taken this stance for years, but a handful have recently made the switch to treating vapers like smokers: US insurer Prudential Financial made the change in October, while the Irish subsidiaries of Aviva and Zurich have switched in the past year. Zurich in Ireland said its new approach followed consultation with reinsurers.

Explaining their caution on vaping, Britain’s Aviva and South Africa’s Discovery said there was a lack of objective evidence of the long-term effects. Justin Harper, head of protection marketing at British insurer LV=, highlighted recent evidence indicating that vaping damages the lungs. Harper said a 20-year policy for a 35-year old offering £100,000 ($128,300) of life cover and £100,000 of critical illness cover would cost £11.89 a month for a non-smoker/non-vaper, and £20.56 for a smoker/vaper.

The life insurers told Reuters they were not treating young vapers differently, though Zurich said it was monitoring statistics on increased deaths or illness among this age group. One exception among the life insurers in its vaping view is Reviti, a new insurer owned by cigarette and e-cigarette firm Philip Morris. It is offering a discount of up to 15 percent for vapers in Britain. Customers who quit tobacco and nicotine altogether get a discount of up to 50 percent. — Reuters