The EU hopes to eradicate the risk of gender discrimination when insurers assess premiums with its Equal Treatment Directive. Peter Carvill explores how male and female claims compare
Of all the wonderful things the UK has to thank Europe for - Joseph Conrad, Jean-Paul Belmondo, the Englightenment and croissants - perhaps the most significant to the protection industry is the European Union's recent Equal Treatment Directive.
It means insurers can no longer assess premiums on the grounds of gender unless it can be proven that being male or female is a decisive factor in the risk being carried by the provider.
For example, it is inarguable that men are less susceptible to breast cancer than women - current figures show male breast cancer accounts for just 1% of cases - so a premium based on this risk would be much lower, reflecting the slim possibility of them suffering such a condition.
Yet what is the gender divide within insurance? What are the most common illnesses for men and women? Who claims most on their policies?
That men have life expectancies five years shorter than women is well-documented but the broader picture is somewhat gloomier still. According to the Men's Health Network, a non-profit medical organisation in the United States, the current state of play is far from ideal: "There is a crisis in men's health," it claims in its literature. "Because of poor health habits, lack of health insurance, failure to seek medical attention and dangerous occupations, men live sicker and die younger than women," it states.
The biggest risk factor to health, regardless of gender, is the increasingly sedentary lifestyles of the western world as workforces move from primary and secondary to tertiary and quaternary industries. In short, this means populations are getting fatter as they move away from manual work. The statistics back this up: the World Health Organisation (WHO) estimated in 2005 that the number of obese adults would increase by 75% over ten years while in the same time period, it was predicted that the worldwide overweight population would increase by nearly 44%.
Roger Edwards, product director at Bright Grey, agrees obesity is a threat to health but points out there are other factors at work: "The main threat are those factors which increase the risk of circulatory diseases such as strokes and heart attacks. These include obesity, poor diets with too much of the wrong type of fats and cholesterol, lack of exercise and smoking. These, combined with high-stress occupations, could also lead to illness."
Equally pressing on male health is susceptibility by gender to conditions such as prostate cancer. Figures from the Office of National Statistics (ONS) show cancer as the most prevalent cause of death, accounting for 27.9% of all deaths and Cancer Research UK's data shows the prostate is the source of cancer in 24% of males who develop malignant tumours.
According to Edwards, heart disease has historically been the main illness to affect men. According to the ONS, it is the second largest killer of men after all cancers, accounting for 21.6% of male deaths. In comparison, the third largest killer is cerebro-vascular diseases which is responsible for 8.7% of male deaths each year.
The economic costs of this ill health are vast. According to the Health Economics Research Centre at Oxford University, heart disease costs the UK economy and the NHS a total of £45bn each year. In terms of days taken sick, 65 million are lost each year which, in itself, comes with a price-tag of £3bn.
How this has affected claims statistics is largely academic. According to Friends Provident and Bright Grey, there has been little change in the last decade.
"Bright Grey has just published its claims statistics," says Edwards, "and the average age at claim for a male is 43 and the top three illnesses are cancer (42%), heart attack (12%) and stroke (9%). I was working for another insurer nearly ten years ago and, when they first published their statistics, they were pretty much identical - the average age was 42."
However, Edwards says, there have been some changes, such as a marginal increase in critical illness (CI) claims for prostate cancer, he asserts although that it is still largely an illness that affects older men. The reason, he supposes, for the slightly higher rate of claims for the conditions is that increased awareness has led to greater testing and diagnosis.
Gerry Warner, protection development manager at Zurich, supports this point of view: "With income protection (IP), mental health and subjective disorders have overtaken musculoskeletal claims. Although musculoskeletal claims still remain high. With CI, it's more around advances in medical science and early detection, more advanced screenings for prostate and bladder cancer, for example the detection of troponin levels in heart attacks. All these advances have had an impact on claims being paid earlier than in the past."
Times are changing
Within IP, John Beale, business development manager at PI Financial, says the demographic of reasons given for claims has altered in the last decade: "Within IP, we have seen a shift from back-related claims to mental illness such as depression."
How gender affects premiums differs according to the type of policy being taken out. CI policies are more expensive for women in their thirties due to the increased risk of conditions such as cervical cancer. For example, a Life or Earlier CI policy from Friends Provident with a £150k sum assured and 25 year return for a female aged 30 costs £42.72 a month while, for a male, the premium is £38.61. If this seems unfair, according to Edwards, the situation is reversed after the age of 40: "At that age, the rates for men will be higher, then rates may even out beyond 50." The reason for the reversal of fortune is that heart disease becomes more prevalent in men in their fifth decade.
Like CI, IP is cheaper for men. According to Friends Provident, a policy taken out at the age of 30 that pays £300 a week until retirement costs £21.30 for men compared to £35.10 for women. "With IP, female rates tend to be more expensive because, historically, women have claimed more," says Edwards.
Generally, when it comes to these policies, there is, according to Beale, a pattern: "Men die and women get ill tends to be the trend so, for IP and CI, men are cheaper to cover on a like-for-like basis but for life they are more expensive." And, as already noted, men have shorter life expectancies - roughly five years fewer than women - which is another reason why they pay lower premiums.
This is borne out by Friends Provident's figures: a 25 year term life policy at 30 with a £150k sum assured will have premiums of £9.79 for men and £7.91 for women.
As to which half of the gender divide claims more on their policies, the question is subjective and the answer is dependent on which product is being discussed when, as Beale says, men apparently die while women become ill.
Age is also key, according to Edwards: "For people in their 30s, it is likely there will be more claiming on CI policies for cervical cancer as this is an illness that purely affects women at that time in their lives. If you look at an insured population in their 40s, it is likely there will be more males claiming for heart-related problems. As people move into their 50s and 60s, the reasons for claiming will begin to even themselves out."
In terms of what is claimed on for CI policies, there is a clear partition between the gender divide. Mark Jones, protection products and actuarial manager at Friends Provident, says: "In our experience, the majority of male claims for CI are caused by cancer of one form or another, closely followed by claims related to heart problems. As you would expect, claims for IP are quite different with the majority for both sexes relating to mental health and musculoskeletal disorders."
Friends Provident's claims statistics for CI paint an arresting picture. While 7% of female claims are for heart attacks and strokes, it is nearly five times higher at 33% for men. And where just over half (54%) of men claimed on their policies for cancer, for women this figure was close to four-fifths (78%).
"It's quite interesting," concludes Edwards, "that when you talk about IP and CI, the impression is people are very young when they claim. The fact remains that it is usually older people who develop cancer and other illnesses - younger people do as well - and that is one of the reasons they should be taking out these products."
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