Quit while you're ahead

Despite the increase in clean air policies in many cities in the western world, cigarette smoke is still difficult to avoid. Just because someone sits in the non-smoking area of a restaurant does not mean they will not inhale the smoke from the smokers' area.

Up to 4,000 chemicals and particles are inhaled when a cigarette is smoked. Some of which are proven to have irritant properties and about 60 of which are suspected of being carcinogens ' the effects of which have been recognised for more than 30 years.

Yet more and more young people, especially women, in the developed world are being drawn to smoking. In emerging nations smoking is also known to be on the increase and will, in the future, become a huge drain on their already stretched medical resources. Many investigations and surveys have been carried out, which prove without doubt, that smoking and using nicotine products, adversely affects mortality and morbidity.

The insurance industry has taken notice of these investigations and medical reports and it is now commonplace for smokers to be charged more for life and health insurance products than non-smokers, with vast differences between premium weightings.

Smoking has been proven to increase the risk of heart attack, stroke, lung, nasal, mouth and throat cancers, bronchitis and other chronic lung disorders. It has also been implicated in low birth weight, and many childhood illnesses such as asthma and possibly middle ear infections. Smoking also causes gum disease and can lead to the premature loss of teeth.

Bad habits

Due to findings from the California EPA report, Action on Smoking and Health (ASH) was able to conclude that there are at least two million incidences of illnesses, caused by passive smoking every year in the UK. This figure includes deaths from heart attacks and more than 30,000 new cases of respiratory disease in infants every year.

The risk of stroke, a major cause of long-term disability in the UK, is significantly increased in those who smoke. According to the Stroke Association, those who have raised blood pressure and smoke are 14 times more likely to suffer a stroke.

While recent research shows that smoking in the elderly and middle aged is falling and men in particular are smoking less, smoking in the female population is on the increase. Lung cancer is now reported to be the major cause of death in women under 70 in Scotland and the north of England, replacing breast cancer as the biggest killer. This trend is moving southwards.

Worldwide, it is estimated four million people die every year from smoking-related diseases, and this figure is likely to rise to 10 million by 2030.

In early 1999, seven major UK health charities joined together to form the Smoking Control Network. Their aim is to support government initiatives to reduce smoking. One of the main focuses has been in promoting nicotine replacement therapy (NRT). NRT research shows its use doubles the chances of successfully giving up smoking and has now been made available through NHS prescriptions. Unfortunately, the cost of the various treatments available, even on prescription, is not encouraging enough people to try and give up.

Insurers accept that medical evidence and insured lives data has clearly shown that a significant extra risk is present where there is consumption of any of the currently available types of tobacco, including pipe smoking and cigars. It is, therefore, only right and equitable that smokers should face increased premiums.

Defining 'smoker'

There are many different definitions of a smoker or non-smoker within the industry. Some companies rely on the number of cigarettes, cigars or pipes smoked. Most companies require the applicant to sign a declaration that they have not smoked for 12 months to qualify as a non-smoker. Companies which employ a 'no tobacco' definition will generally not allow any cigar or pipe smoker within their non-smoker rates. However, some do allow a small number of cigars, normally up to one per month, to be smoked before imposing smoker rates.

The general trend within the industry is towards a no tobacco definition for non-smokers. As insurers are pressured to become more competitive and reduce their premium rates even further, it is ever more important to charge rates that truly reflect the impact of smoking on mortality and morbidity and to remain competitive in the non-smoker market.

But one problem faced by the industry is non-disclosure. This occurs when someone who does smoke or suffers from a disease or disorder and does not disclose the fact, allows an insurer to charge the premium appropriate to that disclosure. In a recent industry survey undertaken by Hannover Life Re, 17 companies reported that non-disclosure rates for smoking ranged from 0% to 12%. It does not appear to be widely appreciated by the public how seriously insurers take evidence of non-disclosure. At best, it can mean a reduction in any payments due to be made under a policy. At worst, it can mean the cancellation of the policy. A test is now available to the insurance industry which can prove whether someone is a smoker or uses nicotine products.

Cotinine is a chemical that is made by the body from nicotine. Since cotinine can only be produced from nicotine, it can be used to measure how much nicotine enters the body. Levels of cotinine in the body can be measured by sampling blood, urine or saliva. Smokers will have a level of 10 or higher in their blood and a typical smoker ' 20 or more cigarettes per day ' will have levels of 150 to 450 units.

The only way to reduce cotinine levels is to stop or reduce exposure to nicotine. Because they all use nicotine, nicotine replacement treatments, such as patches, gums and aerosols will also increase cotinine levels. It is also possible that non-smokers who work in smoky areas, such as pubs, could have cotinine in their bodies, but clearly, not at the levels that cross the smokers' threshold.

In a recent survey of 60 companies, it was found the sums assured at which cotinine is automatically tested for ranges from £187,500 to £1,500,000. Of those who answered the question, 12 used saliva testing, 11 used urine tests and just three employed blood tests.

Some companies have preferential rates, with further rate reductions on the normal non-smoker rates charged for the best risk category of clients. The underlying theory is that if we charge higher premiums for sub-standard risks, why not charge lower premiums for above average risks? For this category of business it is felt that evidence needs to be produced to verify the healthiness of the applicant and most of these clients will be asked to submit to cotinine testing.

The effects of smoking and the use of nicotine products is one of the major risk assessment issues for underwriting and claims in respect of life, critical illness and disability products. Over the last few years underwriters and claims assessors have found the need to pay much greater attention to the smoking issues as evidenced from research. This attention is set to increase even further in the future.