Until a clear pattern emerges, insurers will continue to take the cautious path, writes Phil Cleverley
AIDS has been prevalent in the UK for nearly 20 years. When this seemingly untreatable disease reached the UK, we were encouraged by the Government Actuaries Department to take an extremely cautious approach. The result was that term rates went up almost immediately and although the largest increases were seen in rates for young single males, the industry saw increases across the board. Some contracts that contained guaranteed insurability options (GIOs) were removed from the market. However, for the group considered 'most at risk' ' the gay male population ' it was difficult to get life insurance and almost impossible to get some other types of cover. So why did the industry react in this way? The answer is data. As an insurable risk, HIV is still relatively new in terms of experience data, even after 20 years. As with any new risk with little dependable data, insurers had to adopt a more cautious approach for the protection of other insured individuals and their overall portfolio.
But things have changed since HIV arrived. The impact of the HIV pandemic in the UK has not been anything like the early predictions. Most of the rate increases to enable insurers to reserve for increased payouts because of HIV, have been stripped out again. This is evidenced in our incredibly competitive term assurance market. GIOs have also returned.
But have things changed for gay men? Most definitely. In the mid-1980s, it would have proved either impossible or expensive for a gay man to obtain life insurance. Today, it is possible for gay men to obtain life cover at standard rates if, on individual assessment, they are considered not to be at increased risk of being exposed to HIV.
However, it is fair to say more providers than not are likely to apply a loading to reflect the increased risk of HIV infection within the homosexual community. Recent statistics by the Public Health Laboratory Service (PHLS) have shown that, for the second year running, the rate of new HIV infection in heterosexuals exceeded that in homosexuals. However, the PHLS has also stated that the majority of infections reported have occurred through sex between men and that gay men remain the group at greatest risk of HIV infection within the UK.
Furthermore, two trends have come to light. First, not only has the rate of HIV infection picked up over recent years, but so have other sexually transmitted diseases, suggesting the safe sex message is not getting through. Second, breakthroughs in the monitoring and treatment of HIV have occurred over the years. Unfortunately, recent research published in the British Medical Journal has indicated that an increasing number of people newly infected with HIV may have some signs of resistance to one or more of the drugs used to treat the infection.
Insurers will continue to monitor medical advancements and disease incidence trends, adjusting rating approaches accordingly. The primary aim of the industry is to provide affordable cover to as many applicants as possible. Insurers will strive to do this, but where data is not available or where no clear pattern emerges, they must continue to take a cautious approach.
