New research by Hannover Life Re UK has revealed that insurance providers are moving towards a 'no t...
New research by Hannover Life Re UK has revealed that insurance providers are moving towards a 'no tobacco' definition for non-smokers.
The research was compiled from ongoing research into the mortality and morbidity of assured lives.
Around four years ago, cigar and pipe smokers were usually included in the non-smoking category, but the treatment of these tobacco users now varies between both products and providers. This seems to indicate that the market is finding it more equitable to class them as smokers and remove a potential cross-subsidy of premiums.
Julie Hopkins, chief underwriter at the reassurer, said: "I would be surprised if new products carried anything other than a no tobacco definition of non-smoking. Any cross-subsidy to cigar and pipe smokers should be removed because it is the only way to remain competitive, and providers are now looking to make their products as equitable as possible."
The survey found that 17% of providers had a no cigarettes definition of non-smoking, and 33% had a no tobacco rule for life policies. Although 33% of companies now have a no cigarettes definition with critical illness, 67% of respondents now have a no tobacco rule.
Hopkins said: "It was interesting to note how many people are making the migration over to complete abstinence of all tobacco products for the non-smoking definition. To be competitive, you must take away the cross subsidy between the cigar and pipe smokers out of the equation. It must be a true non-smoker rate."
However, there was considerable divergence to a question asking the providers how many cigars or pipes per day they felt were equivalent to 10 cigarettes a day. Hannover Life Re UK feels that uncertainty and inconsistency remains as to how cigar and pipe smokers are treated.
