The wave of smokers switching from tobacco to arguably safer 'e-cigarettes' raises questions about the pricing of insurance and annuities
By Richard Dyson
A 10-a-day smoker who quits tobacco-filled cigarettes and switches to "electronic" versions already stands to save more than £1,000 a year.
But they might also qualify for a 40pc reduction in life and health insurance premiums – if the wider industry follows the example of one insurer and agrees to treat "e-cig" users as "non-smokers".
The rapid take-up of electronic cigarettes, which are tobacco-free and involve inhaling small quantities of vaporised nicotine, has taken governments and health authorities by surprise. There are already more than a million users in Britain. Many shops, including supermarkets, stock the devices. But the trend has not been properly addressed by the insurance industry – even though smoking remains one of the biggest factors in determining the price of cover.
A specialist insurance broker has focused attention on the matter by successfully arranging life cover, at non-smoking rates, for a number of clients who use only e-cigarettes. The insurer involved, which is one of Britain’s biggest, was made aware of their e-cig habit.
The broker, Harvey Sutton of Manchester-based Suttons Independent Financial Advisers, said: "All insurers ask questions about tobacco use and many, but not all, ask specific questions about nicotine. We sought situations where e-cig users could honestly answer questions relating to their use of tobacco products. Electronic cigarettes are not tobacco products. We spoke to the underwriters in question: we are not doing this without underwriters’ knowledge."
Although Mr Sutton successfully obtained policies for a number of clients, by the end of last week doubts had emerged as to whether much more cover would be provided on the same basis. This is because reinsurers – who underwrite the insurers – have not resolved their position on the issue.
The Association of British Insurers said there remained "a lack of medical evidence as to any long-term health benefits" and added: "An insurer is increasingly likely to ask if the proposer is using nicotine products, as opposed to what is the weekly tobacco consumption."
Lack of evidence of e-cigs’ impact on health is hampering other authorities’ decision on how the products should be regulated, taxed and sold. But Mr Sutton said insurers should address the issue now. "Lifestyles change – the insurers are simply behind the times."
If, as many believe, e-cigs are shown to pose less or no harm, the impact on insurance and other longevity-related financial products, such as annuities, could be far-reaching.
Nigel Barlow of specialist annuity provider Partnership said: "This is a very new market indeed. While e-cigs appear to cut down on some of the hazards associated with smoking, there are some questions as to the chemicals. While we do not at the moment take into account use of e-cigarettes when we quote for an annuity, this may well change in future."
Insurers are increasingly prone to ask about smoking and other harmful behaviour, often following up applications with tests. If e-cigs were to be proved significantly safer, this would have to change. A 40-year-old seeking life cover worth more than £500,000 would probably now be given a test for nicotine use, which would not distinguish between smoking and e-cig use.
Major tobacco firms’ rollout of e-cig products is likely to accelerate take-up. BAT, Britain’s biggest tobacco firm, estimates that 11million people use e-cigarettes across the world’s major smoking nations. BAT’s own e-cig, Vype, was launched earlier this year and now sells in Sainsbury’s, among other outlets. Imperial Tobacco, BAT’s main rival, will launch an e-cig next year.
The 'Vype' e-cigarette from British American Tobacco, now on sale in supermarkets
Dave Levin, joint founder of VIP, a British e-cig manufacturer not linked to the tobacco industry, said: "We launched our first e-cigarettes in late 2008 and now have a turnover of £18m and about 50,000 regular customers. Insurers and other industries are a couple of years behind the times."
One issue, though, is whether e-cig users still smoke ordinary cigarettes. Professor Robert West of UCL, an authority on smoking, found in recent research that more than 80pc of e-cig users were also smokers
Source: Telegraph
No comments:
Post a Comment