Posted May 26, 2021
According to a University of Glasgow study released in February 2021 obesity is now, in England and Scotland, a bigger cause of deaths than smoking. Following a study of close to 200,000 adults, the BMC Public Health journal published research showing smoking as a contributor to 19.4% of deaths in 2017, with obesity the main cause for 23.1% with the gaps becoming more pronounced every year.
BMI, the mainstream manner of assessing height to weight ratio- whilst to some degree a slightly blunt tool- has long been adopted by the insurance industry as the standard in assessing risk for life, critical illness and income protection plans. When an adviser enters height and weight into the application, most insurers algorithmically driven platform will calculate BMI, its relation to the applicants age, and make a decision.
Historically, insurers were broadly similar with a BMI of 33 largely being the cut off point at which standard rates no longer apply. The system has always been slightly more lenient towards older applicants, and slightly harsher to younger applicants, with the idea supporting this being that people typically put on weight as they get older, and young applicants already struggling to maintain a healthy BMI may continue along a similar path.
Whilst admittedly an imperfect measure, it has long been held that a healthy BMI is one between 18-25, with 25-29 being regarded as overweight, and 30+ being classed as obese. A recent study cited in The Lancet has illustrated the very direct correlation between BMI and life expectancy, with a reduction of 4.2 years in males and 3.5 years in females over 40 with a BMI over 30.
The correlation does not end with mortality rates, but extends to conditions ranging from cardiovascular risk, many cancers, respiratory conditions and type 2 diabetes. According to the Framingham Heart Study, an elevation of just one point on the BMI scale increases the risk of heart failure in men by 5% and women by 7%. When we consider the modern type 2 diabetes epidemic, the link is even starker, with obesity being the main modifiable contributor. Currently 90% of those diagnosed with type 2 diabetes are classed as overweight or obese, and obese adults are five times more likely to be diagnosed as diabetic.
With this data readily available, it is very apparent why elevated BMI remains one of the most common reasons that insurers offer increased or non-standard terms to life applicants.
Over the past 18 months, the traditional BMI cut off for insurers of 33, whereby they would accept some overweight clients upon standard rates, has quietly been revised by many insurers, predominantly when considering applications for critical illness cover. A cynic would look to the correlation between poor metabolic health and COVID-19 mortality as the main player here, but I am assured that this is not the case, and that changes with re-assurers and rate negotiations in this highly competitive market have been the real reason behind this. Whatever the root cause, advisers will have become far more accustomed to breaking the news to clients that the standard insurers premium will not be available to them, due to their height and weight.
What is interesting at that point is the very common human reaction that clients display upon being told that their premiums will be increased.
There is a huge amount of data available about the correlation between BMI and life expectancy, cancers, diabetes, and heart disease, and the NHS has spent millions upon advertising campaigns attempting to education the general public upon healthy eating, five-a-day, Change4Life. All of this material is freely available and is designed to shift behaviour by informing people that carrying excess weight will have a long-term impact upon their health.
An increase in premium by an insurer will draw this message into sharp focus, shifting it from a future potential to being immediately apparent. A client who is told their premium has been increased from £100/month to £175/month due to their elevated BMI can see the impact upon their bank balance straight away. And whilst the cost to their bank balance pales into insignificance when contrasted with the emotional (and ultimately fiscal) cost of serious ill health, my experience over recent years has been that this visible immediate effect can have a potentially positive consequence.
We have always been interested in helping clients improve their health, access insurance, and gain the best rates available, and couldn’t imagine working in any other manner. BMI, if handled sensitively but without avoiding the issue, is an area where a good adviser can really help a client head in the right direction.
Contingency management, or the application of financial incentives to drive behavioural change is something that has been closely looked at by the NHS following the successful trial of a scheme to incentivise heroin addicts to complete a course of Hepatitis B vaccinations in 2014, which has prompted incentive schemes to reduce drug use. Whilst this approach will always raise certain eyebrows, it does seem to be an effective way to shift behaviours.
Michael came to Watts for advice as he had historic life cover in place, but had a new mortgage and change in family circumstances. He wanted to review his life cover and it was important to him to have protection in the event of critical illness. He had already spoken with his existing provider before approaching our advisers, and been declined critical illness due to his BMI.
When we first spoke with Michael, his BMI had reduced from 43 to 41 and we were able to source him cover with an insurer, but at a rate of +125%, which in real terms meant an increase to the standard premium of close to £90/month.
Putting together a personalised table, as below, we were able to illustrate to the client the real, and immediate tangible (financial) benefit that continuing upon his weight-loss journey would have.
|Cover Type||BMI||Increase to Premium||Weight- based upon height of 5’11”|
|Life & Critical Illness Cover||43||Decline||N/A|
|Life & Critical Illness Cover||41||+125%||20 stone 7 pounds|
|Life & Critical Illness Cover||37||+50%||18 stone 7 pounds|
|Life & Critical Illness Cover||33||Standard Rates||16 stone 7 pounds|
Experience of dealing with clients such as Michael has taught us that clients respond well to being offered this tailored information, are more accepting of the initially increased premium, and are more likely to take cover up, retain policies, and attend regular reviews.
As advisers we have a privileged access to clients lives on a very personal level, and helping to add value at a time when they have been given a powerful psychological nudge can help turn what could have been a transactional piece of business into a long-term and mutually beneficial relationship.
Watts Mortgage & Wealth Management