Obesity a growing concern for insurers

Dalene Allen, underwriting director and co-founder of Altrisk

More than 60% of South Africa’s population is overweight or obese

The growing waistlines of South Africans could start affecting their pockets, with insurers raising concerns about the impact of obesity on insurance rates. Obesity has long-term health repercussions and is becoming an increasingly important factor when insurers assess the risk profiles of clients applying for life, critical illness and disability insurance.

This is according to Dalene Allen, underwriting director and co-founder of Altrisk, voted the top long term insurer of the year (risk product) for 2012.

“Worldwide, nearly three million adults die every year of obesity-related illnesses such as stroke and heart attack, and that figure is growing rapidly. In South Africa, heart attacks and strokes kill three South Africans every hour. Current estimates are that one in 10 South African adults will suffer from diabetes by 2030,” says Dalene.

A study by GlaxoSmithKline published in 2010 shows that more than 61% of South African adults are overweight or obese. More concerning is that, of this group, 78% of obese and 52% of morbidly obese people consider themselves to be healthy. Capetonians have the worst record with 72% of them overweight. Pretoria follows at 68% and Johannesburg at 59%. In Durban the number is closer to 52%.

“Of great concern to insurers is that the trend shows no sign of abating. And the prevalence of obesity is starting at younger ages than ever before - a quarter of teenagers, and one in six children under age nine are overweight or obese. With such a high prevalence among young and old alike,obesity will continue to have repercussions for the long-term health of the insured and general populations, and is becoming an increasingly important factor when underwriters assess risk,” says Dalene.

Obesity underpins many critical illnesses

Scientific research and clinical studies have proven that obesity increases the risk of developing a variety of conditions and diseases, which in turn lead to a greater likelihood of morbidity and death. There is now extensive evidence to show that obesity not only increases the risk of conditions such as heart disease and diabetes, but also other conditions such as arthritis, liver disease, bone fractures and various types of cancer.

“The increase in these critical illnesses is particularly important, because of the increased number of claims that could follow and the greater risk posed to the insurer. More claims and higher risks mean higher premiums for clients and, ultimately, a more difficult sales pitch for brokers. While underwriters have traditionally been less inclined to load premiums for overweight clients, this could soon become a more common practice given the increase in obesity-related health risks,” explains Dalene.

How do underwriters assess obesity?

BMI’s ease of calculation has established it as the most widely used measure of obesity. But one of the key shortcomings of BMI is that it takes no account of body fat distribution. For this reason, many insurers look at both BMI and waist circumference for improved health risk identification.

“The presence of fat around the waist is recognised as a strong predictor of increasing mortality and morbidity risk. Guidelines suggest that a waist circumference in excess of 94cm in men denotes moderately increased health risk and one of 102cm or more denotes greatly increased health risk. The equivalent values for females are 80cm and 88cm. Many experts believe that both waist circumference and hip-to-waist-ratio provide a better estimation of risk than BMI and is also central to identifying individuals with the potential for metabolic syndrome and diabetes. This is particularly important in the context of critical illness policies.

Historically, most insurers have not considered loading insurance premiums until BMIs of above 40 - considered to be the measure of morbid obesity. Given the scientific evidence that obesity leads to a greater likelihood of morbidity and death, it could mean that clients could start paying higher premiums at weight levels that were previously ignored by insurers,” she adds.

The role of the broker and insurer

“As an industry, we need to take a more proactive role in the ongoing health of our policyholders. The broker is the key interface between client and insurer and, thus, a key information resource. There is much that can be done to encourage clients who receive unfavourable ratings to reconsider their lifestyles and ensure that life cover remains affordable and relevant,” adds Dalene.

“Policyholders can enjoy the benefits that come with just a 10kg weight loss, including a 20% decrease in total mortality, 30% decrease in diabetes-related deaths and a 40% decrease in obesity-related cancer deaths. The improvements in blood pressure and healthy cholesterol levels are also dramatic, with at least a 10% decrease in total cholesterol, a decrease of 15% in low density lipoprotein (LDL - the ‘bad’ cholesterol), a decrease of 30% in triglycerides and an increase of 8% in high density lipoprotein (HDL - the ‘good’ cholesterol).

“It is not difficult to conceive that a client may very well be able to improve upon a less favourable rating with just a 10kg weight loss. With a genuine commitment to simple lifestyle changes, you can arrange for a review of your client’s application that could not only deliver a better premium, but dramatically improve their health prospects too,” concludes Dalene.