Insurance in the age of vaping
As vaping trends rise among young South Africans, life insurers face new challenges. The long-term health risks associated with vaping could impact underwriting, premiums, and overall coverage.
FAnews spoke to Walter van der Merwe, CEO of Fedgroup Life, about how vaping is reshaping life insurance practices and what insurers need to consider to address these emerging risks effectively.
How vaping is affecting healthcare costs for organisations
With the growing popularity of vaping, especially among younger populations, life insurers are concerned about the potential long-term health effects. As the line between smoking and vaping becomes increasingly blurred, insurers often categorise both groups as high-risk. The expected discounts for switching from smoking to vaping are non-existent, given the lack of long-term data on e-cigarettes.
According to *credible research by the US-based National Center for Biotechnology Information, the global market value of e-cigarettes was projected to grow from $14.53 billion in 2017 to $48.9 billion by 2025. This rise in e-cigarette usage, particularly among youth, could have significant health implications.
Van der Merwe comments, “Given the relatively younger population of vapers and the average, shorter duration of use, early research does not provide strong evidence that e-cigarettes are safer than cigarettes. This uncertainty will undoubtedly increase healthcare claims and insurance premiums.”
Best practices for companies updating benefits plans
To address the rising vaping trends, organisations need to proactively adjust their benefit plans. Best practices include offering preventive health services, such as routine check-ups and screenings for respiratory and cardiovascular issues linked to vaping.
Van der Merwe advises organisations to “include customised benefit packages that allow employees to address their specific needs, such as addiction treatment or counselling services for quitting vaping. Offering incentives for healthy behaviours, like rewards for quitting, can also promote wellness within the workplace.”
Clear communication about updated benefits, including vaping cessation programmes, is key to ensuring employees can take full advantage of the available resources, thus helping reduce long-term healthcare costs.
Emerging trends and health risks employers should watch out for
As vaping continues to rise, employers must stay ahead of emerging trends to protect their workforce. Key considerations include:
- Increased use among younger employees: vaping is especially popular among Millennials and Gen Zs, creating long-term health risks that employers should address with preventative health measures.
- Regulatory and legal risks: governments are increasingly regulating vaping products, particularly in terms of marketing to young people. Employers should monitor these changes to stay compliant and adapt workplace policies.
- Evolving health insurance costs: as vaping-related health issues increase, insurance premiums are likely to rise. Employers should keep track of these changes to manage future insurance costs effectively.
- Public perception: with growing awareness of the health risks of vaping, employers may improve their reputation by proactively addressing the issue through updated policies and wellness initiatives.
The conservative approach of life insurers
In conclusion, while the long-term health effects of vaping remain unclear, life insurers, including Fedgroup, are taking a conservative approach. Vaping is typically rated with the same health risk as smoking to ensure that insurers can cover potential future claims.
“As vaping continues to rise, we, for example, continue to take a cautious approach by applying a smoker health risk rating to vapers, ensuring that the policyholder's premiums are adequate to cover potential future claims,” concludes van der Merwe.
By taking these steps, life insurers and employers can better manage the impact of vaping trends and ensure that they are well-prepared for the possible evolving health risks associated with this new phenomenon.
*Sources:
https://pmc.ncbi.nlm.nih.gov/articles/PMC10542855/
Writer’s Thoughts
As the line between lifestyle choice and health risk continues to blur, the rise of vaping presents a test of foresight for both insurers and employers. It's no longer enough to react to emerging health trends - we must anticipate their impact. With limited long-term data and growing usage among younger populations, vaping underscores the need for a more dynamic, prevention-focused approach to underwriting and employee wellness. The question isn't just how we rate risk today, but whether our current models are agile enough to protect the policyholders and workplaces of tomorrow. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected]
