Should anti-vaxxers pay more for life insurance?
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On the face of it, people who are not vaccinated against vaccine-preventable deadly diseases pose a higher risk to life insurance companies than those who are. Should they be penalised accordingly?
This was the intriguing question posed by actuary Pamela Hellig, director of client services at MBE Consulting, at the recent annual convention of the Actuarial Society of South Africa. Hellig’s presentation was based on her paper “The ethical and practical considerations of using vaccination history as a rating factor in life insurance underwriting”.
When you apply for cover, the life insurance company uses what is known as the underwriting process to assess how risky you are to insure. You are required to fill in a questionnaire on your medical history, occupation and leisure pursuits, among other things. South African insurers also tend to take four general risk factors into account: your age, gender, whether you are a smoker or not, and your socio-economic status, determined by education level and income. With this information, the insurer will assess whether or not to grant you cover and, if so, what exclusions may apply and what premium you will pay. The lower your overall risk, the lower your premiums will be.
In her paper, Hellig makes a case for insurers including your vaccination record as an underwriting factor, something which they do not do at present, but which, she notes, was practised as far back as the late 19th century.
In 1899, the British Medical Journal published a survey of insurance companies on their approach to vaccination against smallpox. Of the 69 respondents, 62 discriminated against the unvaccinated to a greater or lesser degree – 13 denying them cover outright and 11 excluding smallpox from their cover.
In the 20th century, Hellig notes, quoting the Centers for Disease Control and Prevention (CDC) in the US, vaccination became one of the most successful medical interventions in history. Smallpox was officially eradicated by 1980, and vaccines have successfully contained many of the world’s most devastating infectious diseases, including polio, diphtheria, typhoid, cholera, hepatitis, tuberculosis, and, more recently, human papillomavirus, which can cause cervical cancer in women.
Many vaccines are extremely affordable, and governments worldwide, including ours, offer vaccination programmes free or at very low cost to citizens. Hellig says: “Large-scale administration of vaccines has not only saved countless lives over the past century, but it has also led to a substantial decline in healthcare costs associated with vaccine-preventable diseases (CDC, 2011). The potential cumulative economic devastation that could be caused by these diseases is staggering, based on the observed financial impact of Covid-19 during the first half of 2020.”
Non- and anti-vaxxers
Despite their unqualified success, vaccines have been the subject of widespread suspicion and “fake news”, epitomised by the anti-vax movement, which the Covid-19 pandemic only seems to have emboldened.
A trigger was the publication in 1998 of a paper by Dr Andrew Wakefield, a British gastroenterologist, which has been called “the most damaging medical hoax of the last 100 years”. The paper falsely linked autism to the measles, mumps, and rubella (MMR) vaccine. The ensuing damage to confidence in public health vaccination programmes in England and the US was, Hellig says, “no doubt fuelled by a handful of vocal Hollywood celebrities’ support of the paper, perhaps the most prominent of all being actress Jenny McCarthy, who, in 2007, published her bestselling book, Louder Than Words: A Mother’s Journey in Healing Autism, in which she claimed that her son, Evan, developed autism after getting the MMR vaccination”.
It is in this shadow that many people are now hesitant about receiving a vaccine against Covid-19 when one becomes available.
But the problem is wider than the anti-vax movement, Hellig says. In South Africa, where the childhood vaccination programme is free but not mandatory, take-up is well below target. Many factors may account for this, including a lack of education, societal norms, and what is known as omission bias, where the risks of inaction are perceived to be lower than those of taking an action.
And while risks to children are high, the risks to unvaccinated adults are far higher, Hellig says. Many more adults than children die from vaccine-preventable diseases annually.
The case for underwriting
To support her suggestion that vaccination be included as an underwriting factor, Hellig refers to a Master’s thesis by retired actuary Francois Marais, “A critical evaluation of discrimination in risk underwriting in the life insurance industry in South Africa” (see “Do insurers discriminate unfairly?”). Marais argues that for such discrimination to be fair, it must be justifiable on three points:
1. The statistical evidence to support the discrimination must be strong and reliable. Hellig says: “The question here is whether the mortality and morbidity linked to non-vaccination in the insured population is statistically significant enough to warrant the inclusion of a vaccination-related rating factor in the underwriting process.” She says more research would be needed. However, figures from Statistics SA and the World Health Organisation show that vaccinations could prevent more than 50 000 adult deaths annually in South Africa. Given that the average South African earner has life cover of R600 000, the industry could save more than R30 billion a year. Furthermore, the cost of treating these vaccine-preventable illnesses in hospital potentially dwarfs the mortality cost.
2. Is the allocation of each applicant to a risk group unambiguous? Hellig says your vaccination record would unambiguously determine whether you fall into the risk group or not.
3. Does the effect of the factor on mortality have a reasonable causal explanation? “A plethora of research has been done over centuries – and continues to be done – which proves the efficacy of vaccination,” Hellig says.
She suggests that instead of penalising anti-vaxxers, insurers could encourage people to be vaccinated by offering premium discounts or wellness-programme incentives.