Cedric Stephens | Insurance for the unvaccinated

QUESTION: Can insurers charge unvaccinated persons more premiums for life and health insurance than those that are vaccinated?

− S.B., Kingston 5

RISKS & INSURANCE: Two questions competed for my attention this week. The first was shouted at me by a reader. Why don’t you write something about the ‘average clause’?

One browser search found 231 million items on the subject. Another turned up nearly 100 million results. Did the oversupply of information on this topic limit the new ideas that I could bring to the debate on this unpopular policy provision when the pandemic is running wild? Was there sufficient time, given the editorial deadline, which was shortened by the lockdown, to review a sample of those items? I selected the second question, which is connected to COVID-19.

News stories about COVID-19 and its impact on all segments of Jamaican society dominated last Wednesday’s headlines. They ranged from an article about a woman who lost four family members in 18 days due to the pandemic and other illnesses, vaccine hesitancy and ignorance, statements from two herbalists who argued for the inclusion of their products in the treatment for the disease, and an editorial about a reverend gentleman’s tawdry performance in spreading misinformation. That eminent person, this newspaper opined, “never sees a stage he should not be on and a spotlight he should not (stand) before” and displayed a “gross form of crooked thinking”. Those comments reinforced my decision about S.B.’s query.

Life insurance

Life insurance companies in Jamaica are free to charge different premiums based on risk factors that predict mortality. Purchasing a life insurance policy often entails a battery of questions about the applicant’s health status and/or a medical examination. Seeking information about the vaccination status would be an extension of those questions.

During the early days of HIV/AIDS, for example, local insurers, like their overseas counterparts, developed a series of questions that were designed to assess the risks. Similarly, information is also sought to assess the risks linked to smoking and obesity.

Studies carried out in the United States have found that smokers pay higher premiums as do people who are obese. Smokers, for example, pay over three times more for life insurance than non-smokers. Obesity increases premiums by about 150 per cent or more if the person also has medical conditions associated with being overweight.

Even though similar information is not available about the practices of insurance companies operating in Jamaica, it would be uncommon for them not to use rating models that resembled those of US insurers.

Jamaica, according to the Reuters COVID-19 Tracker, vaccinated, as of last Thursday, 8.4 per cent of its population. The actual number of persons vaccinated may be closer to 10 per cent. This is because according to anecdotal information, some residents have flown to the US to get their shots.

Given this low number, it is probably unlikely that local insurers are asking new customers about their vaccination status or imposing additional charges for the unvaccinated. On the other hand, they may probably be doing so for those prospective clients who they consider as high risk and are now charging higher premiums.

That said, coverage on existing life insurance plans will not change. So death due to COVID-19 will be covered.

Health insurance

Less than 20 per cent of Jamaican citizens have access to health insurance. This means that the public-health system is bearing the bulk of the expenses associated with the treatment of COVID-19. These costs exclude vaccine-related expenses. The average cost of hospitalisation for COVID-19 treatment in the United States during last year amounted to US$42,200 ($6.5 million) per patient.

Comparative figures for treatment in the local hospital system are not available. What is clear, however, is that the local health insurance system has not been shielded from the effects of the pandemic.

Even though the Financial Services Commission’s February 2019 Market Conduct Guidelines oblige insurers to “give fair and equal treatment to all policyholders and are not to make or permit any unfair discrimination against any person or persons, in respect of premiums charged”, it does not have the force of law. In the US, in contrast, The Affordable Care Act, which passed in 2014, prevents insurers from pricing plans according to health, except for smoking status.

Delta Airlines recently announced that it will be imposing a US$200 per month surcharge on unvaccinated employees who are enrolled in its health plan.

It is my guess that local insurers have started to include COVID-19 into their pricing models since last year. It is only a matter of time before they begin to discriminate against the unvaccinated.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com or bsuiness@gleanerjm.com