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By Carolyn Cohn and Noor Zainab Hussain
LONDON, Sept 2 (Reuters) - The roll-out of COVID-19
vaccinations is making life insurers more enthusiastic about
offering cover to those with underlying health conditions - some
without even knowing whether customers have been vaccinated.
Life insurers were imposing waiting periods to buy cover in
the early stages of the pandemic for certain age groups, as well
as for those who had been infected, saying the long-term health
consequences of coronavirus were not fully understood.
But now that vaccines are prevalent in major economies such
as Britain and the United States, life insurers see fewer risks.
Helen Croft, head of underwriting strategy at AIG Life
, said the insurer had previously been more cautious in
offering cover as a result of the pandemic, but the efficacy and
widespread use of the vaccine meant it could provide insurance
for more customers.
"The vaccine take-up has been excellent," she said. AIG Life
did not check if individual customers have been vaccinated, with
Croft pointing out the insurer did not ask customers about other
inoculations, such as for flu.
"I don't think it's necessary to be asking about the vaccine
- the population level take-up gives us enough comfort," she
said.
Insurers such as LV=, Aviva and Zurich also
said they did not ask vaccination questions, with Zurich
highlighting the possible limitations of inoculation, such as
long-term effectiveness or the impact of new variants.
Regardless of vaccination status, customers with underlying
health conditions may pay up to five times the standard rate for
life insurance products, sources said.
A reduction in the hospitalisation and death rate as a
result of vaccination has meant that "almost all" insurers in
Britain have reversed previous COVID-19 restrictions on life
cover, said Phil Jeynes, director of corporate sales at
insurance broker Reassured.
Britain was one of the first countries to roll out a
vaccination programme and almost 80% of all over-16s are fully
vaccinated, according to UK government figures.
Premiums have stayed much the same during the pandemic,
Jeynes added. Rather than raising rates, insurers postponed
providing cover for those above a certain age, with some
underlying health conditions or who were recovering from
COVID-19, industry sources said.
Life insurance premium volumes dropped by 11% in Britain and
by 0.1% in the United States in 2020, according to Swiss Re.
Sharp falls in household incomes due to lockdowns and job losses
hit demand for life insurance last year, the reinsurer said in a
recent report.
Swiss Re expects strong life insurance growth this year and
next due to the economic recovery and increased consumer
awareness of risk.
In the United States, where more than half of the population
is vaccinated, major life insurers Prudential Financial
and Lincoln told Reuters they did not ask about
vaccines.
The Insurance Compact, standards adopted by 47 U.S. states,
said it did not currently allow insurers to ask vaccination
questions as state insurance regulation has not yet set public
policy around the vaccine and underwriting.
ASKING QUESTIONS
However, some insurers in Britain are asking customers
whether they have been inoculated, particularly if their health
condition makes them more vulnerable to COVID-19, and this could
affect the cost or size of their cover.
"For those that have been fully vaccinated, our risk
appetite will be higher," said Rose St Louis, protection
director at Scottish Widows. "We may be able to offer improved
terms to those who have had both vaccines."
Legal & General typically imposes a 12-month
waiting period on customers who are clinically vulnerable and
where the impact of COVID-19 may be life-threatening.
"To avoid postponing applications for this 1% of new
customers, we will now ask whether or not they have had their
required vaccine doses...allowing us to give cover to customers
when it would otherwise not be available," an L&G spokesperson
said by email.
Unvaccinated vulnerable customers would be declined cover
for now, though allowances would be made for those who could not
have the shot for medical reasons such as pregnancy, L&G said.
Insurers need to get clearance from their reinsurers for any
underwriting changes they make, as reinsurers may otherwise be
unwilling to provide that cover.
L&G said its reinsurers agreed with its approach, without
naming them.
One global reinsurer, who declined to be identified, said it
was supporting the stance of "several insurers" in Britain who
were insuring customers in higher risk medical groups for larger
amounts of cover, if the customers provided evidence that they
were fully vaccinated.
Clive Allison, director, life and pensions at consultants
EY, said the need for vaccine questions may be short-lived.
"There'll be a convergence where most adults will have been
double-vaccinated," he said. "The ones that haven't are most
likely to be in the younger age bracket, and typically are not
looking to take out insurance cover."
(Reporting by Carolyn Cohn in London and Noor Zainab Hussain in
Bengaluru; Editing by Mike Harrison)
