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The Actuary The magazine of the Institute & Faculty of Actuaries
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Health: Are smoking controls working?

On 31 May each year, the World Health Organisation (WHO) marks World No Tobacco Day, highlighting the health risks associated with tobacco use and advocating effective policies to reduce consumption1. The theme for 2011 is The WHO Framework Convention on Tobacco Control (FCTC).

The FCTC is a treaty that was negotiated under the auspices of the WHO. Currently, 172 countries are parties to this treaty. The UK ratified the treaty in 2003 - the same year that it was first open for signature2. Some of the obligations arising out of the treaty are:

>> Adoption of price and tax measures to reduce consumption

>> Prevention of illicit trade in tobacco

>> Regulation and restriction of tobacco product disclosures, packaging and advertising

>> Reduction of exposure to tobacco smoke

>> Provision of support for smoking cessation

>> Prevention of tobacco sales to minors

>> Promotion of public awareness of tobacco-related health risks.

Timeline of tobacco control measures
Long before the FCTC, the UK introduced measures aimed at tobacco control and has since continued to introduce measures that support its treaty commitments. Figure 1 shows some of the noteworthy tobacco control initiatives and smoking prevalence over time. Prevalence for ages 16 to 19 is shown to indicate the effect of policies on smoking initiation as over 80% of smokers start before age 20(3).

Smoking prevalence has generally been falling over time but at different rates in different periods. The most significant reductions in prevalence occurred between the mid-1970s and 1980s when smoking decreased by around 1% per annum. During this time, a large volume of evidence of the health risks associated with smoking was published and the price of cigarettes was rising4.

The pace of the reduction slowed to around 0.5% p.a. between the mid-1980s and 1990s and then stalled, despite continuing real rises in the retail price of cigarettes. In the late 1990s there was even an increase in smoking initiation, which was reversed at a similar time to the publication of ‘Smoking Kills’, the UK Government’s first White Paper on tobacco control in 1998.

The raft of tobacco control legislation introduced in the last decade may have renewed the impetus for reductions in smoking prevalence. This reduction may be difficult to maintain in light of the apparent increase in smoking initiation since 2006 which, ironically, coincided with the increase in the minimum legal age for tobacco sales.

The ban on smoking in enclosed public spaces appears to have had limited positive effect on smoking prevalence in addition to gains that stemmed from earlier measures, however, reduction in exposure to second-hand smoke was one of its primary aims.

The observed changes suggest that the public has responded to dissemination of information on the harms associated with smoking. The introductions of advertising restrictions have coincided with the start of periods of faster reductions in prevalence and it will be interesting to see whether the recently announced proposals to ban retailers from displaying cigarettes will trigger similar changes.


Smoking and health risk evidence
One of the major epidemiological studies that has shown the link between smoking and increased health risk is the British doctors study. This was a cohort study of physicians who were registered in the UK in 1951.

The researchers sent periodic questionnaires to study subjects and published follow-up reports every 10 years until 2001(5). Table 1 below shows some results where risk of death for smokers and ex-smokers is compared with the risk presented by a non-smoker.

The results consistently show elevated risk for ex-smokers and even higher risks for current smokers. The risk reduces with increasing duration since smoking cessation. The relative risks for lung cancer death are particularly pronounced. This is just one study among many. The US Surgeon General’s 1990 report into the health benefits of smoking cessation provides a comprehensive overview of the evidence available at the time6.

The Actuarial Profession, via the Continuous Mortality Investigation (CMI), has gathered its own data. Smoker differentials for different term assurance benefits and at different ages are shown in Table 2 below.

The smoker group consists of current and ex-smokers, while the non-smoker group consists of non- and ex-smokers and possibly a few current smokers, too.

The smoker differentials for mortality products are in a similar range to the results seen in the British doctors study, although the smoker status classifications are not directly comparable. For females the critical illness differentials are lower than those seen for mortality. This is possibly because breast cancer, which does not have a strong link with smoking and has a high survival rate, is a major cause of critical illness claim.

The CMI has not published any income protection results by smoker status. On The Exchange, a premium comparison tool, insurers’ smoker rates are roughly 40% higher than non-smoker rates.

Why actuaries should be interested
In our role as pricing and valuation actuaries working on life and health insurance benefits, we have limited immediate financial interest in changes in smoking prevalence where smoker-distinct premium rates have been charged. Increased cessation rates may temporarily introduce more recent ex-smokers to the non-smoker pool, thereby increasing non-smoker claim rates. If ex-smokers continue to pay smoker rates, smoker claim rates could reduce.

An important component for pricing and reserving is allowance for trends. Due to low volumes and problems with consistent contributions, insured lives data is difficult to use for trend projections. Where population trends are used, adjustments need to be made for improvements resulting from smoking cessation that will not be seen in smoker-status distinct pools.

Where premiums are not smoker-differentiated, for example on large employer schemes where a unit rate is charged, reduced smoking prevalence could translate into lower claim rates, possibly creating an incentive for insurers to encourage smoking cessation.

The cost of annuities has been rising because of increased proportions of non- and ex-smokers in the population. Smoking prevalence changes are believed to have been a major driver of past improvements and should continue to have an effect for some time. Any major changes that happen at younger ages today will have an effect many years from now.

Lastly, as members of society who happen to have additional access to information on the health risks associated with smoking, we will each have our own thoughts on how we wish to respond to the WHO call for a reduction in tobacco consumption on World No Tobacco Day 2011 and beyond.

Adele Groyer is an actuary on Gen Re UK’s technical team

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1 www.who.int/tobacco/wntd/2011/announcement/en/index.html

2 www.who.int/fctc/en/

3 General Lifestyle Survey 2009

4 Townsend J, Price and consumption of tobacco, British Medical Bulletin 1996; 52 (No. 1): 132-142

5 Doll R et al. Mortality in relation to smoking: 50 years’ observations on male British doctors, BMJ 2004; 328;1519

6 US Department of Health and Human Services, The Health Benefits of Smoking Cessation: a report of the Surgeon General 1990