Michael Ducker and Ian Lennox discuss emerging research on lifestyle choices, and the potential implications for risk assessment
Build, blood pressure, cholesterol, family history. For many years, these factors have been the bedrock of risk assessment for life and health insurance – common clinical risk factors founded on much published research and insurer experience.
While the usual (mostly cardiovascular) clinical risk markers are influenced by genetics and family history to some degree, improved understanding of complex biological pathways illustrate how lifestyle choices are in fact the main drivers underlying these clinical risk markers. This, coupled with wearables and the vast amount of consumer data available today, creates an opportunity to more individually and holistically assess someone’s risk. In addition, health and wellness programmes add the ability to improve policyholders’ health by improving their lifestyles.
New evidence about the impact of lifestyle on health outcomes continues to emerge – and lifestyle factors are not just worthy of incorporating into risk assessment, they should also be a key theme for insurers to continually communicate to policyholders, helping them improve their lifestyle and consequently their health and longevity. The need for this is becoming more apparent as we transition towards a society where ‘quick and convenient’ increasingly outweighs the delayed gratification that comes from following healthy lifestyle behaviours. In the UK, for example, nearly half of us do not exercise sufficiently, according to WHO guidelines. What is surprising, however, is the scale of the impact that such behaviour can have on our longevity – it has been shown that a middle-aged individual following healthy lifestyle behaviours will live, on average, 12 years longer than someone who does not.
Why is lifestyle risk so important?
Analysis of leading studies in each respective field of lifestyle risk already suggests the significance of lifestyle.
Sleep: Compared to the optimum seven hours of sleep per night, the relative risk of mortality can increase by as much as 30% for short and long sleepers.
Physical activity: We can reduce our relative risk for both mortality and cardiovascular morbidity by
up to 30% by meeting our daily recommendations of exercise.
Nutrition: Despite experts still not being in agreement on what constitutes a healthy diet, there is clear consensus in some areas: reducing intake of sugar, refined carbohydrates and ultra-processed foods. For example, consumption of one can (330ml) of a sugar-sweetened beverage per day is estimated to increase the risk of diabetes by 30%.
Environment: A number of harmful elements in our immediate environment also impact mortality/morbidity risks. Second-hand smoke has been shown to increase cancer risk by around 25%.
Deep-dive research at Swiss Re has revealed the six factors that are most influential to our mortality and morbidity risk: mental wellbeing, physical activity, environment, sleep, nutrition and substance use. We believe ‘The Big Six’ are key to understanding an individual’s health risk beyond, and in fact underlying, the traditional clinical risk factors, and we are embedding them into our own underwriting models and guidelines for a more holistic risk assessment.
Interactions between lifestyle factors
Looking at these lifestyle factors individually and assessing their impacts on mortality and morbidity is both interesting and insightful, but the true impact of lifestyle comes from bringing these different factors together. We are all aware that the healthier we are across multiple areas of our lives, the more we stand to benefit – but we do this without ever stopping to question why this is the case. Of course, simple logic dictates that if each behaviour lends its own benefit, then the more we do, the healthier we will become. This is true, but emerging evidence demonstrates that it is so much more than that.
Extensive research is highlighting the significance of ‘interactions’ that exist between lifestyle factors and with more common clinical risk factors. A good example of an interaction is the one between physical activity and blood pressure: it is estimated that exercising vigorously for an hour a week can reduce the risk of developing hypertension by up to 10%.
Analysis of these complex interactions between and among clinical and lifestyle factors helps us determine a more holistic, individualised picture of applicants.
Why should insurers pay more attention to lifestyle?
With lifestyle factors having such a large impact on mortality and morbidity outcomes, there are many potential benefits for insurers that are looking to expand into the world of lifestyle risk:
- Incorporating lifestyle factors provides access to further information around an applicant’s health, helping insurers to better understand and stratify risk
- Consideration of lifestyle opens up the opportunity to leverage the power of the rapidly evolving wearables industry
- Insurers have the power to promote healthier lifestyles through positive engagement with the end consumer
- The introduction of health and wellness programmes provides potential new platforms for consumer engagement. This may provide access to new risk pools, as consumers see more value in insurance, and help to close the protection gap.
As with every new approach, there are unanswered questions around some of the potential challenges to incorporating lifestyle factors into risk assessment. Do consumers actually want it? Are wearables too intrusive? Will consumers be more engaged in managing their health risks? Will disclosure be accurate?
This approach also introduces new considerations when it comes to pricing:
- The new lifestyle risk factors are embedded in historical experience; modifications to experience will be required to allow for explicit rating (or higher risk stratification)
- There are questions around whether the new information will lead to positive progression of health – should we allow for better improvement in mortality?
- More engaged policyholders may value their insurance more, which will hopefully lead to better lapse experience
- To what extent should we share the risk of uncertain outcomes with customers via price adjustments?
Despite the unanswered questions and considerations, one thing is certain – the importance of lifestyle is growing, and while it will require a shift from relying solely on traditional methods of risk assessment, it also presents an opportunity to better understand and connect with consumers. Risk assessment as we know it may be about to change.
Michael Ducker is an underwriting research and development analyst at Swiss Re
Ian Lennox is a senior pricing actuary at Swiss Re
Image credit | Ikon
