Everyone seems to be weighing in on “e-cigarettes” – from the Food and Drug Administration (FDA) to WebMD to major news outlets such as CNN and everyone in between. What are e-cigarettes, and why are they all the buzz in the life insurance industry today? All smoking-related puns aside – what’s the deal with e-cigs? And – most important – what effect might e-cigs have on life insurance underwriting for those who use them?
The FDA describes e-cigarettes as products designed to deliver nicotine or other substances to a user in the form of a vapor. Typically, they are composed of a rechargeable, battery-operated heating element; a replaceable cartridge that may contain nicotine or other chemicals; and an atomizer that, when heated, converts the contents of the cartridge into a vapor. This vapor can then be inhaled by the user. These products are often made to look like products such as cigarettes, cigars and pipes. They are also sometimes made to look like everyday items such as pens and USB memory sticks, for people who wish to use the product without others noticing.
Basically, an e-cig is classified as a smoking alternative. The majority of e-cigs have been designed to simulate the experience of smoking an actual cigarette. They are available in a variety of options, including with and without nicotine (the major addictive drug in tobacco). E-cigarettes have been gaining in popularity quickly, with sales crossing the $1 billion mark in 2013. Sales are expected to grow to $1.5 billion this year and leap to $5 billion in 2015, according to some estimates. However, the main difference between conventional cigarettes and e-cigs is that e-cigs don’t contain tobacco; they use the process of vaporization for the user to absorb nicotine, as opposed to the combustion, or burning, of a regular cigarette. This is one of the central arguments of proponents of e-cigs: the fact that there is no actual burning involved in the process and therefore no smoke – firsthand, secondhand or otherwise.
Because the vast majority of the harmful chemicals in cigarettes are contained in the smoke itself, e-cig supporters tout this as a prime reason e-cigs are “healthier” than their regular cigarette counterparts. In fact, a recent FDA study tested e-cigarettes versus tobacco cigarettes and found nine contaminants in the e-cigarette versus 11,000 contained in a tobacco cigarette.
E-cig proponents also highlight the fact that e-cigs are safer than regular cigarettes due to the fact that there is nothing burning, which could theoretically reduce accidents such as smoking-related house fires. In fact, the National Fire Protection Association cites smoking as one of the major causes of house fires.
Thomas Glynn, the director of science and trends at the American Cancer Society, also stated that “there were always risks when one inhaled anything other than fresh, clean air, but … there was a great likelihood that e-cigarettes would prove considerably less harmful than traditional smokes, at least in the short term.”
However, there are a huge amount of conflicting information and a variety of questions swirling around e-cigs and their use. Are they actually safer than traditional cigarettes? How about exposure to secondhand vapor produced by their use? Are they safe for use in public places where smoking traditionally is banned, such as restaurants and airplanes? Should they be classified as a cessation device (used to help someone quit smoking, such as nicotine gum or the nicotine patch) or as a smoking alternative such as chewing tobacco? How should e-cig use be regulated? As e-cigarette use is still a fairly new phenomenon, there are comparatively few studies on the health risks involved, and as with many questions regarding the use of e-cigs, the jury is still out.
However, e-cigarette use is a pressing matter for those of us in the life insurance industry, especially for carrier actuaries and underwriters. How do you underwrite potential clients who use these devices? Do they qualify for a smoker rate, even though technically they aren’t smoking? Because of the lack of conclusive studies on the matter, many insurance companies are currently erring on the side of caution and classifying e-cigarette users with tobacco-user status.
This stems from the fact that the primary method used by insurance companies to detect tobacco use is a urine test. These tests are designed to detect a byproduct of nicotine called cotinine, which is a metabolite of nicotine, or what nicotine breaks down to in the body. Due to the constraints of the current testing process, e-cigarette users are, for now, classified as tobacco users. At this time, there are a few notable carrier exceptions that currently classify e-cigarette users as nonsmokers. This is the same category as those applicants who qualify for “alternate tobacco use” such as cigar use and smoking cessation methods (such as nicotine gum and the nicotine patch), as long as the applicant is using a non-nicotine e-cigarette.
Regardless of how individual insurance companies classify e-cigarette users, the reality of the situation requires agents and advisors who engage in any kind of field underwriting to be aware of these devices and to ask the appropriate questions of their clients. Some relevant questions may be:
» Do you currently use e-cigarettes? If so, are you still using regular tobacco products (and if not, when did you last use them)?
» If you do currently use e-cigarettes, are they the nicotine or the non-nicotine variety?
» If you do currently use e-cigarettes, are you aware that you may be classified as a tobacco user for the purposes of life insurance underwriting?
The issue of e-cigarette use promises to be a hot-button issue for many of us in the months (and possibly years) to come, and life insurers are no exception. Actuaries and underwriters are keeping a close eye on the topic as dedicated research starts to look at the effects of e-cigarettes on their users and those around them.
It’s refreshing to see that some of us in the industry are keeping an open mind with regard to e-cigarette users. We fully anticipate more positive changes to the way insurers will underwrite e-cigarette use as more research on its effects becomes available. However, for now it’s important to make our clients aware of the fact that if they are the typical e-cigarette user, they will most likely be classified as a tobacco user for the purposes of underwriting. Stay tuned!
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