New Delhi, April 10: Fat folk had better watch out: the premium on their insurance policies could soon be determined by how far they tip the scales.
Obesity in India is on the rise and insurers are increasingly concerned about the associated health risks that this involves.
While insurers in India claim that they have always charged a higher premium from the tubby tribe, there’s always been a huge gulf between practice and precept.
The insurance industry is now looking to change all that — and is sending out instructions to its band of insurance agents to tighten their belts, scrutinise prospective customers better and extract more by way of premiums for corpulent covers.
“A prudent insurer should definitely charge a higher premium from an overweight policyholder. It largely depends on the type of insurance plan, its term, age, height and kinds of sickness the individual has,” said G. . Aggarwal, chief in-charge, actuarial, Life Insurance Corporation.
In the insurance parlance, obesity is defined “as body mass index above a particular factor”.
As per international standards, the weight of an individual (in kilograms) is divided by the square of his height (in metres). If the body-mass index attained is above unit 25, the individual is considered overweight.
“Obesity is one of the most dreadful ailments in India,” said K. K. Aggarwal, president-elect of the Delhi Medical Association (DMA). “However, carbohydrate obesity or abdominal obesity is found to be more prevalent in India.”
Aggarwal said nearly 50 per cent of men and women in the urban areas are obese.
“Women are about 10 to 15 per cent more obese in comparison to men,” he added.
Stating that an insurer should charge premium according to the risk element involved, Aggarwal said, “There are cases where LIC has covered policyholders under pure protection plan who are forking out a premium that is twice or thrice the normal premium, or may be even more.”
He said LIC conducts studies on obesity risks at least once each year to figure out any advancements and change in trends.
While both state-owned and private life insurers follow certain basic guidelines before covering obese people, he said “In the absence of a single uniform guideline, all underwriters follow guidelines suitable to their company”.
However, this may not naturally translate into huge variations in premium from one insurance company to another. This is because all life insurers ask for detailed medical test reports before providing an insurance cover.
Stating that various researches across the country prove that obesity is “very pronounced” above the age group of 40, Dr R. Kannan, actuary and chief financial officer of SBI Life Insurance, said, “An obese person must pay high premia because of the high mortality risk he carries. The premium loading may vary from 5-15 per cent depending on a case-to-case basis.”
However, the ground reality at present is a lot different. A top LIC agent confirmed, “It is true that there are agents who present bogus medical reports from prospective policyholders in an attempt to meet their targets. Moreover, high sum assured policies are more closely scrutinised than the others.”
According to industry experts, obese people tend to go in for pure life term covers that have a small portion of saving element and a high degree of mortality risk cover.
Confirming that a separate table of mortality rates is not available for obese people, Kannan said, “We rely on well-grounded research papers. By virtue of private life insurers being relatively new to the market, it will take us time to come up with any sort of claim analysis for such group of people.”