Obesity's ills spell fatter bills

Being fat is not just bad for your health - it can hit you in your wallet through hefty insurance premiums.

As the government considers its response to last week's dramatic report on obesity from the Commons select committee on health, insurers are bracing themselves for increased claims from weight-related ilnesses.

The prices of life insurance, critical illness policies and disability cover are dramatically higher for the overweight than those of healthy weights and as obesity increases more people will face higher premiums.

For example, a healthy 35-year-old man, who is 175cm (5ft 9in) tall and weighs 76kg (nearly 12 stones), will pay the standard rate of about £8.60 a month at Norwich Union.

If his weight is 102 kg, the cost goes up by 26 per cent to £10.80 a month. If he weighs in at 125kg he pays a whopping £19- nearly £125 extra per year and more than twice the standard rate.

The higher premiums could add thousands of pounds to the cost of life insurance to cover a mortgage.

The 125kg customer would pay £3,125 more over 25 years than someone qualifying for the standard rate. Norwich Union says the severely overweight may be refused cover altogether.

Ultimately, rising claims on life insurance from weight-related illness could force up premiums for all.

Obesity is having an even greater impact on critical illness insurance, since overweight people are far more likely to develop a serious sickness than to die from obesity-related problems such as diabetes, stroke or a heart attack.

An obese applicant, for example, might pay 50 per cent more for life cover but need to shell out 75 per cent more for critical illness insurance, says a spokeswoman at private health insurer Bupa.

Norwich Union's chief underwriter, Tony Jupp, says: 'You can pretty much count on paying at least double for critical illness cover [if you're obese].'

Russell Whitworth of Legal & General agrees. 'We try to give as many of our customers the normal rate as possible, but critical illness cover is a more sensitive area,' he says.

Just as the government has recognised the economic and health costs of the nation's bulging waistlines, so insurers say they need to consider the problems in providing both death and disability benefits to an increasingly overweight population. More than two-thirds of Britons - 67 per cent of men and 52 per cent of women - are overweight or obese, and obesity will soon overtake smoking as the country's leading cause of preventable death.

As a result, insurers fear the spiralling costs of obesity-related claims, including many for diabetes, stroke, heart disease and several types of cancer. Norwich Union warns that 'the extra costs of insurance will begin to affect more and more of us'.

The National Audit Office estimates that obesity accounted for 18 million days' absence from work due to sickness and 30,000 premature deaths in 1998, the latest year for which figures are available.

'Obesity, on average, knocks about eight years off the typical lifespan, and that has huge ramifications for us as insurers,' explains Norwich Union's Jupp.

Life insurers typically use the body mass index (BMI) - which is worked out by dividing a person's weight in kilos by the square of their height in metres - to assess an applicant's build.

Most firms consider an applicant with a BMI of between 25 and 30 overweight, while anyone rating more than 30 is considered obese.

Generally those with a BMI of 30 and over can expect to pay at least 50 per cent above the standard rates for term life insurance, says a spokesman for independent adviser LifeSearch. Those with a BMI of between 35 and 40 can expect multiples of that, or be denied cover altogether.

Obese people who smoke or show additional risk factors will have their premiums increased even more.

Bupa says it does look further, however. 'We try to look at the whole picture in terms of an applicant's health; not just BMI,' says Val Davies, the chief underwriter for its life insurance arm.

Applicants who are marginally overweight shouldn't have a problem getting a policy, Davies says, but those with abnormally high BMI figures must give additional medical details or visit a Bupa nurse, who will check their cholesterol and blood pressure and ask questions about their lifestyle.

Davies insists the extra information is aimed at helping understand an applicant's overall fitness, rather than seeking factors that could drive up the cost of coverage. 'Not everyone with a high BMI is unhealthy. Rugby players, for example, often have high BMIs but are quite fit,' she says.

Ronald Klein, global head of pricing at insurer Swiss Re, says: 'As more consumers' BMI goes up, so too will their premiums.' His firm published a report last month on how the rising tide of obesity in Britain is changing the way insurers calculate premiums.

As more of us box ourselves into cubicles at work and park ourselves in front of the TV on weekends, our sedentary lifestyles mean we're piling on the pounds later in life, even though we are still paying the initial rates that were guaranteed at the time we took out our insurance policies.

Insurers could start focusing more on such factors when assessing healthy applicants in the future. The cost of a policy might, for example, take into account how much exercise someone does or see how many times they visit the gym each week.

Requiring a mid-term 'health assessment' of holders of long-term policies is also a possibility, according to the Swiss Re report.

While charging portly customers more will help meet the increasing costs of obesity-related claims, insurers realise the long-term solution lies in tackling the root causes of Britain's expanding waistline to begin with: by teaching Britons how to live more healthily, eat better and take more exercise.

Jupp says Norwich Union is especially worried about the young. Obesity among those aged between six and 15 has trebled since 1990, and one child in three is now overweight or obese.

As a result, more kids have diseases normally found in adults, including diabetes and high blood pressure.

Some health experts fear the next generation may not even live as long as their parents. Obese children gener ally carry their extra weight and unhealthy habits into adulthood, a daunting prospect for themselves and their families, as well as for insurers which feel they cannot cover them.

'In the crystal ball, I see a far higher percentage of young people who are going to apply for insurance when they want to take out their first mortgage, and will be hit with higher and higher premiums,' says Jupp. 'Unfortunately, it's very difficult to explain to a young person how their unhealthy habits will affect them 20 or so years.'

Norwich Union launched a new 'Adopt A School' programme last week to encourage children to become more active and promote the benefits of regular exercise. It pairs up health clubs and leisure centres with primary schools to give pupils access to fitness facilities and qualified staff.

One small consolation is that obesity can make you better off in old age, by giving you a better annuity rate - but only because you're likely to die younger.