Plump but healthy?
"No sports" was Winston Churchill's answer to the question of how he had managed to live to such a ripe old age. The former British Prime Minister was considerably overweight. He nevertheless died only in 1965 – at the biblical age, at least for that time, of 90 years. Was he an exceptional case? One thing is certain: People who are similarly overweight today can take out life insurance only if they are willing to pay additional risk premiums. However, such premiums may soon become somewhat lower.
The body-mass index (BMI) plays a key role in life insurance risk assessment. It provides information on whether an applicant is overweight or obese, and hence would constitute, from a statistical standpoint, a greater risk within the community of policyholders. Indeed, people who are seriously overweight very often suffer from resulting illnesses, such as high blood pressure and fat metabolism disorders. And this combination can, in turn, lead to a number of widespread ailments such as diabetes, cardiovascular illness, fatty liver, chronic kidney problems, and even cancer. Applicants with significantly elevated BMIs are, therefore, charged additional premiums commensurate with this risk.
No one knows exactly how much Winston Churchill weighed. Based on press photos, however, we can assume that his BMI was probably well over 30 kg/m2 – a figure that the World Health Organisation defines as the threshold to obesity. To illustrate: In order to be of normal weight, i.e. to have a BMI of between 18.5 and 25 kg/m2, Churchill, who was only 1.73 metres tall, would have had to have weighed a maximum of only 76 kilograms. The fact that he lived to be 90 despite being so overweight is an indication that his health was otherwise good – without high blood pressure or elevated blood lipids. What does this mean for risk assessment and insurance ratings? Might people who are greatly overweight, but whose blood pressure and cholesterol levels are normal, be insured less expensively than they have been in the past?
What counts is the overall assessment of the risk factors
The answer is "yes", if one can simultaneously take into account in the risk assessment – based on reliable data – the health effects of BMI, blood pressure and lipids, and their interactions and respective frequencies. Using a newly developed calculator, the Risk Calculator, in its MIRA risk assessment tool, Munich Re has now done just that. The difference between the new method and customary risk assessment is that, instead of considering BMI, blood pressure and blood lipids one-dimensionally and then adding their individual values together, Munich Re's new calculator evaluates the interaction and correlation between the various metabolic factors. The result is a risk assessment that comes even closer to matching the actual risk.
The key is profound understanding
The prerequisite to developing the new calculator was a profound understanding of the complex interactions between the various metabolic factors, on the basis of corresponding, statistically significant data. Yet although half the population in the western industrialised nations are overweight, and a third suffer from high blood pressure or high cholesterol, until now no sufficiently reliable data sets have been available.
The insurance industry itself has data only from past policyholders, but this does not allow assessment of the risk experience of those applicants who were unwilling to pay the increased risk premiums, or who were refused coverage altogether – precisely because they never became policyholders. Munich Re has therefore taken the initiative and has, over a period of ten years, analysed data from over 1.5 million applicants in the US insurance market. Each record contained information on BMI, blood pressure and blood lipids, and was compared, in a process probably only possible in the USA, to public death registries over a period of ten years.
And the question whether such results can be carried over to other countries and continents has been addressed by Munich Re as well. After comparing the data with the results of studies from other countries and regions, the analysts found that the relative risk difference between people with increased metabolic values and those with normal ones is almost identical in all populations. There are, however, regional differences in terms of the frequency of excess body weight and other risk factors. These differences are taken into account in the calculator's various regional versions of MIRA.
Going live has begun
After years of development and extensive testing, the new Risk Calculator is now ready to be used in practice. Asia went live first, in April. The calculator will be integrated successively into all regional versions of MIRA, so that it will soon be available to every Munich Re primary insurance client worldwide.