The sales & marketing director of protection provider Direct Life said providers should assess whether to go beyond a clear-cut choice in underwriting between ‘smoker’ and ‘non-smoker’.
His comments came after Royal London Group, which owns Scottish Provident and Bright Grey, backtracked on a policy of assessing e-cigarette smokers on a case-by-case basis, now choosing to classify them as smokers.
Mr McCarthy said: “Providers have to reassess the accuracy of their quotes because if a client has smoked 50 a day in the past, that is very different from someone who has only smoked one a day.
He also questioned the traditional caveat that a client must not have used cigarettes in the last 12 months to qualify for non-smoker status, arguing that varied rates depending on how long someone has gone smoke free or whether they use nicotine replacement products.
He said: “The questions need to be more focused on what kind of smoker you are and, if you have given up, what kind of smoker you used to be.
“The health implications can vary dramatically and the rise of e-cigarettes could also have a dramatic effect on how we price annuities and life insurance.”
Direct Life’s protection service for advisers, LifeQuote, is currently reviewing its applications, considering whether to reflect if a customer is a conventional smoker, a user of nicotine replacement products or both.
There are an estimated 1.3 million people using e-cigarettes in the UK, according to a recent briefing from anti-smoking organisation Action on Smoking and Health.
Phil Stafford, head of underwriting standards, philosophy and claims, said: “The use of e-cigarettes is a developing issue for the protection market as the popularity of these products has increased and it is important that it is recognised as another variable to the tobacco definition.
Matthew Walne, managing director of Midlands-based Santorini Financial Planning, said: “I have always thought it bizarre that occasional cigar smokers are classified as non-smokers, even though cigars are potentially more dangerous than cigarettes. I think the definition needs to be a lot clearer. Pruprotect’s serious illness cover is trying to provide incentives for those who are trying to give up. Rates should also be reviewed down the line for those who have given up, not just at the outset.”
