Determining whether or not someone fits into this category is the adviser’s first port of call.
Emma Thomson, life office relations director at LifeSearch, says: “Unusual or adverse risk will apply to anyone not underwritten on standard terms, because they are deemed to be more likely to make a claim due to their health, occupation or status.”
However, the phrase ‘unusual risks’ is something insurer Aviva avoids.
Andy Doran, protection underwriting philosophy manager for Aviva, explains: “We don’t use this in protection.
“There are applicants who follow certain occupations or participate in certain pastimes that we see less commonly, but each customer who applies to Aviva is underwritten based on the risk they specifically present, taking into account their medical history, lifestyle, occupation, travel and pastimes.”
Insurers have tried to align products to changes in consumer behaviour or developments in medical treatment Paul ReedPaul Reed, director at Vita, says the term ‘unusual risk’ would probably be lost on some consumers and possibly cause offence to others if they were described either as ‘unusual’ or a ‘risk’.
Mr Reed says: “The question could be posed whether or not advisers and insurers explain the reason for such terms and the possible outcome as a result.”
Sadly, as Mr Reed says, many customers still “hold the belief they are uninsurable because of a health or lifestyle disclosure. They may say ‘I can’t get insurance because I work in the armed forces’, or ‘I can’t get life insurance because I have diabetes’.
“These may have been historic reasons but insurers’ guidelines have tried to align products to changes in consumer behaviour or developments in medical treatment.”
Indeed, as Ms Thomson says: “They will be accepted but charged a higher premium to cover that risk, or be accepted but have the issue in question excluded, so will be unable to make a claim on the element that poses the highest risk.
“For example, someone with a history of back pain might be accepted with a ‘back exclusion’, so they would be covered for everything except a back-related injury.”
But our experts say there may be the odd occasion where cover has been declined if the risk is deemed too great.
For example, if someone has asthma and is a heavy smoker, but works in a mine, this may be a toxic cocktail of risk that would be too much for most insurers to underwrite.
However, there may be ways to help the person improve their lifestyle and reapply using an adviser to help get insurance.
Moreover, the issue of wider, more flexible acceptance has been something with which the insurance industry has been grappling and, over the last decade or so, insurers have been improving the way it assesses ‘unusual risk’ clients.
Chris Morgan, lead financial adviser for Compass Independent and Unusual Risks Mortgage & Insurance Services, called his own company ‘Unusual Risks’ “because this was a good way to show we can help people with complicated medical situations”, he says.
“Unusual Risks is a business focused on helping people with difficult medical conditions, such as HIV, hepatitis, T-lymphotropic virus type one and tuberculosis.”
Mr Morgan says the industry has had a shady history of “excluding certain groups of people. It has improved a great deal in areas such as lesbian, gay, bisexual and transgender (LGBT) and insuring HIV-positive people.”
According to Ms Thomson, improvements to the underwriting and pricing processes mean clients with health issues are being accepted faster than they were several years ago.
She says: “This is down to initiatives such as tele-underwriting and better online questioning at the application stage, meaning fewer GP reports and medicals are now needed.”
For example, in April this year, Willis Towers Watson developed a piece of technology called the PulseModel, which uses predictive analysis to forecast the effect of pre-existing conditions on an individual and calculate mortality patterns.
It also incorporates risk factors such as smoking, blood glucose, the body mass index and the period since the prospective client’s last diagnosis.
It can then predict whether a person is more likely to develop certain conditions, when, and what their likely age at death will be.
According to Matthew Edwards, head of mortality and longevity in the life insurance practice at Willis Towers Watson, this can be used to help insurers price premiums more easily, calculate liabilities and manage risk.
This will also mean insurers do not have to over-price products to compensate for potential risk, which could lead to slightly reduced premiums for those people deemed to be unusually risky.
