Cicero Policy Briefer

Issue 13, June 2007

Taking Risks:
why the insurance industry needs to rethink its attitude towards HIV

By Johanna Gornitzki, Editor, COVER magazine

Insurance is all about risk, there is no doubt about that. Saying that, though, and with the risk of sounding like Naomi Klein, where should a firm’s attention to risk end and when should the corporate social responsibilities of a company come into effect?

That question is pivotal when it comes to HIV and insurance. For decades, the way insurers have treated people with HIV and individuals associated as being at high-risk of contracting the virus has been a thorny issue.

When the virus was discovered in the early ‘80s, it was initially thought to be a disease only affecting the gay community, hence HIV was originally dubbed Gay-Related Immune Deficiency. While this is no longer the case, there are still a lot of misconceptions and myths surrounding the illness, and the insurance industry, alongside many other parts of the society, is to a large extent keeping these fabricated stories alive by taking a conservative stance on the issue.

Many industry experts would probably disagree with this, saying that the sector recently took a giant leap forward when, in 2005, the Association of British Insurers implemented its new Statement of Best Practice on HIV and Insurance—finally ruling that the practice whereby an insurer can ask a prospective policy holder about their sexuality would no longer be acceptable.

But, while the practice of insurers discriminating against a person due to their sexuality has now been eradicated—an issue that for years completely took over the HIV and insurance debate—for people living with HIV, the door to the world of protection insurance remains firmly shut.

At present, none of the major UK providers provide any life insurance or critical illness insurance to people with HIV, despite the former often being a ‘must have’ when taking out a mortgage. Another form of insurance, income protection, is only provided to policy holders who took out a policy before contracting the virus, and, typically, only if the virus was caught through certain types of profession (as long as the individual took reasonable precautions), through blood transfusion or through physical assault.

So, why is it so difficult to obtain cover for HIV? Is it because the virus is seen as being so ‘aggressive’? Judging by recent research, this does not seem to be the case. According to several studies, it may no longer be justifiable to label HIV as anything else than a manageable, chronic disease. For example, a 2003 study from Switzerland, published in The Lancet, found that people with HIV should be able to obtain life insurance in the same way as successfully treated cancer patients. The authors concluded that successfully treated HIV positive and hepatitis C negative patients have a short-term mortality as low as, or lower than that of, patients with cancer who have been successfully treated—who are able to obtain life insurance—and argued that “this study provides preliminary actuarial evidence that life coverage could be considered under specific conditions”.

Another study from France, published in 2005, suggested that people with HIV who maintained good immune function on anti-HIV treatment (a CD4 cell count of over 500 cells/mm3) had a death rate that was not significantly greater than the general HIV negative population and could live a more or less normal life span.

With these findings in mind, one would think underwriting HIV should not cause a major problem for the insurance industry. However, due to the fact that HIV/Aids is a relatively new disease in comparison to other critical illnesses, such as cancer, it has proven difficult for the sector to predict the long-term impact the disease would have on premiums. Accurate statistics have also been hard to come by as the risk pool is very small. Moreover, there is no information on the long-term effects new anti-HIV drugs will have on people’s lifespans. Without these vital statistics, the risk involved when underwriting HIV is hard to measure and, because of this, the insurance industry feels it has no other choice than to decline cover.

But, while this may be the case in the UK, things have progressed a lot further in other countries. The Life Offices’ Association in South Africa announced at the end of March this year that its members (29 insurers), as of 1 April 2007, will no longer apply existing HIV/Aids exclusions to life and disability policies. As a result, no claim for a lump sum death or disability benefit will be denied by any of these insurers based on the HIV/Aids status of the insured person, unless the policy holder is found guilty of non-disclosure. Aids Law Project, an organisation in Africa that works exclusively to promote equal rights and justice for people with HIV, described the move as “totally groundbreaking, and one of the biggest moves the life insurance industry has ever made”.

In the US, things have also begun to move forward after a discrimination complaint was filed against a life insurance company that refused to sell insurance to a man with HIV. The Human Rights Commission filed a complaint in the beginning of May this year against Farmers New World Life Insurance Company of Mercer Island after it was found that it had declined Gerald Herbert, a civil rights advocate, the opportunity to buy mortgage life insurance. The case is still undergoing but is likely to cause a stir in the world of insurance should the claimant win the case.

With insurers in other parts of the world beginning to take a fresh approach to HIV and insurance, it is high time that the UK market should try to catch up. Sure, risk is an all-important factor when insuring people; but so is showing people that insurers take their social responsibility seriously too. Keeping abreast of new medical advances, especially ones which effectively change the level of risk a disease is associated with, is certainly key for the latter to ring true; if this does not happen, the ‘fair discrimination’ mantra currently used by the insurance industry could be labelled as something quite different.

Johanna Gornitzki is the editor of COVER magazine and can be contacted here.