Why Covid-19 and Vaccination Status Need to be Considered by Insurers



Life and health insurers will need to follow the science and consider any extra risk associated with covering those who are not vaccinated against Covid-19, says Partners Life Managing Director Naomi Ballantyne.


Our world of personal insurances is based on the wellbeing and longevity of New Zealanders, meaning our industry is heavily based on both medical science and statistical evidence.

To be able to offer our coverages to help people when unexpected and significant health issues interrupt their day-to-day lives, we must understand the likely incidence of that outcome occurring from all possible health conditions, the likely duration of that health impact, and the likely costs of any treatment, so we can estimate the likely claimable amounts over the lifetime of each policy.

We must do this for every client we insure, and then we are able to calculate how much we should charge clients to meet both their estimated claims requirements and our own profit needs.

We design our products based on emerging medical science – what diagnostic tools are available, what types of diseases/disorders they are identifying, how early these conditions can be treated, how effective the emerging treatments are, etc.

This information helps us understand the medical conditions that are most likely to significantly interrupt the lives of our clients, so we can design products to cover those needs.

Naomi Ballantyne, Managing Director, Partners Life
Naomi Ballantyne, Managing Director, Partners Life.

Over the centuries since our industry began, we have seen major shifts in the causes of death and disablement as medical science has advanced and nutrition and lifestyles have improved.

A significant component of this improvement in health outcomes was the advent of vaccines. Many of the diseases that once caused mass death – such as smallpox, polio, tuberculosis and influenza – have been eliminated (or virtually eliminated) by widespread vaccination.

The technology of vaccines has been evolving and advancing for many years, all to the overall betterment of life expectancies. We see the development of Covid-19 vaccines as simply the next step in this development, and we trust in the long-established medical science behind it.

We design our products based on emerging medical science…

We understand that there are very small risks of harm in some individuals in reaction to the vaccine, which is true for all vaccines. But in terms of the statistical likelihood of this occurring, there are enormous quantities of data available to us from our global reinsurers. The data tells us there is no statistically significant risk to claims incidence or duration rates arising from complications of Covid-19 vaccinations.

The same global data demonstrates statistically significant medical complication rates arising from infection with Covid-19 (and variants) in those who do not have any immunity to the virus through vaccination or previous infection.

This is true to such a disproportionate extent that most infections, hospitalisations, and deaths are occurring within this uninoculated population – now a substantially smaller population than the vaccinated population in New Zealand. (As of the time of writing, 67% of eligible New Zealanders had received two vaccine doses and 85% had received at least one.)

From an insurance risk assessment perspective, life insurers globally have started to include Covid-19 vaccination status in their underwriting considerations for new applications, and more specifically in conjunction with other pre-existing health conditions which are proven likely to be substantially more damaging to health if a Covid-19 (and variants) infection is then layered on top.

…insurers globally have started to include Covid-19 vaccination status in their underwriting considerations

In other words, pre-existing issues such as diabetes, heart disease, kidney disease etc are much more likely to result in a claimable outcome if the client is not vaccinated and subsequently contracts Covid-19 (or variants), compared with our normal claim estimations

New policies

These underwriting considerations only apply to new client applications, and do not affect our existing clients in any way or trigger the need for them to be re-underwritten depending on their vaccination status.

To avoid all clients having to pay increased premiums to address this Covid-related increased claims risk, life insurers have several options:

  • They can price differently for vaccinated applicants versus unvaccinated applicants to reflect the different risk profiles
  • They can apply specific exclusions to unvaccinated lives to avoid the increased claims risk arising from potential Covid-19 (and variants) infection
  • They can decline to offer cover altogether if they believe a combination of pre-existing health conditions and the unvaccinated status of an applicant would give rise to an unquantifiable increased risk of claims

This application of medical science and globally significant statistical data in determining the health risk of Covid-19 (and variants) is neither opinion-based nor politically motivated.

Life insurers can only provide sustainable protection to their clients if they can quantify and price the risk presented to them. Applicants are assessed based on their likely exposure to claims over the lifetime of their policies.

What science and statistics demonstrate is that people who choose not to vaccinate themselves against Covid-19 (and variants) are exposed to an increased risk of significant health impacts compared to the vaccinated population.

Those people have made a personal decision to accept this increased risk. Likewise, life insurers have a decision to make about whether and how they might accept and accommodate this increased risk.