Will Using E-Cigarettes Affect Your Insurance Rates?

New studies and reviews are being conducted on e-cigarettes and their effects almost daily, however, most reports are unable to deny the simple fact that e-cigs are far healthier for users than traditional cigarettes. The vapor inhaled when a user takes a puff of an e-cigarette is not only free of the smoke and tar that accompanies traditional smoking, but the vapor also does not carry the cancer causing carcinogens that you find in traditional tobacco smoke.

With such an obvious difference in the effect on a user’s health, it seems a given that being a user of e-cigarettes would not hold the same penalties as a traditional smoker when it comes to insurance. This, however, does not seem to be the case. Being a user of e-cigarettes can potentially send your health, life and long-term care insurance sky-rocketing.

It’s not a surprise that insurance companies do not know how to handle e-cigarettes. They fall into many gray areas as new research is still being conducted and the product is only now beginning to have “long-term users.” Insurance companies are concerned about e-cigarettes being new, controversial and unregulated.

E-cigarettes are relatively new products. They only hit the market in the United States in 2007 and while they have experienced an incredible growth in that short time, they lack the ability to have a measurable track record with only 7 years on the shelves. Despite studies that are beginning to suggest its use as a cessation device, there is not enough to provide the support for a change in the underwriting approach. Health officials and organizations still have questions the long-term effects of vaping.

Another issue for insurance companies is the fact that they are a controversial device. The debate rages daily on the pros and cons of e-cigarettes. Proponents call e-cigarettes a healthier alternative to smoking and an effective smoking cessation tool. Opponents however feel that e-cigarettes could encourage nicotine as an entry-level drug for teens and adolescents.

Perhaps the most difficult challenge for insurance underwriters is that e-cigarettes are currently unregulated. The FDA is beginning to consider expanding their tobacco authority to regulate e-cigarettes, opening the door to taxing them. In addition the Centers for Medicare and Medicaid Services is considering whether health insurers can levy an up to 50 percent tobacco surcharge on e-cig users who buy Affordable Healthcare exchange plans.

With e-cigarettes being new, controversial and unregulated it seems that until more is researched and discovered, e-cigarettes will be unfairly compared with combustible tobacco products. Greg Conley, president of the American Vaping Association, a New Jersey-based nonprofit e-cigarette advocacy group. He says insurers unfairly lump “vapers” with smokers.

Conley, who quit smoking cigarettes four years ago by switching to e-cigarettes, went on to question the insurance companies methods. “A lot of the insurance applications say, ‘Do you use tobacco products?' I think that 90-plus percent of former cigarette smokers who have quit with e-cigarettes and no longer use tobacco are going to mark ‘no.' The problem is, they may end up testing positive for nicotine, which is what the insurance company uses to make a tobacco determination.”

Prudential Insurance Company is one of the only ones that allows non-smoker rates for e-cigarettes users. Tom Farrell, vice president of life underwriting for Prudential, says life underwriting is changing as we learn more about the benefits and risks of e-cigarettes.

Farrell says, “Much the way users of alternate forms of tobacco and/or nicotine products such as pipes, cigars and nicotine gum are considered, ongoing studies and regulations will help determine the best approach to underwriting e-cigarette users.”

Other insurance companies, however, don’t seem to be willing to consider the new and ever changing research. Almost 90 percent of 151 life underwriters said they consider an e-cigarette user a smoker, according to a May 2014 survey by Munich American Reassurance Co.

The FDA has called for a workshop to be held December 2014 to address the needs for regulation of the e-cigarette business. As decisions are made and regulations are put in place it seems likely that insurance companies will be able to formulate more realistic terms for e-cigarettes users.

However, Mike Woods from Pinney Insurance in California, doubts that the inevitable FDA regulations on e-cigarettes will have any immediate impact on insurance underwriting. “It will matter, but it's not necessarily going to change their mind,” he says. “The long-term effect of vaping is not yet known. When in doubt, be on the conservative side.”

With insurance companies remaining conservative, you can expect to be treated just like a smoker even if you are a vaper. With regulations looming, it feels like this is just something to get user to. With the World Health Organization’s call for a ban on indoor e-cigarette use and the recently released study from the Center for Disease and Prevention noting a three-fold increase in youth e-cigarette use, it seems e-cigarettes are headed for heavy regulation. This could hurt the business, and make it more difficult, and expensive, for users to obtain these devices that in the end can improve health benefits for smokers or be used a cessation devices. Regulation could easily impede the progress and slowly negate all the positive benefits that e-cigarettes allow.

Despite the opponent’s of e-cigarettes claims, there is plenty of evidence to support the positive benefits of vaping. A recent study published by the Society for the Study of Addiction proposed that smokers who used e-cigarettes were significantly more likely to report success with quitting than those that went cold turkey. Researchers at the University College of London also note the positive benefits, even with e-cigarettes just as a replacement for regular cigarettes. They suggest that thousands of lives could be saved with an overall shift away from smoking to e-cigarette vaping.

As e-cigarettes travel in uncharted waters, it is easy to understand why businesses and companies don’t know how to respond. While it seems unlikely that insurance companies will adapt their policies to reflect the difference between e-cigarettes and traditional tobacco smoking methods, some like Prudential Insurance Company, remain flexible and able to adapt to the realities of e-cigarette usage. We can but hope that regulation remains minimal, and businesses and insurance companies can properly react to the reality of the benefits of e-cigarettes.

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