Matthew Connell explores how the insurance profession is continuing to offer cover during the Covid-19 pandemic
We are used to hearing reports on the news that markets hate uncertainty – but if there is one group of people that hates uncertainty even more than investors, it is underwriters.
Risk, on the other hand – which can be defined as a possibility that is understood well enough to be quantified – is the lifeblood of underwriting: striking the right balance between making a risk predictable enough to reserve for, without making it so predictable that the risk is no longer worth pooling.
Turning uncertainty into risk can only be done through experience. Our experience of coronavirus is being documented and analysed faster and more thoroughly than any disease in history, but the process of learning is still not fast enough – we still are not doing as much testing as we would like, we still do not know why some groups are more likely to become seriously ill than others, and we still do not have a vaccine or a cure, even though work developing treatments and vaccines is progressing at an unprecedented pace.
All this creates serious dilemmas for insurers. What happens in the period in which knowledge is scarce? Do insurers take unquantifiable risks and hope that their reserves hold? Do they withhold cover until risks can be quantified and, if they do, how do they answer the charge of unfair discrimination in the meantime?
To make the issue even more difficult, insurers operate within a historical context – in which decisions that proved to be an overreaction or underreaction in the past can be used to question their motives and their competence.
One example of this is people living with HIV. According to the Terrence Higgins Trust: “There is currently no evidence that people living with HIV are any more likely to catch Covid-19 than anyone else.” It goes on to say that for those who do contract coronavirus, “those on HIV treatment with a good CD4 [T-cell] count and an undetectable viral load are not considered to have weakened immune systems”. However, those who are not receiving treatment for HIV or who have a detectable viral load could have weakened immune systems and may be at greater risk.
There have been two studies of people in the UK concerning coronavirus and HIV. One estimates that people living with HIV have a 130% risk of dying from coronavirus compared to the general population; the other estimates a 63% raised risk of dying once age and state of health are taken into account. However, both these studies are based on a small number of patients – one based on 25 people and the other based on 115 people.
There is no need to wait for uncertainty to clear to take action to improve outcomes for consumers
Writing the risk
So, what do insurers do under these circumstances? This is a situation where a risk is known and can be described in some detail, but where there is not yet enough data to quantify it accurately.
One response that is simply not an option is to deny access to insurance or increase premiums without empirical evidence. The Equality Act protects people who are under particular risk of discrimination according to nine pre-defined characteristics, one of which is disability. Under the Act, people living with HIV automatically meet the disability definition from the day they are diagnosed. The Equality and Human Rights Commission goes on to explain that insurers are in breach of the Act if they are, “charging a higher premium to people with a protected characteristic or giving them lower benefits or refusing them insurance altogether”.
In addition, the Financial Conduct Authority’s (FCA) approach to culture means that, while it does not expect firms to never make mistakes, it does expect them to be able to demonstrate a culture of working to improve consumer outcomes at all times. As the regulator’s director of supervision – retail and authorisations, Jonathan Davidson, has said, the FCA’s aim is “that mindsets and incentives will shift to make doing the right thing for consumers and the markets the objective that is always considered, and that it trumps all other objectives for everyone in financial services”.
There is a clear need for this mindset of constant improvement in the way insurers interact with people living with HIV. The National Aids Trust (NAT) have often spoken about how there is a widespread perception among people living with HIV that many financial products are not available to them. Putting this mindset of improvement into practice could take several different forms for insurers, including:
- Being more transparent about data. A key message we have often received from charities and consumer bodies is that insurers must be more transparent with consumers about the main factors that have influenced the price they have been quoted, as well as the data used in the assessment of risk.
- Removing barriers to accessing insurance. HIV-specialist insurers tend to have a better understanding of the concerns that people living with HIV may have around provision of information and maintaining confidentiality. For example, some firms sell travel insurance policies that automatically cover HIV and therefore do not require HIV to be declared on any travel documents. Some firms are seeking to remove medical screening entirely from travel insurance products and instead rely on sign-off by the applicant’s medical practitioner. These could be a particularly attractive proposal for people living with HIV, who tend to have considerably more trust in their own specialist physicians.
- Improving signposting to insurance providers who can provide cover or to an appropriate service. One excellent example of this is the Access to Insurance Working Group’s Signposting Agreement, set up under the leadership of the Cabinet Office’s Disability Champion and launched in January 2020. This pledges improved access to protection for those with disabilities or medical conditions, including HIV.
- Giving people from protected groups a greater say in product governance and development. Crucial to combatting self-exclusion is a joint effort from all stakeholders to combat the stigma faced by people living with HIV. HIV stigma can intersect with stigma around sexual identity, race and socioeconomic status. People living with HIV can experience stigma when accessing insurance, at any point throughout the consumer journey. To address this, insurance providers should test products and processes with focus groups of people living with HIV, to ensure they are accessible, non-stigmatising and meet their needs. For example, some practices within the sector can put pressure on people living with HIV to share their status when it has no relevance to their situation, and insurers should explore how this can be better addressed to avoid any unintended consequences.
Because of the stigma attached to HIV, many people living with it tend to have less trust in mainstream services and more trust in HIV-specialist services, where they feel they can be comfortable about sharing their status.
The NAT informs us that when asking focus group participants where they would like to get information about HIV-inclusive financial services, many said from their HIV clinics or HIV voluntary and community organisations. A number of gay men also suggested that HIV-inclusive insurers could advertise in gay dating apps and the LGBT media, as places where they might access and trust this information.
The example of people living with HIV during the coronavirus pandemic shows there is no need to wait for uncertainty to clear to take action to improve outcomes for consumers. As a profession, we can be transparent about how far we have come in our understanding of the issue, and how this impacts on underwriting decisions. We can do more to include everyone in society in the search for better solutions and we can acknowledge those who are leading good practice through signposting. Uncertainty does not ever have to be the signal for inactivity.
130% Risk of dying from coronavirus for people living with HIV
Matthew Connell is director of policy and public affairs of the CII