COVID-19 Vaccines Are Here! Isn't It Time to Open Up Underwriting?!?
This is a question a number of carriers are being asked today. Roughly a year ago with the onset of the pandemic a majority of carriers introduced underwriting restrictions to deal with COVID's potential impact on various age groups, and especially those age 65 and older with comorbid health conditions (see COVID-19! What Have You Done to Underwriting?).
Since then carriers have learned a lot about COVID and its effect on mortality. Discussions with several carriers indicate that their mortality impact is mostly in the 75 and up age groups and with insureds whose policies have been in force for several years.
In addition, effective vaccines have been rolled out to stave off serious illness and made available to those with high risk health conditions and to various age groups, with those in the age 65 plus group being a primary focus.
So it's only logical to ask the question: Can we modify or even get rid of underwriting restrictions implemented last year? And if not for everyone then at least for applicants who have been vaccinated?
Recently, we posed this question to several carriers that Windsor does business with. The overwhelming response? No changes are being considered at this time.
But why? There certainly appear to be sustained tail winds to open things up with a downward trend in both COVID infections and deaths. Why are we holding back? The responses are what you might expect:
- Variants are circulating and we don't know their near term and medium term impact
- For those who have already been infected with the virus, we don't yet know the length of time antibodies will remain to fight off recurrent illness
- For those who received a vaccination, we don't yet know how long the vaccine will be effective, and whether it will fend off other strains of the virus
These certainly are valid reasons to proceed cautiously when considering any substantial changes. But this isn't the whole story. There is another concern that is equally if not more important, though it is not being expressed by the carriers when making public-facing statements. It is the concern of additional regulations being introduced into the underwriting process.
The COVID vaccines being administered today are extremely effective in preventing severe disease. That has to count for something since getting vaccinated has a direct impact upon mortality. But this is where the concern about insurance regulations comes in. The carriers are worried that if they begin triaging applicants on the basis of being vaccinated, they may get drawn into a debate about those who are vaccinated and those who choose not to get vaccinated. This is not a position any life insurance company wants to be in. The companies' apprehension may be compounded further when regulatory bodies begin to weigh in, which has occurred in the past. The life industry is highly regulated, and carriers certainly don't need or want more restrictions coming into play — especially in the underwriting decision-making process.
So what about people who become vaccinated? For the most part, carriers say they will ignore the information whenever they become aware of an applicant having received a vaccine. Should we believe them? Maybe yes, and maybe no.
One of the issues is that people have been getting vaccines on their own, so their personal physicians may not be aware that they received a shot. The results may not appear in medical records unless the patient provides this information to their physician. Another issue is that there is no current application question that specifically asks about the COVID virus or a COVID vaccine, nor are carriers looking to add one. However, there are enough general questions found on a typical Part 2 so that an applicant has an opportunity to voluntarily disclose such information.
Will it hurt for an applicant to disclose a vaccination? No, and I believe an applicant should disclose when they have been vaccinated. The worst that will happen is that the carrier ignores it. However, I believe that if a carrier is on the fence with an underwriting decision, they may consider a vaccination to be a positive factor. They may not expressly say or document that they used it in the decision-making process, but it could be something to sway their opinion in a potentially positive way. Carriers often apply credits when rendering decisions on cases. At minimum, a COVID vaccine should be another credit among any other credits that might be applied.
As it stands today, COVID restrictions will eventually be modified and possibly lifted, but it may take a while. Life insurance professionals are in business to provide financial security to families at a reasonable cost and at a very critical time. The underwriting restrictions that were applied with the pandemic are preventing some people from acquiring coverage they want and need. Hopefully with the progress made with COVID, this will all be behind us soon.
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