Insights

14th July 2023

Following National Friendly’s discussion last month on a fresh approach to underwriting, National Friendly sat down with Jake Watts, Disability & Development Underwriter, to learn more about underwriting diabetes.

What obstacles do people with diabetes face when trying to get income protection?

There are many factors that could hinder people with type 2 diabetes getting income protection: Reinsurance agreements and the extra pricing or rating they’d have to add means the provider would have to break the maximum limit they can offer terms at. This could significantly impact the customer as it’s likely to mean that the cost of the cover is above the customer’s budget. Some insurers may not be able to offer terms if they feel the customer doesn’t meet the criteria of what they call “typically insurable”. This means a customer with diabetes needs to demonstrate they manage their condition well and these are measured by things like HbA1c or a history of retinopathy.

Why is diabetes an important topic within underwriting?

The number of people with diabetes in the UK is over 4.8 million, and in the UK it’s estimated to rise to 5.3 million by 2025 (Diabetes UK, 2022). This means that there is a vast and growing population who may struggle to get cover. One of the main things we strive for at National Friendly is fairness and inclusivity, and we believe some cover is better than none.

When you look at the number of people with diabetes, it means that the amount of data we have access to is larger than for many other conditions. This means we can be proactive and evolve our approach to how we underwrite diabetes more efficiently and effectively. We want to offer the best terms we can to all our potential members. When we look back in 5 years’ time we want to be able demonstrate we’ve made significant changes to the way we underwrite people with diabetes.

Do you think that we’ll reach a point where diabetics can have cover at standard rates (or your existing premium loadings will improve)?

The terms being offered to people with chronic conditions is always changing. With improving medication, enhanced technologies for monitoring and keeping symptoms under control, customers are developing a better understanding of their condition and how to manage it. It’s hard to say if terms will ever be offered at “standard rates”, but if we compare how the insurance industry was five years ago, we are certainly making progress. Diabetes, especially type 1, can attract a higher prevalence of auto-immune and cardiovascular risks. However, as we get older these risks do fade, and it is not unheard of to offer standard rates to older lives with type 2 diabetes applying for life insurance.

What changes could be made to improve the terms offered to diabetics?

One facet the industry could improve is the approach to diabetes on an individual case by case basis. Regularly, insurers will paint all cases with the same brush which, while providing a degree of consistency, doesn’t effectively consider the person behind the application, and appreciate that everyone is different. Applying this ‘one size fits’ all approach can often result in terms being offered that may not always be the most appropriate to the individual, the best suited, or even fair. That’s why at National Friendly we adopt a more human, personal touch, which is assessing each case on its own merits to match the exact risk profile of the individual.

How does National Friendly compare to the rest of the market in its approach to diabetes?

As well as the individual consideration for each member, we don’t require any medical evidence upfront for type 2 diabetics when someone applies for income protection. This approach means customers with diabetes could get income protection cover immediately. Diabetes is a serious medical condition and it can result in someone needing time off work at some point in their life, but the condition shouldn’t be used as a reason not to process applications in a timely manner or offer fair terms.

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