Life insurance is all about risk assessment, and underwriters have grown quite good at it over the course of the last several decades. However, certain new realities have cropped up in recent years that may require these companies to significantly reevaluate the ways they insure people based on some of their chosen activities, especially in light of shifting legislation around certain types of drugs.
One such issue coming to the fore late in 2018 is the way in which people who carry the drug naloxone - also known as Narcan - may be denied life insurance coverage outright. According to Boston public radio station WBUR, a nurse who works in a Boston hospital's addiction treatment program, recently had a life insurance application rejected because naloxone showed up on a list of drugs in her name which, to her hoped-for insurance provider, was actually a potential indicator that she was an opioid user.
Digging into the facts
This came despite the nurse's claim that she told her life insurance agent about the need for her to carry the drug, which can be administered to save the life of an overdosing patient, the report said. From an insurer's standpoint, the decision to reject the nurse's application sight unseen is understandable to a certain extent, but that might not be the case when dealing with the general public, especially given the current ongoing opioid crisis experienced in many states.
Moreover, it's worth noting that the nurse did not have a prescription for naloxone, but rather purchased it over the counter, which may have complicated the issue for the insurer to which she initially applied for life coverage, the report said. A second life insurer, to which the nurse later applied, also rejected her application but said that if she could get a note from the doctor that prescribed it explaining the issue, it would reconsider. However, in Massachusetts, naloxone is an over-the-counter drug that anyone can buy.
"Now, if a life insurance applicant has a prescription for naloxone, we request more information about its intended use as part of our underwriting process," Keith Hancock, the vice president for corporate communications at the first insurer to which the nurse applied, told WBUR while declining to discuss the individual case in question. "Primerica is supportive of efforts to help turn the tide on the national opioid epidemic."
Dr. Alex Walley, who works at Boston Medical Center and serves as medical director for the Opioid Overdose Prevention Pilot Program at the Massachusetts Department of Public Health, said that the concern among medical professionals around this issue is simple. If people - whether working in the health care field or not - think they will see their insurance costs or eligibility adversely affected by naloxone, they may be less likely to carry the drug and, therefore, less able to save a life in certain situations, Walley told the radio station.
The initial report on the issue attracted the attention of one of Massachusetts' representatives in the U.S. Senate, the radio station later reported. Sen. Ed Markey, the state's junior senator, recently wrote a letter to the National Association of Insurance Commissioners and the American Council of Life Insurers in an effort to better understand the situation and see if there are any potential solutions to the issue of "Good Samaritans" being denied coverage.
Specifically, Markey asked the two life insurance industry organizations how companies generally determine the difference between people who have been prescribed naloxone because they personally are at risk of an overdose versus those who carry it for other reasons, the report said. He also sought clarification on how often insurers are now rejecting applicants on these grounds, and what recourse those people might have to better address the issue.
For its part, the NAIC said it has not seen any evidence this is a widespread issue, but both organizations have pledged to look more closely into the problem, the report said. This comes after U.S. Surgeon General Dr. Jerome Adams made a public plea for anyone who knows someone at risk for opioid overdoses to obtain the drug, just in case.
Why it's so important
Indeed, the entire state of Pennsylvania recently decided to boost the understanding among residents about the risk of opioid addiction and overdoses, according to U.S. News and World Report. The Keystone State leads the nation in O.D. incidents - with almost 5,400 residents dying of one last year alone - and recently tried handing out naloxone for free in an effort to reverse the trend.
Nationwide, there were more than 70,000 deaths resulting from overdose in 2017, of which more than two-thirds stemmed from opioids specifically, the report said. Pennsylvania, being a kind of center for the crisis, has been proactive in distributing naloxone in recent years; it began giving the drug to first responders in late 2014, and since then those professionals have saved more than 20,000 people from dying. In all, the state set aside $5 million in funding for the free overdose kits - available in dozens of locations statewide, with at least one in every county - now being distributed to civilians there.
"People should know that we are all first responders in the opioid epidemic and we must all be equipped to help in any way we can," Wolf said in announcing the move. "Having a naloxone kit in your car or home may mean you can save a life and help someone into recovery."
"1 in 3 major life insurers have created specific guidelines around marijuana use"
These hurdles for potentially millions of Americans come as life insurers broadly acknowledge they may need to do more to allow people to obtain coverage, not set up additional barriers. For instance, in light of changing legislation at the state level across the country, more underwriters may now be reconsidering how (or whether) they insure people who regularly use cannabis products, according to Simple Life Insurance. Currently, about 1 in 3 major life insurers have created specific guidelines for underwriting around marijuana use, which differ from those applied to regular cigarette smokers.
About the same number specifically categorize people who say they smoke marijuana as non-smokers, and a recent study found that about 1 in 6 people who do regularly smoke marijuana have lied about it to get more favorable rates, the report said. Currently, life insurers by and large seem to not have rules specifically related to edible marijuana products versus smoking.
With that in mind, it's important for life insurers to consider several factors when trying to make underwriting decisions about marijuana users, including not only how or how much they use, but whether it's being used for recreational or medicinal purposes. Even if different categories end up being created - siloing regular users off from both non-smokers and smokers, into a third group - that may allow life insurers to continually reach consumers as legalization becomes more widespread. The same logic, then, might need to be applied for those who carry naloxone but are not themselves at risk of an opioid overdose.
In Canada, where marijuana was recently legalized at the federal level, this trend is already underway, according to Insurance Business Canada. As of Oct. 17, Canadians' recreational use of the drug became fully legal, and both life and non-life insurers have been working for some time to react. One insurance broker noted that, in many cases, the specific rules around underwriting were still somewhat ambiguous. But in comparison with just a few years ago, insurers have come a long way from the days when they simply categorized marijuana users as "smokers," and that policies around the drug will likely continue to evolve as time goes on.
For instance, some companies may broadly allow marijuana users to get the non-smokers' rate, but at the same time could compare that fact with other issues - such as depression - when making underwriting decisions or setting premiums for insureds, Business Canada added.
"These companies are in the business of acquiring clients," independent insurance broker Jeff Simmons told the site. "You're trying to acquire young people who are to be in this thing for the long haul. They're trying to acquire clients and this is the best way to keep prices at a level where they can."
The more insurance companies can do to get a better handle on emerging trends in health-related laws at the state and federal levels, the better off they will be when it comes to dealing with consumers overall. Having specific policies in place to deal with carrying naloxone, using marijuana and other issues that might have once been a "red flag" but are gaining more widespread credibility may help them find a broader client base.