Jet-declining severe obesity is costing life insurance carriers business

This is an exciting time to be in the life insurance industry. Data-driven insights and leading-edge innovations are empowering significant transformation in risk assessment. And the big-picture thinkers at Milliman IntelliScript love to study all this new data and share our findings with you.

We recently dug deep into body mass index (BMI) and mortality and discovered some surprising insights. In our webinar, Revealing the insurable market in severe obesity: new research challenges the status quo, Sue Bartholf, Kimberly Sapre, and Emily Simons presented compelling data that could reshape how you assess risk and issue policies to individuals with severe obesity.

Obesity is epidemic among your customer base—and rising

Obesity rates in the United States have doubled since the 1980s, with nearly 75% of adults now classified as overweight or obese. Within this group, 9% suffer from severe (morbid) obesity. Its prevalence has been steadily increasing, and projections suggest that by 2031, one in four Americans will have severe obesity.

We took a live poll of our audience during the webinar, and 98% said they jet-decline or steeply rate applicants with BMI categorized as severe obesity. That’s a lot of uncovered Americans—and a lot of lost business, now and in the foreseeable future.

BMI is a flawed metric for risk assessment

BMI has long been used as a quick and easy metric for assessing obesity. But we’ve all come to realize that it’s not a reliable measure of body fat and doesn’t account for factors such as muscle mass or distribution of fat. Despite its widespread use, BMI was never intended to be a sole metric for risk assessment; it lacks the precision needed for modern medical evaluations. So we’ve been using a flawed metric to inform our risk decisions, but on top of that, we’re making broad assumptions about mortality based on it—to the point that we are categorically declining a large swath of the population.

Mortality is all about comorbidities

Obesity is a known risk factor for several chronic diseases, including heart disease, diabetes, stroke, and certain cancers. These comorbidities significantly impact mortality rates. For instance, individuals with severe obesity are seven times more likely to develop endometrial cancer and five times more likely to develop esophageal cancer. But it’s the presence of these comorbidities, rather than obesity alone, that drives higher mortality rates.

Our research leverages extensive medical data to provide a more nuanced understanding of the risks associated with severe obesity. We found that the aggregate relative mortality for individuals with severe obesity is 190%. But when comorbidities such as heart disease, diabetes, cancer, and stroke are accounted for, the relative mortality for those without these conditions drops to just above average.

The key to unlocking the insurable market in severe obesity lies in predictive modeling. Irix Risk Score uses a sophisticated model that incorporates thousands and thousands of data points to predict mortality with proven, durable accuracy. This model can stratify risks more effectively than BMI alone, identifying low-risk individuals within the severe obesity population. For example, applicants with severe obesity but no comorbidities have better-than-average mortality, while those with multiple comorbidities have very high relative mortality.

You can confidently underwrite millions of Americans with severe obesity

This research opens the door for life insurance companies to issue policies to a broader segment of the population without taking on additional risk. By using data-driven tools to assess individual risk profiles, insurers can confidently offer coverage to millions of Americans with severe obesity. This approach not only expands the market but also ensures that policies are priced accurately, reflecting the true risk of each applicant.

The integration of advanced data analytics and predictive modeling in underwriting practices marks a significant step forward for the insurance industry. It allows for a more inclusive approach, providing coverage to those previously deemed uninsurable and fostering growth in the life insurance market.

For more insights and a full review of the mortality findings, watch the on-demand webinar and meet the research team.