Ask an Expert: How do OH&S improvements influence life insurance underwriting and risk classification?

Improvements in occupational health and safety (OH&S) certainly do help to support the accessibility of life insurance products to a broader customer base.

While any OH&S improvements are positive, claims experience (or mortality and morbidity data) will always be the primary determining factor for an insurer when it comes to the availability and pricing of life insurance products for an occupation.

The adoption and use of OH&S initiatives should lead to improved claims experience, which then results in lower premiums.

In the Australian life insurance market, it would be very rare to refuse a person access to life insurance, let alone an accident only benefit, based on their occupation. Of course, per mille loadings or exclusions (for professional sportspeople such as motor racing) may be required. 

There will be instances where a more detailed underwriting consideration is warranted and further information is necessary. 

• reliance on the individual to adopt all required OH&S practises consistently is expected
• length of time in the role
• qualifications
• experience, and
• no past incidents 

The above assist in risk-profiling an individual to a point that will (hopefully) allay any concerns the underwriter may have and enable an offer of the best possible terms. 

The speed at which automation is implemented across companies and industries is not consistent and comes at a cost, particularly for smaller businesses. There are also self-employed individuals working in high-risk roles offering their services, so there will likely always be a high-risk classification.

If we consider the mining industry for a moment, some years ago underground workers were not insurable for a number of life insurance benefits.

This has changed and OH&S initiatives plus positive claims experience have assisted in broadening the range of available life insurance benefits to some of these workers.

My response to this question is my own personal view and not necessarily the view of my employer.

Attributable to John O’Leary, Underwriting Quality & Training Consultant.

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