Obesity to Erode Life Insurance Profits

Bulging waistlines are set to weigh on life insurers' profits, a Swiss Re study showed as obesity gains on smoking as the leading cause of preventable death, particularly in the United States.

Fatty foods and a lack of physical exercise mean the number of overweight people in developed countries has risen three-fold over the last 30 years, raising the risk of an early death and swelling the cost of tackling diseases related to obesity.

"If left unchecked, it will have negative consequences for adult health and mortality in the future," said the study by researchers at the world's largest life and health reinsurer.

Obesity is associated with heart diseases, diabetes and some types of cancers and is linked to premature death. The study said an obese 40-year-old, even if he did not smoke, could die six to eight years earlier than otherwise expected.

Higher mortality would hurt insurers' profits from existing life policies where they can no longer increase premiums or adjust terms.

"Obesity presents the greatest threat to (existing) business where margins are tightly squeezed due to competitive factors and insurers are unable to raise rates," the study said.

For new policies, growing obesity was less likely to be a problem if the risk could be assessed and rates set accordingly, it said, suggesting that somebody looking to buy life insurance might have to be screened for the risk of becoming obese.

Swiss Re called for action to change government and consumer attitudes toward tackling obesity.

The United States leads the obesity league tables, with nearly one in three people overweight, Swiss Re said. The number of obese children there aged six to 11 has doubled over the past 20 years.

The study said research suggested that as developing countries got richer, obesity would become an issue there too.