Understanding 'safe' alcohol consumption and what that could mean for insurance applications

Alcohol use is a continuing public health issue both in Australia and overseas, with health services being stretched due to preventable alcohol-related disease and injury. According to a 2014 World Health Organisation report, Australia is in the second-highest band of alcohol consumption, equating to a per capita consumption rate of between 10 and 12.4 litres of pure alcohol per year. That is, over 10 litres of pure alcohol per year each. In reality, this means that some people are drinking far more than that, while others aren't drinking any. 

After tobacco, alcohol causes the most preventable deaths per year - the latest report from the Foundation for Alcohol Research and Education (FARE), Risky Business (2016), says alcohol directly or indirectly causes 5,500 deaths and 157,000 hospitalisations every year. Amazingly, this equates to fifteen deaths per day from preventable alcohol-related causes. 

Alcohol, while clearly being a major health risk, is now being understood to be less safe than we would like it to be or previously thought, possibly causing a flow-on impact on underwriting and premiums in the future as our understanding of drinking behaviour and the consequences develops. 

It's possible that any disclosure of alcohol consumption at the application phase and beyond could be considered an extra risk, and the question has been raised: should those who don't drink be treated differently to those who do by risk insurers? Will this change in future?

Currently in Australia, alcohol intake is requested on application forms, and any signs of excessive drinking or alcohol-related disease are considered during underwriting. A medical examination may reveal such conditions, but often, alcohol-related issues can go undetected by insurers. This makes alcohol use and abuse a tricky topic to address with any real certainty. 

It works out that if you drink more than two or three standard drinks per day, premiums may be affected. The accepted level of drinking in Australia is 14 alcohol units per week for men and women, with one standard drink containing 10 grams of alcohol (one standard drink). The premium loading estimate for at-risk drinkers is between 50 and 200 per cent (NobleOak, 2015), but heavy drinkers may be denied cover, since the risks are high of something going terribly wrong, either by misadventure or disease. 

Previously, studies suggested that moderate alcohol consumption was actually good for us, however links are emerging between alcohol consumption and cancers and diseases of the gastrointestinal, nervous and cardiovascular systems. The benefits, it seems, only have their effect on women over 55 - a small percentage of the population - and while that is very interesting (why this group specifically?), it leaves a lot of folks out. 

Some of the main issues with reclassifying drinking behaviour as 'risky' is that risky drinking varies between people (body weight, lifestyle, individual metabolism, capacity for stupidity), and problem drinkers actually drink a lot more than everyone else. Most people generally drink below the threshold.

Heavy drinkers consume the majority of the booze, and wouldn't fit into the acceptable drinking profile anyway, by many standard drinks. So, it seems that we'd have the same premiums as before most of the time - heavy drinking is still classified correctly, as are low-level drinkers. It's the ones somewhere in the middle that could face some (unexpected) premium issues. 

Other issues with measuring and making judgement calls on drinking include the inability of underwriters to truly measure true drinking habits, since most people still only have their single-drink amounts to go by: if you go to a party, you can (probably) count how many glasses or bottles you consume, but it's hard to know just how many standard drinks are in each one, especially with wobbly pours. This remains a problem for everyone, not just insurers (the number of times drink drivers have said, "But I only had two drinks officer!"...) 

Nobody really understands the standard drink mathematics with any great certainty (despite public health campaigns to educate us), so problematically, some studied estimates regarding alcohol disclosure on insurance application forms put the missing drinks at 40 per cent. This could tip someone over the edge (on paper) of being a riskier investment, and highlights the importance of diversity in questioning regarding drinking habits and health to get a better idea of how someone uses alcohol and the impact this has on their health outcomes. Using negative alcohol-related consequences can be useful, including driving records and previous health incidents. 

Alcohol questioning changes with research, however that doesn't necessarily mean an increase in premiums or new classifications for applicants, at least at this stage in Australiqa. The UK has a proposal underway currently to drop the 'safe' limit to 14 units of alcohol per week, with several dry days between, which is estimated to be worth a whopping three per cent change in lifetime risk of alcohol-related death from four per cent to one per cent.

This is lower than current Australian guidelines released in 2009 stating that drinking no more than two standard drinks (20 grams of alcohol) on any given day for both genders reduces lifetime risk, and drinking no more than four standard drinks on any one occasion reduces the risk of alcohol-related injuries on that particular occasion. At no point do Australian guidelines recommend having dry days. 

With changing legislation overseas, Australian insurers have an opportunity to review questioning and relevant alcohol-related research based on what other countries are doing, and possibly do some revisions of their own. Alcohol use is getting less and less user-friendly in this country in a plethora of ways, and it is only a matter of time - despite the lucrative tax revenue - before regulations and guidelines are updated to reflect the truth of the matter. That is, Australian drinking is a major public health problem.