Insurance: solving some alcohol problems and causing others

Insurance cover is often taken out for risks that are related to problem drinking. Examples include death, illness, criminal behaviour, accidents (on the road and otherwise) and fire.

Insurance can sometimes pay for treatment for the effect of alcohol misuse. It can help to meet the cost of alcohol-related harm. Sometimes the insured may be encouraged to avoid alcohol problems by risk management procedures required by the insurer or by the prospect of paying higher premiums if those procedures are not adopted.

Often alcohol-related risks may be excluded from the scope of the cover. Sometimes the non-payment of an insurance claim is an alcohol problem in its own right. Non disclosure of (among other things) problem drinking by the person applying for cover (‘the proposer’) may invalidate the insurance. Insurance can also be problematic when it contributes to dangerous behaviour by protecting people from the consequences, as when an alcoholic makes a suicide attempt believing that his family will be able to claim on his insurance.

Alcohol problems are studied within the scientific community. Addiction professionals, including doctors and counsellors, help their patients and clients to face up to their problems. In the insurance industry, alcohol-related risk is an issue for medical staff and risk management professionals. The insurance regulator, the Financial Services Authority, has focused on the mis-selling of, for instance, insurance against critical illness where customers are not given appropriate advice about making full medical declarations. Problem drinking is one of the main conditions which people do not disclose adequately when taking out insurance.

A new paper published by the Institute of Alcohol Studies considers the common ground between the scientific, medical and insurance perspectives and the scope for co-operation in future research and initiatives in addressing problem drinking.

Insurance: solving some alcohol problems and causing others Jonathan Goodliffe
IAS Occasional Paper 2007