Vaping: A look at the health effects and insurance  implications  of Vaping

Thank you to Kathryn Jones for her research assistance with this article.

The rise in vaping-related deaths and illnesses has ushered in a new awareness of the negative effects of electronic cigarettes or “e-cigarettes.”

Entering the market in the early 2000s, e-cigarettes gained global traction in 2014 and have steadily risen in popularity.  Earlier this year, several people were hospitalized with a mysterious lung illness attributed to vaping and e-cigarettes. Since then, the numbers have risen steadily with the CDC reporting 805 confirmed cases of lung injury related to vaping. At the time of this article, 17 people have died due to vape-related illness. As a result of this, President Trump has pushed for a ban on certain flavored e-cigarette pods and cartridges. States have followed suit, calling for a temporary ban on these products.  Although commonly viewed as a safer alternative to traditional cigarettes, we are now seeing some of the health consequences, and as more is understood about e-cigarettes, vaping, and Juul-ing”, we can expect changes in the health and life insurance industry.

By way of background, according to a recent report by the Center for Disease Control (CDC), conventional tobacco use has declined significantly among youth and young adults. However, e-cigarettes have been on the rise and offer a new, arguably trendier way to consume nicotine. The use of e-cigarettes is often referred to as vaping based on the mechanism used to deliver the nicotine into the body. E-cigarettes produce an aerosol by heating a liquid that usually contains nicotine, flavorings, and other chemicals that help to make the aerosol which users then inhale. Although e-cigarettes come in a variety of shapes, each contains a heating element and place to hold liquid. Juul has become one of the most popular vaping products on the market and the company at the center of this ban. When the company Juul emerged in commerce in 2017, it gained traction through its discreet shape and size as well as its flavor options. Juul pods, the liquid that is turned into vapor, come in flavors that often appeal to young users like mango, crème brulee and watermelon. Though originally marketed as the safer option to conventional cigarette use and a helpful means to quitting cigarettes, new companies like Juul have pounced on the opportunity to appeal to new customers, namely teens. A CDC survey from 2017 reported that nearly seven million people over the age of 18 use e-cigarettes. Another report exposed that an estimated 2.1 million middle school and high school students reported using e-cigarettes in 2017 and 3.6 million reported use in 2018.

The tie in…

In 2016, the FDA finalized a rule deeming e-cigarettes to be products meeting the statutory definition of “tobacco products”, thus bringing them under the purview of the FDA’s control. The “deeming rule” as it is known, thus adds e-cigarettes to the list of tobacco products that insurance companies consider when providing health and life insurance coverage. Because tobacco usage has been linked with increased likelihood of disease and death, insurance companies often charge higher premiums to smokers versus non-smokers. These upcharges can vary but companies generally have the ability under the Affordable Care Act to charge up to 50% more in premiums for smokers. However, under the ACA, states also have the ability to reduce or eliminate altogether inflated premiums for smokers. Several states opted to eliminate higher premiums for smokers years ago. While vaping can affect individual’s insurance policies, the new illnesses, deaths and bans can affect a business’ insurance policy.

The individuals and the families affected by the recent spur of vape-related injuries have begun lawsuits aimed at several players. One such lawsuit has been directed at Juul and other manufacturers while others have filed against individual smoke shops. As for product liability insurance, many insurers are wary of providing coverage for e-cigarettes because of the lack of consensus and information in the medical community about their safety. Many carriers utilize different exclusions in order to narrow coverage. Health hazard exclusions are the most common. One type of health hazard exclusion for tobacco products excludes “bodily injury” including but not limited to the actual or alleged emergence, contraction or exacerbation of virtually any type of cancer or pre-cancerous condition, heart disease, arteriosclerosis, emphysema or any other lung-related disease, or any other disease; caused by, resulting from, arising out of the use, consumption ingestion, inhalation, absorption of, contact with, or exposure to tobacco, any product containing tobacco or any product used with or related to the use of tobacco. They may also exclude other metabolic effects of “tobacco products or tobacco byproducts” use, including shortness of breath, low resistance to infection or disease, psychological or mental injury or addiction.  By narrowing coverage, insurers are safeguarding against paying out millions to injured parties.

Some insurers have met the demand for vape-specific insurance coverage. One such carrier offers vape and e-cigarette shop insurance that notably does not include health hazard exclusions. Another insurer offering an exclusive e-cigarette and vape store program offers low minimum premiums as well as no full battery exclusions. These programs offer coverage for a range of classes, including: distributors, wholesalers, importers/blenders, retailers, e-liquids & e-juices, e-cig devices & accessories, private labels, and smoke & vape retail shops. For manufacturers and shops, general liability insurance is key, especially as the number of vape related illnesses rise and as some e-cigarettes malfunction. In a study published last year, it was found that over 2,000 e-cigarette explosion and burn injuries sent users to US hospital emergency rooms from 2015 to 2017. One of the complaints filed against e-cigarette manufacturer Juul lists at least two claims of product liability manufacturing defects and negligence. As lawsuits against vape shop owners rise, insurance that covers health hazards may be the key to keep these owners in business. As several news outlets have reported, mom and pop smoke shops all around the country are already bracing for impact due to the proposed ban and possible lawsuits.

Add: more on ban, CDC findings on the outbreak, how a parent could bring a claim if child is sick from vaping especially because they would have been smoking illegally, notes about fraud and lying about smoking (weed smokers shouldn’t lie even if they live in a state where it is illegal because HIPAA will protect their information)

Early research into these deaths and illnesses show a possible link to the vaping of marijuana products. Several states have legalized medicinal and recreational marijuana, but because it is still federally illegal, the FDA has no control over the manufacturer of cannabis products, particularly vape cartridges. According to PBS, eighty percent of the 148 underwriters who were surveyed by reinsurer Munich Re at the Association of Home Office Underwriters annual conference in 2015 said their company factors marijuana use into its decisions on how to price policies and whether to offer coverage. This does not mean that marijuana users will be denied coverage or automatically be offered smoker policies. In fact, 29% of those surveyed indicated they view marijuana users as nonsmokers. Insurance companies ask questions about marijuana usage as they would about alcohol consumption or tobacco use. Life insurers are less concerned with the legality of the substance as they are with the long term effects on an individual’s health. Some sources indicate that using cannabis and using alcohol are underwritten similarly due to long term effects.