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There Is No Last Word on the Subject

There were 49 forestry-related fatalities in British Columbia in 2005. I am not sure of how many forestry people there are out there so it is hard for me to say if that death statistic warrants my concern as a risk taker. There was a time in my early days as a life insurance risk taker that I would rate “loggers” who worked west of the great divide (mainly B.C.) but take those east of the same magical line through the mountains at standard rates. My curiosity then discovered that “loggers” often migrate to where the trees to be cut are and thus our actions as risk takers were deemed foolish. Soon the life insurance industry backed away from charging anything extra and accepted all “loggers” at standard premium rates. The exception remains for those who carry dynamite and such explosives and fiddle with their wicks. Risk takers listened to the criticism and did change. Looking back and forward I am still not sure how many of those forestry related deaths were “loggers” versus “tree huggers” whose amorous enrapture with a tree was at the wrong time.

Where is Ross going with his forestry information? Yes my guidance counsellor in high school suggested I was best suited to either a job on a farm or in the woods but that is not what I am going to write about today. I use the forestry statistic as a mere example of how we as risk takers sometimes over react to numbers since we are in the numbers game — spread my risk and know my risk being the mantra of a good insurer. Today’s issue is not with “loggers” but with “travellers”.

The whole issue of what is a risk beyond the normal or average for a Canadian proposed insured when they travel beyond our borders of Canada has confused and irritated both consumer and the distributor/advisor. Tragic and unforeseen events of the past six years lead to perhaps an irrational overreaction to anyone travelling to other than Niagara Falls or Banff. Countries and cities, once seen as either great historical places of interest or idyllic places to “unwind” were thrust on to lists which insurers used to deny coverage or add an extra charge — somewhat like the overreaction to loggers on one side of a line from north to south through the picturesque Rockies. Were we reacting to reams of statistics? No. We were reacting to the need to make sure we understood the risk presented and thus protect the imbedded value of our insurance industry. Caution with risk has always been the way life insurers insure they are around to pay claims some 50, 60 or 90 years after policy issue — name another product with such a long commitment.

What fuelled the industry’s reaction was the overwhelming number of applications where the distributor/advisor would add the statement to the application either in note or letter saying roughly “The proposed insured is leaving for ________ (fill in any place of high concern) in 6 days and needs the insurance issued prior to departure”. Being cynical at times the industry thought “Sure, and this is all part of a routine estate analysis and it is mere coincidence the insurance is needed right now”. Would the policy lapse immediately upon return? Where has the application and estate analysis been all these years? Would the oil field worker going to Iran or Nigeria be buying the insurance if they were going to Alberta? If the oil field worker is making a huge difference in pay because of the danger element why not share that risk premium with the insurer? The cynical questions were many but not voiced as we had to assume that it was mere coincidence the insurance application was just before the proposed insured was getting on a jet a plane.

As time progressed the risk takers became more confident that we could assume that most travellers for holidays or business of under say eight weeks to most global sites were presenting us with no or minimal extra risk. Now, some four years after the issue percolated to the top of the chart of why insurers are not responsible, it has plummeted down on the list of annoyances. Did we get overwhelmed with statistical data that gave us such assurances we could consider these risks standard? Not that I saw. We did come to appreciate Canadians were not dying on these trips in numbers that skewed our mortality. Regrettably the industry to my knowledge never did collate all its death payments where the death occurred overseas. A simple collation of all insured deaths over the last 3 to 4 years by age, sex, country and cause of death would have been a great statistic. Who should have done this? Well I can think of many either singularly or jointly — Canadian Institute of Underwriters. Canadian Institute of Actuaries, Canadian Life and Health Insurers Association, Advocis, LIMRA, etc. Even I could have or perhaps should have pleaded for the data and done the collation but I did not (pick from excuse one through twenty).

At a recent Underwriters Association of Toronto evening I was giving a talk on the realities of underwriting today which by necessity had to include my opinions on foreign travel cases. During that talk I threw out the challenge to the group that they should get the statistics on foreign deaths and come up with a unified approach to foreign travel and residency. When I threw this challenge in the past to numerous groups over the past two years it fell on deaf ears. This time though one underwriter took up the challenge and dug up some available statistics that are enlightening even if they are not fully reliable.

Beth Gibson, an experienced senior underwriter at Desjardins Financial, took up my challenge and found some statistics. What she presented me with was the statistics from the federal government on the number of deaths per country of Canadians (Canadian citizens who may or may not have been Canadian residents nor insurance contract holders). The cause of death and the overall accuracy of the numbers could be challenged perhaps but they are numbers from which we can better surmise the risk than just going on panic’s conjecture. Was I surprised at the numbers? Absolutely. Given the cause of deaths listed (murder/suicide, natural and accident) one wonders where “killed in a suicide bombing” fits. I also wonder if a country truly investigates the cause of death to make sure it is accurate. All the scepticism aside these were telling numbers. They make me feel better as a risk taker that our current stance is justifiable but needs some ongoing sophisticated study.

In the period 2002-4 inclusively there were 2142 Canadian deaths abroad. Natural deaths accounted for 1533 (although I am suspicious of natural deaths in 10 year olds but at least I will assume it was not a violent death). Accidents accounted for 412 deaths (nowhere does it say if it was the accidental stepping on a land mine or shopping in the wrong part of town at bomb time). There were 99 suicides (having a bad travel day could prompt that action). Murders came in at 98 ( a pretty clear statistic).

The largest number of murder/suicides occurred in USA (29) with Mexico next at 16 and then China at 13. Given my perception of the number of Canadians who travel there these numbers do not surprise me. None of them make me want to rate travellers to any of the three countries. One third plus of the Mexican deaths were older Canadians in the 66 plus category. Dying on a sunny beach outweighs dying in a snow drift. Now on the other hand there were 9 deaths in Iraq and 8 of those were murder/suicide. I still want to decline travellers to Iraq! As I peruse the list of countries and causes of death I note Israel had 11 Canadians die there of which none were from murder/suicide and four of the 11 were on older travellers 66 years of age or over. Similarly the numbers for Germany surprised me but will have no impact on my risk taking price. There were 139 deaths in Germany of which only one was from murder/suicide but 98 of them were on lives over 66! Talk about going home to die. Similarly 49 of 66 Greek deaths were in the older category and there were no violent deaths. Cuba remains high on my vacation list even with knowledge that there were 68 deaths there but none from violent causes.

Other surprises, but none significant to change my perception of risks out there, were Thailand’s 58 deaths of which 7 were murder/suicide, Vietnam’s 87 deaths of which 61 were over 66 years of age and only one violent death, and 2 of Saudi Arabia’s 18 deaths were on young children.

Are we doing this thing called risk appraisal and pricing right today? I think we are pretty close but to make me feel better and the actuaries’ price better we would still need to know how many Canadians travel abroad to each of these countries, plus study the deaths we as insurers have had over the past few years where location of death is outside Canada. In the meantime thanks Beth for doing some digging which is more than any of the rest of our industry (including me) did and sharing it with me. I feel better now that what I do is not perfect but close and still prudent.

Beth Gibson and her statistics can be reached at

Thanks again Beth for taking the time and caring.

Written by

Ross A. Morton