Obesity is a trend escalating on a global scale. Not only do expanding waistlines have consequences for health, but the larger socio-economic impact is vast. The prevalence of obesity has increased two-to-three fold in most developed countries, reaching around 10 to 25% of the population. Insurers are beginning to confront the rising cost and severity of health claims as well as the potential for lawsuits brought against companies involved in the food industry. This poses the question: is obesity the next liability crisis?
Earlier this year, as part of a government strategy to encourage people in the UK to make healthier choices, health secretary, Alan Johnson, laid out the task confronting the government and society at large. “Tackling obesity is the most significant public and personal health challenge facing our society," he said. "The core of the problem is simple - we eat too much and we do too little exercise. The solution is more complex."
Department of Health figures reveal that a quarter of the adult population and almost a fifth of all children under the age of 16 are obese. If no action is taken, by 2050, 60% of men, 50% of women and 25% of children will be obese, the government's Foresight report predicts. Measured via Body Mass Index, which calculates a person's weight in kilograms by the square of their height in metres, anyone with a calculation of 30 or over is classified as obese.
In the US, obesity is rapidly becoming the gravest health concern in the country, as the percentage of adult Americans who are obese or overweight is three times as great as those who smoke, according to the Insurance Information Institute and the National Health and Nutrition Examination Survey (NHANES) findings. In 2006, figures from the Centre for Disease Control and Prevention show that only four states had a prevalence of obesity of less than 20%
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It seems clear that behavioural and environmental factors make a large contribution to excess weight and obesity.
According to the government's Foresight report, obesity is responsible for 9,000 premature deaths each year in England alone. As well as being linked to chronic diseases, such as type 2 diabetes, heart disease and high blood pressure, it reduces life expectancy, on average, by nine years.
As well as the implications for health, obesity is incurring a heavy economic cost. The price tag for costs to the NHS is estimated at £4.2 billion, and this is expected to double by 2050, according to the SustainAbility report. On a broader scale, costs to society and the economy are estimated at £25 billion a year, through absence from sickness as well as reduced productivity.
With this impact on the workforce, businesses in the UK are starting to recognise their corporate social responsibility and confront the issue. Carolyn Williams, development manager at the Institute of Risk Management, has described how regular health checks and healthier canteen options, as well as gym memberships and occupational health practitioners, are just some of the benefits offered now by many large firms. However, with smaller businesses, such employee perks "are often viewed as a cost, rather than something they can benefit from", Ms Williams said, explaining that "there is still a long way to go" for such initiatives to be offered on a wider scale.
The insurance industry is also playing its part. PruHealth health insurance includes gym membership at a heavily subsidised rate, which drops the more the gym is used. Shaun Matisonn, Chief Executive at PruHealth is delighted at the take up of the scheme so far, and highlights the thinking behind it: “PruHealth aims to remove the financial barriers that exist that stop people exercising, and to encourage policyholders to take control of their own health and fitness.” Following this success. the scheme is now being developed to include to encourage good eating and a healthy lifestyle: “We also offer customers the chance to earn "Vitality" points in a variety of ways such as by purchasing fruit and vegetables at Sainsbury's stores or online, buying sporting goods from eBay and attending health screenings.”`
As with the tobacco lawsuits, obesity-related litigation is growing in the US, with fast food companies rapidly being targeted in the search for culprits. A case involving obese teenagers against McDonalds in 2002 was eventually dropped, but the resulting publicity and legal costs had serious implications for the firm. Kraft Foods faced a similar court battle in 2003 over the marketing of Oreo cookies to children. While the issue of causality in both cases proved a difficult one to verify, such examples of litigation highlight the growing risk of liability associated with obesity.
Although such liability cases in the US suggest the issue of obesity is an emerging risk for insurers, Ms Williams has commented that it is not an immediate crisis facing UK industry. However, the liability issue is one that insurers are "keeping an eye on", Ms Williams conceded. "Insurers will be looking very carefully at any court decisions in that area to see whether there are any precedents set", she said.
While obesity suits have faced many obstacles, they highlight companies' potential vulnerability to such claims. The Insurance Information Institute has warned that given the history of litigation arising from asbestos, environmental and tobacco claims, "it would be a mistake to dismiss it as far fetched" and has direct consequences for the insurance and reinsurance industry.
