The term ‘avocational' describes activities taken up outside one's regular work or profession. Asking life and health insurance applicants whether they participate or plan to participate in hazardous sports, for example, is standard practice.
The term ‘avocational' describes activities taken up outside one's regular work or profession.
Asking life and health insurance applicants whether they participate or plan to participate in hazardous sports, for example, is standard practice.
Among the most common avocations declared at underwriting are climbing, diving, motor vehicle racing, caving, private aviation and parachuting.
Any additional rating will typically be charged as a flat per-mile cash extra to offset the increased risk an individual brings to the insured pool.
There is one very obvious distinction between avocational risks and medical risks, in that the former are undertaken voluntarily.
If an individual quits a particular avocation, their exposure ceases immediately and no loading need apply from then on.
Before removing any extra rating, however, experience suggests it is always worth ascertaining whether one thrill-seeking activity has simply been replaced by another.
Covering extreme sports
Clearly, not all avocational risk activities are alike. A key area of concern is the sub-category of extreme sports.
Solo glacier climbing is a far cry from walking well-trodden paths in the Swiss Alps.
At the extreme end of the spectrum are individuals who relish danger and always look to push themselves that little bit harder.
For such people, cover is unlikely to be available, except perhaps at a hefty premium via a specialist broker.
Consider BASE jumping. This involves people throwing themselves off high buildings, bridges or cliffs and attempting to deploy a parachute in the brief interval before they hit the ground.
It is estimated BASE jumping has a fatality rate of one in 60 in any given year.
BASE jumping is illegal in many countries and should be uninsurable.
It should be recognised, however, that many of those who participate in theoretically risky avocations are highly safety conscious and belong to organisations with rigorous training, licensing and safety standards.
Such hobbies are often not inexpensive. People who are willing to invest in their hobbies are also likely to want insurance.
The very fact that they are risk-aware suggests they will understand the value of insurance.
So how are appropriate loadings for such individuals set? The applicant's age is a key consideration.
The younger a thrill seeker is, the more likely they are to progress to more dangerous exploits.
To see how this looks in practice, let's consider the example of parachuting.
Nobody parachutes by accident. Even if you have been talked into tandem skydiving for charity and find yourself shuffled out of a plane at 10,000ft strapped to an instructor, you are still essentially responsible for putting yourself in the path of whatever potential harm the jump may entail.
Parachuting provides a good example of an avocation where risk hazard is fairly easy to measure.
