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.
Each jump can be considered as a single simple measure of risk exposure and each jump carries a mortality risk.
Parachuting in the UK is regulated by the British Parachute Association (BPA).
Its website includes statistics covering every jump made and every fatality incurred since 1990.
Analysing this data provides an excellent starting point to help set ratings.
With 4.5 million jumps resulting in 46 deaths over 20 years, this suggests a mortality rate of one per 100,000 jumps.
The BPA breaks its data down by type of jump and by the experience of the jumper.
While splitting the data into smaller subsets gives less credibility, it seems that for experienced jumpers, display jumps are more dangerous than normal drop zone jumps, with fatality rates of five per 100,000 and one per 100,000 respectively.
It is also worth noting, however, that many of those making display jumps often members of the armed forces are doing so more by way of occupation than avocation.
For tandem jumps, there has been just one (joint) fatality in more than 300,000 jumps.
Although the numbers are too small to draw firm conclusions, it appears that a student jumper’s first jump brings a higher risk of mortality than subsequent jumps.
This is true for the risk of injury, which the BPA also publishes. It is hardly surprising that experience counts.
It is worth noting that individuals who take part in one extreme sport often participate in others.
Data on BASE jumping fatalities suggests that many of those who died were experienced skydivers.
Overall, underwriters need to consider what type of parachuting an applicant engages in, their experience and relevant qualifications, and their frequency of jumping.
It is also important to look for, or ask about, participation in other extreme sports. The applicant’s age and experience should be considered as an indicator of their likely propensity for taking greater risks in future.
Questionnaires and considerations
When an applicant discloses an avocation, they are likely to be asked to complete a specific tailored questionnaire.
The table on the left gives a summary of the main considerations when deriving an avocational rating philosophy.
In practice, few applicants declare hazardous sports. As policies are underwritten only once at outset, individuals who subsequently take up dangerous avocations will remain covered at the original premium.
A general exclusion for hazardous sports can be applied to disability and critical illness policies, but in practice this is rarely seen.
With extreme sports constantly evolving and new ones growing up, however, it is important that avocational underwriting and risk assessment keeps up to date.
James Shattock is actuarial pricing manager at Hannover Life Re (UK)
