Manulife ditching nicotine testing as life-insurance fraud prevention technique

February 6th, 2017  |  Canadian Business

According to a report from The Globe and Mail, Manulife Financial Corp. will be moving away almost entirely from nicotine testing as a means of determining whether clients may be lying about being non-smokers.

In the past, the finance-insurance behemoth had mandated nicotine testing for all of its applicants, but that number has shrunk all the way down to just 20 per cent of them. The reason Manulife has been moving away from this formerly critical practice, is twofold. Firstly, smoking has decreased massively as a health risk that life insurers need to be on high alert for. Secondly, its data-analysis capabilities have developed to a point where that can compensate for what the test accomplishes.

Manulife's data-analysis program is centred on its predictive analytics system. This method involves cross-checking all of the pertinent non-test-requiring factors and comparing those findings against other public data that comes from Statistics Canada, much of which is demographic-based.

Some high-risk applicants may still have to be tested, but that will be a potential precaution for later on, rather than a mandatory requirement.

By going down this route, Manulife and other similar companies stand to benefit quite a bit financially. Eliminating nicotine testing also elminates the need for as many nurses to administer those tests. Moreover, it speeds up the entire client onboarding process and improves the customer experience. It is common for new clients to complain that testing is invasive and time-consuming.