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• LETTER: Insurance-Industry Investments in Tobacco (PDF) 

The Obama administration is proposing a major overhaul of the U.S. health care system, and the insurance industry is poised to play a major role in the process. . . .

In case there is any doubt that insurers place profit above health, consider their investments in tobacco. The U.S.-based Prudential Financial provides life insurance and long-term disability coverage and is also a major owner of tobacco stocks, with total tobacco holdings of $264.3 million (Table 1). The U.K.-based Prudential offers life, health, disability, and long-term care insurance. Prudential’s stake in tobacco totals $1.38 billion. Standard Life, which is also based in the United Kingdom and offers both life and health insur ance, owns nearly $950 million of tobacco stock. Canada-based Sun Life, which offers life, health, disability, and long-term care insurance, owns just over $1 billion of tobacco stock. Northwestern Mutual and Massachusetts Mutual Life Insurance Company (MassMutual) both offer life, disability, and long-term care insurance. MassMutual owns more than $585 million of tobacco stock, and Northwestern Mutual’s stake exceeds $235 million. (These figures are accurate as of March 26, 2009, but given the current economic climate, they are subject to change.)

Although investing in tobacco while selling life or health insurance may seem self-defeating, insurance firms have figured out ways to profit from both. Insurers exclude smokers from coverage or, more commonly, charge them higher premiums. Insurers profit — and smokers lose — twice over.

These facts should discomfit Canadian and British readers as their countries consider further privatization of health insurance. For those of us in the United States, these data are a reminder of the true priority of the insurance industry, which is making money, not ensuring health and wellbeing. These data raise a red flag about the prospect of opening vast new markets for private insurers at public expense, as has happened in our state of Massachusetts, whose recent health care reform is often cited as a model for national reform.

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