The nicotine pouch epidemic: What insurers need to know

Nicotine pouches, often marketed as “tobacco-free” snus, have surged in popularity; particularly among young people. The discreet ease-of-use and lack of smoke has fuelled the rapid growth of the nicotine pouch market. 

Across the UK, usage amongst 16-24-year-olds has nearly quadrupled in just two years, jumping from under 1% in 2022 to 3.6% in 2024. Health experts are now grappling with what this trend means – not only for individuals’ well-being but also for insurance providers who may face new patterns of risk and claims.

Implications for insurers

The rise of nicotine pouches significantly impacts insurance underwriting and healthcare costs. Life insurers traditionally classify all nicotine users as smokers, triggering higher premiums than non-smokers, due to cardiovascular and cancer risks. Young pouch users often do not realise this classification applies to them until facing premium shocks when applying for cover.

However, the industry is reconsidering this blanket approach. The American Council of Life Insurers reports growing pressure for nuanced underwriting to differentiate between smoking and tobacco alternatives. Some progressive carriers now offer better rates to exclusive pouch users who have never smoked, recognising their different risk profile. With the right disclosures and insurer, a person who only uses oral pouches and has never smoked might qualify for a non-smoker rate category, avoiding the higher premium penalty. Yet most insurers remain cautious, maintaining higher premiums for all nicotine users.

The actuarial challenge is complex. On one hand, if existing smokers switch to pouches instead of cigarettes, insurers could see fewer claims for lung cancer and emphysema – diseases strongly linked to smoking. On the other hand, if pouches attract new users, insurers may face a different set of problems: increased claims for cardiovascular disease and oral cancers in populations that would otherwise have been low-risk. The critical question is whether the reduction in smoking-related claims will outweigh the new nicotine-related claims. 

Health and dental insurance costs

For health and dental insurers, nicotine pouches present immediate cost concerns through oral health damage. Gum recession and periodontal disease require expensive treatments: deep cleanings, gum grafts, extractions, and implants. Early-onset gum disease in a generation of pouch users could trigger a surge in dental claims. Tooth decay may also rise, as dry mouth from nicotine increases cavity risk.

The prospect of oral cancer is particularly grave. Mouth cancers require costly surgery, radiation, and reconstruction, with long-term impacts on critical illness payouts and ongoing medical costs. Historically affecting older smokers and heavy drinkers, health experts now warn that early exposure to potent nicotine pouches could shift cases to younger ages. A rise in serious oral illness amongst middle-aged adults would force insurers to adjust actuarial projections for both health expenditures and life insurance mortality assumptions.

Preventive initiatives may become crucial. Just as health plans sponsor programmes to stop smoking, insurers could develop pouch-awareness campaigns and oral health monitoring. In Shetland, NHS services now offer mouth cancer screenings with explicit warnings about snus risks during Mouth Cancer Action Month. Such community-level prevention aligns with insurers' interest in early detection and risk reduction.

Why this matters now

The insurance landscape is shifting rapidly. Whilst cigarette smoking declines, nicotine pouches threaten to replace one addiction with another, creating new nicotine users who might never have smoked, and complicating ex-smokers' risk profiles. Regulators are introducing age limits and labelling requirements, but these measures are only now catching up.

This echoes the e-cigarette rise a decade ago; products marketed as safer alternatives which created unforeseen health implications and youth appeal.

Insurers must stay agile: updating underwriting questionnaires to specifically ask about nicotine pouches, educating agents that 'tobacco-free' doesn't mean 'risk-free', and considering premium adjustments or oral health wellness programmes. Since insurers bear financial risk from widespread nicotine addiction and oral diseases, they have a vested interest in supporting prevention through research funding or awareness campaigns – similar to past smoking cessation efforts – to help policyholders avoid costly health outcomes.