Life insurance provider TAL's adjustment to its BMI calculator will see some obese and overweight policyholders hit with higher premiums.
TAL general manager for retail distribution Niall McConville said the Australian life insurance industry has assessed and accepted overweight and obese customers at standard rates.
"As an industry, we are continuously working towards long-term sustainability and there is an industry need to review what is classed as 'standard' risks," he said.
"We believe in appropriately pricing risk, based on available evidence, to ensure our ability to pay claims in the future."
The insurer said it had reviewed the rapidly increasing prevalence of obesity in Australia and the subsequent need to price risk more accurately.
As a result, premium loadings will now be charged for overweight and obese customers who may have previously been accepted at standard rates across all benefit types.
The BMI loading will increase with the rise of a customer's rating on the TAL BMI tables.
"Unfortunately, Australia is at the forefront of the obesity problem and this represents a substantial health, societal and financial issue for all Australians," TAL said in a statement.
"There will be opportunities for customers to have their medical loading for obesity reviewed. This hopefully is an incentive for people to get healthier. Customers should be paying the right price for their risk."
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