Current Challenges in Medical Underwriting

Transcription

1 Current Challenges in Medical Underwriting Marianne E. Cumming MSc, MD, AALU Chair, ACLI Medical Section Vice President, Life & Health Products Swiss Re Life & Health America Inc.

2 Mission: to identify, consider, inform ACLI & its member companies on medical & scientific issues that impact the underwriting & claims process Board of managers 9 MDs; Standing committees: Membership & medical relations; Medical issues Representation on ACLI committees, key state and federal advocates - testimony on related issues before regulators & policymakers Slide 2 Medical expertise developed, enhanced & advanced through education programs; primary focus: insurance risk assessment, emphasis on long-term prognosis & survival

3 Underwriting case reviews, fair risk assessment Education, training for underwriters, claims analysts Development of underwriting standards, guidelines Determine underwriting requirements Provide medical expertise for pricing assumptions Participate in new product development Support marketing, sales, legislative issues Slide 3

4 Fair, competitive and profitable risk assessment Selective expertise for competitive advantage Cost-benefit analyses for requirements, processes Monitor underwriting and mortality trends to support underwriting and pricing obesity, pandemics mortality improvement new technology and medical advances Slide 4

5 Underwriting function interacts directly with new business and new customers Risk classification has the potential to be confusing or contentious from perspective of the applicant, agent and/or applicant s physician Underwriting performance may influence actual vs expected product experience, with narrow profit margins Medical underwriting is a complex process and not easily monitored by only quantitative models Slide 5

6 Enhanced accuracy of risk assessment with medical knowledge 1897 Association of Life Insurance Medical Directors of America (ALIMDA): identified association between overweight and increased mortality 1925 Joint Committee of ALIMDA and the Actuarial Society of America: 1 st Blood Pressure Study Slide 6 Mortality risks of build and BP were understood by the insurance industry long before concepts of cardiovascular risk factors were recognized in clinical medicine

7 1980 s: HIV awareness resulted in expanded use of laboratory testing for risk assessment Presently, multiple laboratory tests may be performed using blood, urine, and/or oral fluids to refine risk classification The search for the perfect test continues, either ahead of our time or wishful thinking Potential improvement of risk assessment accuracy with medical understanding, but not without potential conflicts in a marketing environment Slide 7

8 Application accuracy, extent of information Exam reliance on single measurements Identification of attending physicians or care facilities Obtaining medical information, records Interpretation of medical information Determination of mortality risk class Time and market place competition Slide 8

9 New lines of business The elderly market: underwriting and pricing STOLI (Stranger owned life insurance), premium financing Risk transfer: access to capital markets Fair risk selection: the right to underwrite Professional development, new underwriter training, remote underwriting Slide 9

10 Primary reasons for allowing remote underwriting: Slide 10 25% (28/113) companies; Swiss Re survey on remote underwriting, 2006

11 New medical science and technology Preferred focus Older age applicants, anticipated market expansion Monitoring and understanding mortality trends obesity and related impairments pandemics Slide 11

12 Emerging interdisciplinary field of research and clinical applications Focused on repair, replacement, or regeneration of cells, tissues, or organs to restore impaired function resulting from any cause, including congenital defects, disease, and trauma Combines several technological approaches beyond traditional transplantation and replacement therapies. Slide 12 Approaches may include use of stem cells, soluble molecules, genetic engineering, tissue engineering, and advanced cell therapy

13 Application Pancreatic islet regeneration for diabetes Regeneration of heart muscle Immune system enhancement engineered cells, vaccination Tissue engineered skin substitutes Umbilical cord blood banking for future cell replacement therapies Tissue engineered cartilage, modified chondrocytes Inherited blood disorders - gene therapy, stem cell transplants Nerve regeneration using growth factors, stems cells, synthetics Slide 13 Example Bone marrow stem cell transplant, genetically engineered cells to express insulin Myocardial patch, autologous marrow cells - repair Genetically engineered immune cells to enhance or repair immune function Intelligent dressing- skin loss with burns, wounds Future therapy for diseases: diabetes, stroke, myocardial ischemia, Parkinson s, leukemia Cartilage repair for degenerative joint disease Genetically engineered stem cells to restore normal blood cell function beta-thalassemia Spinal cord and peripheral nerve injuries

14 1 nanometer=1 thousand millionth of a meter (10-9 ) Several applications & products, unimaginably small particles that demonstrate special properties related to being small, more reactive & mobile, assume other optical, magnetic or electrical capabilities Nanoparticles: almost unrestricted access to the human body, human & environmental risks uncertain Faster computer chips, more efficient batteries, tailor made drug delivery, self-cleaning windows Slide 14 No practical definition, knowledge gaps, regulatory deficits

15 Diagnostic advances may improve ability to predict or measure specific risk with implications for risk classification brain natriuretic peptide (BNP) noninvasive coronary arteriography, CT, MRI virtual colonoscopy genetic testing Therapeutic advances targeted therapies Slide 15 endovascular techniques

16 Hormone first identified in brain, also produced in heart ventricles, increased in congestive heart failure, left ventricular dysfunction (+ symptoms) Uses: diagnosis, prognosis, prediction heart failure, other cardiovascular diseases/events Increased BNP associated with heart failure, atrial fibrillation, TIA & CVA risk, & increased mortality risk NT-ProBNP (stable, inactive portion) testing through insurance labs, particularly in older applicants Slide 16 Reference ranges, insurance cutoffs still to be determined

17 One revolution in modern science is our ability to connect particular genetic findings with occurrence of specific diseases at an ever increasing pace Only in rare cases is a gene test result near 100% predictive, best example Huntingtons Disease Some gene changes associated with disease are acquired not inborn, example most cancers Expression of most gene linked diseases depends on Interaction between individual s genome and environmental factors Slide 17 Genetic privacy concerns, legislation, GINA

18 Human Genome Project, sequenced all human chromosomes, million bases (A, C, T, & G), next step is to figure out what the 25,000+ genes do In each gene, bases sequence = instructions to make proteins, each has specific function. Many diseases result of genetic mutations which affect proteins (alter function, amount made; 0 to excess) Genes important for health, genetic component to all diseases; search for genetic variations, mutations more accessible, affordable Slide 18 Screening, diagnosis, treatment; commercial & research labs, individualized therapies, significant impact on practice of medicine

19 Employment Consumer Groups Data-Protection Discrimination Social Insurance Access Genetic Information MD s Clinical Practice Private Insurance Information Symmetry Scientists Bio-Banks Slide 19

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23 Build Niverthi M, Ivanovic BN, Body mass index and mortality in an insured population; Journal of Insurance Medicine, 2001; 33: Cumming M, Pinkham A, Comparison of body mass index and waist circumference as predictors of all-cause mortality in a male insured lives population; Journal of Insurance Medicine, 2008;40:26-33 Cholesterol Ivanovic BN, Pinkham A, Relationships between serum lipids and subsequent mortality in an insured population, J Insur Med 2003; 35:11-16 Blood pressure Ivanovic BN, Cumming M, Pinkham A, Relationships between treated hypertension and subsequent mortality in an insured population, J Insur Med, 2004; 36:16-26 Pinkham A, Ivanovic BN, Cumming M The 2003 Swiss Re Blood Pressure Study, North American Actuarial Journal 2005; 9:1-16 Slide 23 Metabolic syndrome Pinkham A, Cumming M, Minuk H, The metabolic syndrome and all-cause mortality in an insured lives population, North American Actuarial Journal 2006; 10:7-16

24 Millions Age 65 or older Share of total population % Slide 24 Source: U.S. Census Bureau

25 Slide 25 Source: LIMRA

26 Under age 70 Primarily term sales driven by need for income replacement Insured usually the owner, mutual interest death not expected Insured pays premium for defined term and policy lapses Over age 70 Investment driven, purchased for death benefit Insured often not the owner with children or third parties owner/beneficiary Different lapse pattern Different medical profile Different motive Different result! Slide 26

27 Ages Ages Ages ,495 deaths (5.4%) 425,727 deaths (17%) 1,811,720 deaths (74%) Top 10 leading causes of death Unintentional injuries 22% Malignant neoplasms 34% Diseases of heart 32% Malignant neoplasms 15% Diseases of heart 24% Malignant neoplasms 22% Diseases of heart 13% Unintentional injuries 5% Cerebrovascular disease 8% Suicide 9% Cerebrovascular disease 4% Chronic lower respiratory dz6% Homicide Diabetes mellitus Influenza & pneumonia HIV 5.6% Chronic lower respiratory dz Alzheimer s disease 3% Chronic liver disease Chronic liver disease Diabetes mellitus Cerebrovascular disease Suicide 2.3% Nephritis,nephrotic syndrome Diabetes mellitus HIV 1.4% Unintentional injuries 1.8% Influenza & pneumonia Septicemia Septicemia Slide 27

28 Growth of older issue age specific underwriting Traditional risk factors may not predict mortality as well at older ages Increased percentage of impaired risk in a block of older age business, higher number of expected deaths/1000, higher prevalence of chronic impairments at older ages Challenge to traditional underwriting tools and implementation of new tools Slide 28 The growing secondary market for life insurance policies will exploit product guarantees

29 Total cholesterol increases with age, less predictive based on Framingham Heart and Cardiovascular Health Studies Blood pressure also increases with age, mortality decreased with hypertension treatment Build pattern of weight loss or gain more important than number Slide 29

30 US Preventive Services Task Force Slide 30

31 Life Expectancy (yrs) Larson 1988 Slide 31

32 Personal history interview Tighter APS age/amount guidelines Strengthened underwriting financial justification analysis Elderly Questionnaires Preferred older age criteria Witnessed cognitive and mobility testing Slide 32

33 Determinants of health Behavioral patterns Social circumstances Genetic predisposition Health care 30% Genetic 40% Behaviour 15% Social 5% Environment 10% Health care Environmental exposures Slide 33

34 Age 50 Slide 34 Martin et al. Science 2003

35 Slide 35 The Economist

36 Hypertension High blood lipids (cholesterol and triglycerides) Diabetes mellitus and impaired glucose tolerance The metabolic syndrome (a cluster of the above) Heart attack and stroke Many cancers Depression Slide 36 Osteoarthritis

37 Health condition Percent of persons age 20 years & over Diabetes High total cholesterol Hypertension Overweight (includes obesity) Percent of persons under age 20 Overweight, ages Overweight, ages Overweight, ages Age adjusted rates, Health, United States, 2007 Slide 37

38 Will sources of mortality improvement continue to conceal the impact of obesity on mortality levels in the future? Could past mortality improvements have been higher if the prevalence of obesity had been stable? Can we quantify these lost mortality improvements attributable to the increasing prevalence of obesity? Slide 38

39 In contrast to the young, the distribution of elderly by disease burden is quite diverse. A minority have relatively few problems and represent the population most likely to have best class level mortality. As a proportion of the total group the numbers of such best class risks will be much smaller than at younger ages. # of Chronic disease prevalence by age group chronic conditions % 18.9% 15.2% 12.6% 12.2% % 18.0% 16.0% 14.9% 15.0% % 22.5% 21.6% 20.9% 21.0% % 18.7% 19.9% 20.4% 20.4% % 21.9% 27.3% 31.2% 31.4% Higher morbidity burden at older ages, applicant population with greater risk of overt or pre-symptomatic disease and premature mortality. Impact on decisions related to underwriting requirements and the thresholds where requirements are obtained. Slide 39 Arch Intern Med 2002;162:

40 Spanish Flu [H1N1] Asian Flu [H2N2] March Outbreaks in Europe and USA August 1918 Second, deadlier wave with 10x case mortality rate By 1919, pathogenicity was reduced; Australia hit less hard Resulted in upwards of 40 million deaths worldwide 99% of fatalities were below age 65 February 1957 First recorded cases in China May 1957 major outbreaks in Hong Kong and Singapore Milder virus type than that responsible for 1918 pandemic Approx. 2 million excess deaths worldwide Case fatality rate highest at the extremes of age Hong Kong Flu [H3N2] July Outbreaks in China and Hong Kong Spread more slowly, with lower morbidity and mortality than in 1957 Pandemic of 1957 probably conferred resistance to 1968 virus Global, excess mortality estimated at ~1 million lives Slide 40

41 Great variability in severity of illness and fatality rate in 3 pandemics of last century Year Excess mortality in the United States (per thousand) Chart sources: see Pandemic influenza: A 21st century model for mortality shocks Variable susceptibility of healthy, young adults to infection Slide 41

42 Historic accounts of insured lives mortality at certain US life insurance companies provide some evidence that different subsets of the insured population had a different experience of 1918 influenza compared with the general population EDR comparison: Population vs. Met age <70, using 1917 overall q s as expected mortality Met Industrial 1918 Met Intermediate 1918 Met Ordinary US Male Pop In the case of Metropolitan Life Insurance Company the experience on higher face amount ordinary policies had a lower peak excess mortality compared with the general population EDR/ Slide 42 Age group

43 Swiss Re has built a pandemic influenza model that takes account of a wide range of factors present in the three pandemics of the last century Includes many of the widely-recognised interventions that may slow or mitigate the effects of a pandemic Seeks to imitate the capacities of the public and institutions to respond to a pandemic, and to maintain these responses Slide 43

44 Conclusions from the pandemic model after all inputs: There is roughly a 3-4% probability of a pandemic of any degree occurring in any given year Additional factors for consideration pro Global human travel and commerce Urbanization con Poor (non-existent) human-to-human H5N1 transmissibility Major improvements in surveillance and medical care Based on historical frequencies, the chances of a severe pandemic occurring appear to be relatively small, on the order of 0.3% or less Slide 44

45 Swiss Re has built an influenza spread model which has been calibrated against the 3 pandemics of the last century. Basic reproduction rates and lethalities have been used to parameterise statistical distributions. Values are randomly generated off these to define a pandemic. 1,000 runs have been used to produce the distribution of mortality outcomes shown here. The distributions shown here represent interventions available in 1918 and The three pandemics of the last century are shown on the output of 1,000 runs of the Swiss Re model The model indicates excess population mortality of 1.3 per thousand in a 1 in 200 year event Further allowance should be made for the lower mortality of insured populations versus general populations Organisations with globally diversified portfolios would further benefit from the time it takes for the pandemic to spread around the globe in comparison with those with a more concentrated exposure, as more effective interventions could be utilised as understanding of the virus increases with time Slide 45

46 Freedom to quantify, group similar risks together is fundamental in establishing equitable homogeneous risk distribution within the pool fair competitive price for consumer maintain experience in line with morbidity or mortality assumptions for the insurer full disclosure, information symmetry Challenges by regulators and governments to demonstrate that risk selection process is fair and priced on actuarially sound basis Slide 46 Travel, Genetic testing, Unisex, specific impairments

47 Don CeSar Beach Resort St. Pete Beach, FL February 21 24, 2009