Critical Illness Insurance and the Elderly Risks and Opportunities

Transcription

1

2 Critical Illness Insurance and the Elderly Risks and Opportunities Health & Aging Conference 2013

3 Agenda > CI for the elderly why? > Product Design > Diseases what changes, what stays the same? 2

4 What is Critical Illness Insurance? Historical Development Original Aim: You need insurance not only because you are going to die, BUT because you are going to live [Marius Barnard] 3

5 What is covered? > Critical Illness Insurance provides a lump sum benefit on first occurrence and definite diagnosis of a pre-defined lifechanging illness or event > Typical conditions covered: Cancer Kidney Failure Heart Attack Organ Transplantation Stroke Paralysis Bypass Surgery Multiple Sclerosis > List of covered conditions includes more than 30 diseases in several markets 4

6 CI for the elderly why? Because we have to (1) > CI is already sold as wholelife product in many markets Combined with life insurance Typical entry age End age death Currently little experience for ages 65+ Source: Gen Re Dread Disease Survey

7 CI for the elderly why? Because we have to (2) > Anti age discrimination becomes more and more important > In Latin America and India, CI policies must be available regardless of age > Next steps in the EU? 6

8 Source: Statistisches Bundesamt, 12- koordinierte Bevölkerungsvorausberechnung, Vairante 1-W1 CI for the elderly why? Because it is an opportunity (1) population in 1,000 24,000 Projected development of German population in 2 age groups 22,000 20,000 18,000 16, ,000 12,000 10, > Current target groups are shrinking > 55+ is a growing market 7

9 CI for the elderly why? Because it is an opportunity (2) > Incidences of diseases strongly increasing with age > Financial impact of disease Healthcare Rehabilitation Temporary assistance Modification in Housings No/less income protection needed Insurable interest exists > CI is an established product in many markets > Lump sum benefit is attractive Business oportunity exists 8

10 Agenda > CI for the elderly why? > Product Design > Diseases what changes, what stays the same? 9

11 Cautious product design reduces risks Issues Solutions > Very long duration if sold to young ages > High risk of change in CI rates > Little portfolio experience > Many people meet CI-criteria shortly before death > Elderly less able to cope with increasing rates > Fixed duration instead of maximum end age > Reduce sum at risk in high ages Acceleration benefit instead of stand-alone CI Reduce sum assured with increasing age > Offer level premiums instead of risk premiums 10

12 Appropriate diseases for DD products for seniors Well-suited Less well-suited Heart Attack, Stroke, Bypass-Surgery, Aorta Surgery, Hear Valve Surgery, Cardiomyopathy Cancer Coma, Paralysis, Loss of Limbs, Femoral neck fracture Chronic Lung Disease Kidney Failure Alzheimer s Disease, Dementia, Parkinson s Disease Organ Transplantation heavily depending on state of health and age Multiple Sclerosis occurs mainly in middle-aged persons Benign brain Tumour occurs mainly in children and younger persons Bacterial Meningitis occurs mainly in children and younger persons Encephalitis occurs mainly in children and younger persons Rheumatoid Arthritis course of disease depending therapy and compliance 11

13 Agenda > CI for the elderly why? > Product Design > Diseases what changes, what stays the same? 12

14 Sources: gekid.de, GEK Pflegereport 2010, gbe-bund.de Impact of diseases changes in high ages 10% 9% Incidence rates for selected diseases 8% 7% 6% 5% 4% 3% 2% 1% 0% Cancer Male Cancer Female Heart Attack Male Heart Attack Female Dementia Male Dementia Female Currently 60-80% of all CI claims are cancers In high ages dementia and other diseases will become more important Are they carefully priced? 13

15 Source: ABI Statement of Best Practice for Critical Illness Cover Dementia definition What should be covered? ABI standard definition Alzheimer s disease [before age x] resulting in permanent symptoms A definite diagnosis of Alzheimer`s disease [before age x] by a Consultant Neurologist, Psychiatrist or Geriatrician. There must be permanent clinical loss of the ability to do all of the following: remember; reason; and perceive, understand, express and give effect to ideas. For the above definition, the following are not covered: Other types of dementia. > Alzheimer s only vs. all types of dementia In common speech often mixed up Exclude other diseases (if all dementias are covered) > Limited end age Age discrimination? > Define severity of loss Requires supervision Dependence in ADLs Clinical Dementia Rating 14

16 Incidence per 100,000 Source: ABI Statement of Best Practice for Critical Illness Cover Relevant changes even within a disease! Male cancer incidence - Germany 2010 ABI standard definition Source: gekid.de all cancers prostate % 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Cancer excluding less advanced cases Any malignant tumour positively diagnosed with histological confirmation and characterised by the uncontrolled growth of malignant cells and invasion of tissue. [ ] For the above definition, the following are not covered: [ ] All tumours of the prostate unless histologically classified as having a Gleason score greater than 6 or having progressed to at least clinical TNM classification T2N0M0. 15

17 High prevalence of multi-morbidity and preexisting conditions 60% 50% 40% 30% Ten most prevalent diagnoses - 65-year -old males > What has caused physical limitations? Difficulties in claims management Careful wording in definitions required > Overlaps in Pricing If priced on population data 20% 10% 0% > Underwriting needs to be adjusted for the elderly > Recommended max. entry age 75 16

18 Pre-existing conditions less problematic in high ages > Illustrative statistics: PREVALENCE Young Old Standard 99% 50% Substandard 1% 50% INCIDENCE Young Old Standard 1% 25% Substandard 2% 50% Average 1.01% 37,5% Substandard / Average 198% 133 > Classic risk factors like hypertension can be underwritten more generously in high ages > More concentration on diseases > Dementia is an additional issue 17

19 In a nutshell > Elderly do not get enough attention in current CI products > More uncertainties, but product design can help to limit risks > With adjusted underwriting, high acceptance rates are possible > Robust definitions become even more important, compared to standard products 18

20 Disclaimer This presentation is protected by copyright. All the information contained in it has been very carefully researched and compiled to the best of our knowledge. Nevertheless, no responsibility is accepted for its accuracy, completeness or currency. In particular, this information does not constitute legal advice and cannot serve as a substitute for such advice. It may not be duplicated or forwarded without the prior consent of the Gen Re. Diese Präsentation ist urheberrechtlich geschützt. Alle hierin enthaltenen Informationen sind sehr sorgfältig recherchiert und nach unserem besten Wissen zusammengestellt. Dennoch können wir keine Haftung hinsichtlich ihrer Genauigkeit, Vollständigkeit oder Aktualität übernehmen. Insbesondere stellen diese Informationen keine Rechtsberatung dar und können auch nicht als Ersatz für eine solche Beratung dienen. Eine Vervielfältigung oder Weiterleitung ist nur mit vorheriger Zustimmung der Gen Re gestattet. 19