CRITICAL ILLNESS INSURANCE SURVEY SUMMARY

Transcription

1 Survey Participants American-Amicable Life Insurance Company of Texas Americo Canada Life Insurance Company Central States Health & Life Co. of Omaha Colonial Life & Accident Colorado Bankers Life Combined Insurance Company Companion Life Family Life Insurance Company Hartford Life Illinois Mutual Life Insurance Company Protective Life Insurance Company Security Financial Life Insurance Company Trustmark Insurance Company UNUMProvident

2 1a. Indicate the market for which the Critical Illness Insurance (CII) product was designed. Market # Companies offering a product to this market Percent of Group Individual 9 60% Worksite 7 47% Group 3 20% No product 3 20% Market # of companies % of companies Individual Only 3 20% Worksite Only 3 20% Individual and Worksite 3 20% Individual, Worksite and Group 3 20% None 3 20% 1b. Indicate which type(s) of CII product(s) you sell. # of Companies Product Number of Products Individual Worksite Group 7 Standalone Policy Additional Rider to Life Product Accelerated Rider to Life Product Additional Rider to Product Other than Life Cancer-only Policy /24/2003 2

3 1c. How many companies are new to the market? 25% or 3 out of the 12 respondents indicated their products were new to the market in Please indicate the minimum, maximum, and average face amounts for each of your products. If you have increased or decreased your maximum face amount, please include the maximum face amount for your product(s) prior to any increase/decrease. Standalone Products or Cancer Only Products # Companies Market Minimum Face Maximum Face Average Face Prior Max. Face 4 Individual $5,000 - $100,000 $50,000 - $200,000 $18,000 -$150,000 $2,000,000 6 Worksite $5,000 - $10,000 $50,000 - $100,000 $20,000 - $30,000 $50,000 - $100,000 2 Group $5,000 $100,000 $26,286 $50,000 Additional Rider # Companies Market 2 Individual Minimum Face Maximum Face Average Face Prior Max. Face $5,000 $100 monthly benefit $50,000 $1,500 monthly benefit max 36 months $25,000 $800 a month 1 Worksite $ 10,000 $ 10,000 $ 10,000 Accelerated Rider # Companies Market 3 Individual Minimum Face Maximum Face Average Face Prior Max. Face $10,000 $250,000 $20,000 $100,000 4 Worksite $1,000 - $20,000 $70,670 - $250,000 $12,587 $70,670 1 Group $5,000 $50,000 $18,750 Percent Acceleration available: (1 company) 25% (2 companies) 50% (3 companies) 100% 9/24/2003 3

4 3a. Which conditions are currently covered by your Critical Illness product? Condition % Condition % Condition % Life-threatening Cancer 92 Paralysis 67 Other: Heart Attack 100 Alzheimer s 8 Catastrophic/Accident 8 Stroke 100 Multiple Sclerosis 12 Disability 8 Organ Transplant 92 Coma 0 Occupational HIV 8 Kidney Failure 92 Severe Burns 17 Loss of two or more limbs 16 Deafness 17 Terminal Illness 17 Brain tumor 8 Blindness 50 Bypass (CABG) 8 Stage A Prostate Cancer 8 Quality of Living/ADL s 0 Angioplasty 8 Loss of Speech 0 Carcinoma in-situ 58 *% = % of Responding Companies who offer 3b. If condition is payable at a reduced benefit amount, please indicate percentage of benefit paid. Condition Bypass (CABG) 25% Angioplasty 25% Carcinoma in-situ 25% Percentage Paid % Co s (out of 12) 8% 58% 17% 8% 50% 8% Catastrophic/Accident when charges exceed $100,000 for a 12-month period 8% Disability per year for 5 years, then balance if still Social 8% Security disabled Stage A Prostate Cancer 25% 8% 3c. Have you added or removed covered conditions from your Critical Illness product in the last 2 years? Added carcinoma in-situ, coronary bypass, and wellness screen rider. Changed half benefits at 65 to half benefits at 70. 9/24/2003 4

5 4. Have your definitions for covered conditions been modified over the past 2 years? If yes, please indicate the conditions for which definitions were modified and indicate whether the new definition is more or less strict. Yes 25% Changes: Deleted survival period. Stricter cancer definition (25% benefit for carcinoma in-situ and Stage A prostate; stricter MS definition) No 75% 5a. Indicate whether your critical illness product(s) includes the following features. % Feature # days 25 Survival Period 30 days (1 company); 0 days (1 company); no time given (1 company) % Feature #days # days for Life-Threatening Cancer (if different) 83 Waiting Period 30 days (6 companies) No answer 30 (1 company) (1 companies) 90 0 (1 companies) 90 0 (1 company) 30 % Feature # month look back # month look forward 42 Pre-exiting Condition Provision NA b. Have you modified any of these features in your product over the past 2 years? Deleted survival period. The survival period of 30 days was deleted. 9/24/2003 5

6 6. If you offer a group critical illness product, indicate the type of cases you write*. Non-contributory (100% employer paid) Contributory Voluntary (100% employee paid) Min. Group Size 25% - 100% Participation Requirement 100% 50% - 60% 20% - 25% % of Cases Written 5% % * 75% of responding companies do not offer group product. The data represents only 25% of respondents. Range of responses are given. 7. How many Critical Illness claims did you receive in 2002*? Individual Worksite Group # claims total % denied 0% - 50% 0% - 25% 0% -30% Average $15,000 - $125,000 $10,000 - $15,000 $10,000 - $14,000 Benefit % occurred in 14% - 57% 35% -100% 32% yr. 1 * 25% did not have product in place in % did not provide information. The data represents 50% of respondents. Individual Worksite Group* Average # claims Average % denied 25% 21% 15% Average benefit $52,847 $14,379 $12,056 Average % occurred in year 1 39% 52% 32% * Small sample leads to results with a high margin of error. 9/24/2003 6

7 8. Indicate the distribution of claims for 2002, by covered condition. 4% 7% 3% 12% 51% 23% Cancer Heart Attack Stroke Angioplasty Renal Failure Other 9a. Do you reinsure your Critical Illness business? Yes 42% No 58% 9b. How many reinsurers do you use? Only 2 respondents gave an answer: both said 2. 9c. If you reinsure your Critical Illness business, on what basis? Automatic/Quota Share 80% Automatic/Excess 20% Facultative 0% 9d. On what basis do you reinsure your Critical Illness business? % of companies maximum dollar retention % of CI risk retained Automatic/Quota Share 80% ; 20%; 25%; 60% Automatic/Excess 20% $50,000 Facultative 0% 9/24/2003 7

8 10. What type of underwriting program do you have in place for your Critical Illness product? Individual Worksite * Group * Simplified 33% 67% 33% Fully U/W 67% 22% 0% Guaranteed Issue 0% 33% 100% * More than one choice was selected. 11. Do you ask for the following information on your CI insurance application? Information Yes No Family history, including whether any relative, living or dead, has been diagnosed and/or treated for any of the covered critical illnesses? 75% 25% Whether the applicant has sought treatment for AIDS or AIDS related complex? 100% 0% Current medications the applicant may be taking? 58% 42% Other insurance coverage the applicant may have? 50% 50% Whether the applicant is a smoker or non-smoker? 100% 0% The applicant s height and weight 100% 0% Suspicious symptoms (dizziness, shortness of breath, high cholesterol, high blood pressure 83% 17% 12. Which of the following do you use for underwriting Critical Illness Insurance applications? MIB 70% Test % At what age Amount Blood/Urine 33% Adult Employee All $100,000 Paramed Exam 42% All EKG, Stress test, etc. 0% $75,000 and $100,000 $350,001-$500,000 $50,000 $50,000 $75,000+ $350,001-$500,000 $100,000 Other Saline test Phone interview All $250,001-$350,000 All 9/24/2003 8

9 13. What is the anticipated loss ratio for your CI product? Average = 55% Actual 50% 40-50% 55% 57% 58% 60% % Companies 20% 40% 14. What is the average age of your CI policyholders? Average = 42.3 Actual % Companies 11% 11% 22% 11% 22% 22% 15. What is the length of your premium guarantee period? Period 0 years 1 year 5 years 10 years 20 years Life (GR) 1 year for w/s A&H 5 years for Accelerated 2 years for Group 5 years on 10 year term product 0 on permanent product % Companies 30% 9/24/2003 9

10 16. How did you file your CI product? # % With individual states 7 67% On a group trust basis 0 0% Combination 4 33% 17. In how many states is your product approved? # States # Companies % Companies % % % % % % 49 + DC 1 8% % Filing now 1 8% 18. What is the lapse rate for your CI product at various time periods? Individual Lapse rate Range Average 1 st policy year - 35% 23% 2nd policy year 8% - 21% 15% Policy years 3-5 6% - 18% 13% Worksite Lapse Rate Range Average 1 st policy year 23% - 75% 39% 2 nd policy year 19% - 80% 36% Policy years % 32% 9/24/

11 Group Lapse rate Range Average 1st policy year 15% - 43% 29% 2nd policy year 15% - 30% 23% Policy years % - 20% 18% 19. Do you see any relationship between CI lapse rate and policyholder age? Individual Worksite Group Policyholders >50 have a greater lapse rate than policyholders < 50 Policyholders >50 have a smaller lapse rate than policyholders < 50 0% 0% 0% 22% 44% 33% Have found no relationship 11% 11% 33% Have not researched this point 0% 22% 0% No answer 66% 23% 33% 20. What profit margins have you experienced on this product in the last year? Individual Worksite Group 1% - 5% 33% 11% 33% 6% - 0% 44% 33% 11% - 15% 11% 11% 0% 16% - 20% 0% 0% 0% 21% - 25% 0% 0% 0% > 25% 0% 0% 0% No answer 66% 33% 33% 9/24/

12 21. What percent of NAIC required capital have you allocated to your CI product? Individual Worksite Group 200% 11% 11% 33% 250% 0% 22% 0% >250% 33% 33% 67% No answer 56% 34% 22. What is your internal rate of return on the capital that you indicated in the answer to the previous question? Only two respondents gave answers to this question: 4%, 7% 23. What has been the sales performance of CI at your company over last five years? Individual Worksite Group Increasingly slowly 33% 45% 33% Increasing quickly 22% 33% 0% Stable 22% 11% 0% Decreasing slowly 0% 0% 0% Decreasing quickly 0% 0% 0% Fluctuating 0% 0% 33% No answer 22% 11% 33% 24. Do you market CI to groups that would be declined by insurers for LTD? Yes 25% No 17% Not applicable 58% 9/24/

13 25. How many in force CI policies do you have? Average Individual 8,200 Worksite 16,396 Group 1, How much CI premium have you earned in the last full calendar year? Individual Worksite Group <$50,000 33% 0% 33% $50,000 - $250,000 0% 33% 33% $250,000 - $1 million 11% 11% 0% $1 million - $5 million 11% 0% 33% $5 million - $10 million 22% 22% 0% >$10 million 0% 22% 0% No answer 23% 11% 27. What was your new sales premium for 2002? 2002 New Sales CI Premium Average Individual $1,508,000 Worksite $3,161,423 Group $293,500 9/24/

14 28. Please indicate your target markets. Individual Group year olds 100% 43% year olds 22% 0% Low to middle income 89% 43% High income 11% 0% Current customers who own other products 44% 14% New mortgage insurance applicants 11% 0% 29. If you use the worksite distribution channel what are your target markets for Critical Illness Insurance? Distribution Channel Worksite Associations 44% Unions 33% Establishments with high turnover 0% Establishments with low turnover 67% Establishments employing low to middle income employees 100% Establishments with middle to high income employees 11% Establishments with employees primarily in the age bracket 89% Establishments with employees primarily in the 50+ age bracket 11% Establishments offering a full range of employee benefits, including LTD 0% Establishments offering a limited range of employee benefits & specifically excluding LTD 11% Current worksite customers who own other products 67% State, city, school district 11% 9/24/