2008 General MeetingAssemblée générale 2008

Toronto, Ontario

2008 General MeetingAssemblée générale 2008

Toronto, Ontario

Canadian Institute

of Actuaries

Canadian Institute

of Actuaries

L’Institut canadien desactuaires

L’Institut canadien desactuaires

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Group Living BenefitsGroup Living Benefits

Critical Illness

Role of Medical Director

Howard MinukChief Medical OfficerSwiss Re Life & Health

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Group Living BenefitsGroup Living Benefits

• team player working with actuarial, underwriting, sales, claims

Medical Director

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Medical Director and Pricing Actuary

• provide reliable incidence information for covered CI

• speculate what factors might affect population CI incidence trends

• help determine what impact underwriting will have on insured CI incidence

• determine detailed knowledge about how the product is priced and understand the impact that changing risk factors for CI will have on premium rate

• speculate what impact changes in medical technology, medical definitions, and legislation, may have on the CI risk classification process and the bottom line

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Distribution of the “Big Four”

United States

Cancer44.6%

1,258,000

MI23.7%

670,000

CABG13.9%

392,000

CVA17.7%

500,000

Canada

Cancer49.4%

129,000MI

26.1%68,000

CVA19.1%50,000

CABG5.4%

14,000

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Coronary Artery Mortality Trends

Ford ES et al. CAD Mortality Among Young Adults in USA 1980-2002. (J Am Coll Cardiol 2007;50:2128–32)

Among both men & women age > 35 years, the age-adjusted mortality rates from coronary heart disease have decreased steadily from 1980 through 2002.

49%

52%

About 50% of the decrease in mortality is related to a reduction in CV risk factors and the remainder is related to improvements in medical technology

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Ford ES et al. CAD Mortality Among Young Adults in USA 1980-2002. (J Am Coll Cardiol 2007;50:2128–32)

Among both men & women age 35-54 years, the age-adjusted mortality rates from coronary heart disease have already plateaued

Coronary Artery Mortality Trends

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Storm Clouds on the Horizon •Obesity •‘Metabolic Syndrome’ - Clustered heart attack risks (diabetes, prediabetes, lipids hypertension) associated with central obesity threaten to reduce or even reverse the declining trend in population cardiovascular mortality.

Are CI insurers protected from these epidemics?

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2003 Health Canada’s Wt Guidelines

Underweight < 18.5

Normal 18.5–24.9

Overweight 25.0–29.9

Obese, class I 30.0–34.9

Obese, class II 35.0–39.9

Obese, class III 40.0+

Lemieux S et al. CMAJ, Nov 23,2004

BMI (kg/m2)

Body Shape indicators of increased risk Waist circumference Male: > 40 inches (102m)

Female: > 35 inches (88cm)

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Canada Obesity Prevalence 1979 vs 2004

96

13

20

11

20

17

11

21 20

30 30

25 24

0

5

10

15

20

25

30

35

18-24 25-34 35-44 45-54 55-64 65-74 75+

1979 2004P

erc

en

t O

bese B

MI

> 3

0

Tjepkema. Adult Obesity in Canada. Statistics Canada-Cat. No.82-620-MWE Canadian Adult Age Bands

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Obesity & CV Risk Clustering

0 30 45 60Age

CVDPVD

Retinopathy

Nephropathy

Type 2DM

PreDM

Geneticsusceptibility

plus

Childhoodobesity

& inactivity

BP

Fats

&

Insulin resistance

Metabolic Syndrome

Excess CV Morbidity

NGT

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Epidemic of MS in USA/CDA by Age

25

34

4441

21

43

9.0

13

44

15

7.0

33

0

5

10

15

20

25

30

35

40

45

50

20-29 30-39 40-49 50-59 60-69 70+

MS

Prev

alen

ce (%

of p

op) Men

Women

Ford ES et al. Prevalence of the Metabolic Syndrome in US Adults.JAMA.2002;287:356-359

This data on the prevalence of the MS comes from an analysis of information obtained from 8814 US men & women age > 20 who participated in the Third National Examination survey from 1998-1994. This is a cross sectional survey of a nationally representative sample of the US population. Up to the time of this report, there was little available information on the US prevalence of the metabolic syndrome. This study indicates a very high prevalence of the MS increasing with age.

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Swiss Re Canadian Group Claims

CancerStrok

e

MI

MS Other

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Distribution of Denied Swiss Re Claims

Does not meet contractual definition

90 day waiting periodPreviously

diagnosedOther

Pre-ex

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Age-specific cancer incidence rates

Incid

en

ce p

er

1000

05

1015202530354045

15-19

25-29

35-39

45-49

55-59

65-69

75-79

85+

Age at diagnosis

MaleFemale

1.21.6

2.74.2

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SEER Incidence and U.S. MortalityAll Cancers, Female (per 1000)

Year of Cancer Diagnosis and U.S. Female Mortality

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

‘74

‘76

‘78

‘80

‘82 ‘84 ‘86 ‘88 ‘90 ‘92 ‘94

In

cid

en

ce p

er

10

00

3.11 3.08 3.03 3.07 3.14 3.273.36 3.43 3.47 3.48 3.424.0 1999-2005 Annual % change (APC) = -0.7%

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4.82

'74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94

3.72 3.89 3.95 4.09 4.13 4.25 4.36 4.51 4.78

5.34

1.0

2.0

3.0

4.0

5.0

6.0

SEER Cancer Incidence rate and U.S. MortalityAll Cancers, Male (per 1000)

Inci

den

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000

Year of Cancer Diagnosis and U.S. Male Mortality

1995-2005 APC = -0.6%

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Prostate Cancer Incidence Rates USA by Year

2.38

1.85

1.16

0

0.5

1

1.5

2

2.5

YEAR

Inci

denc

e/1000

http://seer.cancer.gov/faststats/sites.php?site=Prostate+Cancer&stat=Incidence#trend

Lung

Prostate

Colon

White Males

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Incidence Common Male Cancers(2000-USA, All Ages - Seer)

0

50

100

150

200

250

Prostate Lung Colorectal Urinary

Inci

den

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Th

ou

san

ds

Total 2000 661,200

2002 637,500 2008 745,180

31%(of all male cancers)

15%

10%9%

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Incidence Common Female Cancers (2000-USA, All Ages - Seer)

0

20

40

60

80

100

120

140

160

180

Breast Colorectal Lung

Inci

den

ce in

Th

ou

san

ds

30%

12%13%

Total 2000 596,000 2002 647,400 2008 692,000

(of all female cancers)

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CA Incidence Trends(1973-94, Seer, US Female, All Ages)

0

20

40

60

80

100

120

140

% in

crea

se

Lung MelanomaNon-Hodgkin’s

Kidney ThyroidLiver

BreastAll Cancers

122%

82%

67%53%

35% 34%23%

13%

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% in

crea

se

0

20

40

60

80

100

120

140

160

ProstateMelanoma

Non-Hodgkin’sLiver Testis

KidneyAll Cancers

141% 142%

90%75%

50%36%

27%

CA Incidence Trends (1973-94, Seer, US Male, All Ages)

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0

20

40

60

80

100

Whole Life < 85 < 75 < 65

% o

f C

ance

rs D

iagn

osed

Age

100%93%

71%

41%

Impact of Contract Duration on Cancer Diagnosis (Seer 1987 - 1991)

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CI pays a lump sum benefit

on the diagnosis of one of the

pre selected critical illnesses.

Product

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Risks in CI definitions

Increasingincidence

rates

Client perceptions about cover& exclusions

Evolvinglegislation

Scientificmedical

advances

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Myocardial infarct: definition flexibility?

2008

Benchmark MI Definition

1999

New myocardial infarction

tests

Troponin –T

Current myocardial infarction definition

CP, EKG changesenzyme rise & fall

Changing sensitivity and specificity of tests

Risks in CI definitions

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CI Individual

• concern about behaviour pattern of applicants• epidemic of informed applicants who have been

over represented in claims • possibly poor mix of applicants because of reduced

sales

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CI Individual

Applicant

UnderwriterActuary

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Incomplete Underwriting information

InformedApplicant

Underwriter

Actuary

CI Individual

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Pre-Existing Condition• A Critical Illness that is directly or indirectly related to a

condition for which the employee obtained medical care, or for which a reasonably prudent person would have sought medical attention within 24 months before he became insured.

• Medical care is considered to be obtained when he consults a doctor or other health care practitioner, uses medication on the advice of a doctor, or receives other medical services or supplies, advice or treatment, whether or not a specific diagnosis is made.

• This exclusion does not apply if the illness is diagnosed after he has been continuously insured for 24 months.

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CI Individual

•Can informed applicants hurt us?

Yes!

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Materially Important Nondisclosure • not commonly involved in contestable life insurance claims

• may be one important unrecognized factor responsible for adverse mortality experience especially in preferred lines of business

• more commonly recognized in other lines of business, such as DI and CI

• Recent increasing sales of CI insurance have really been an eye opener in understanding the behavior pattern of insurance applicants

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2008Group CI

• law of large numbers

• we hang our hat on pre-existing unless excess

• 8 out of 10 Group CI claims are paid

• CV claims seen are sometimes seen at young ages-late 30’s early 40’s

• potential worsening experience with increases in population risk factor clustering

• partnering with experienced reinsurer

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CI Benchmark DefinitionsAlzheimer’sAortic surgeryAplastic anemiaBacterial meningitisBenign brain tumourBlindnessCancerComaCoronary angioplastyCABGDeafnessMIHeart valve replacement

Kidney failureLoss of independent existenceLoss of limbsLoss of speechMajor organ failureMajor organ transplantMotor neuron diseaseMultiple sclerosisOccupational HIVParalysisParkinson’s diseaseSevere burnsStroke