Transcript Canadian Institute of Actuaries L’Institut canadien des

Canadian
Institute
of
Actuaries
L’Institut
canadien
des
actuaires
2009 General Meeting ● Assemblée générale 2009
Ottawa, Ontario ● Ottawa (Ontario)
Session/séance :Pooling
Speaker(s)/conférencier(s) : Gary Walters
Outline of presentation
• Outline of issues
• Progress of CLHIA task force on Cat drugs
– Transfer Rules
– Industry Pooling
• Next steps
The issue
• Increased number of high cost drugs
– New Drugs
– Out of Hospital
– Provinces excluding new drugs from
formularies
• Recurrent Drugs aren’t insurance
– Variations in companies’ pooling
– Annual renewals
The issue for employers
• Bad luck of a large one-off claim
• Bad luck of a large recurrent claim
• Affordable Drug Coverage Availability
– Renewals
– Changing carriers
The issue for Insurers
• Industry Reputation Risk
• Insurer Viability Risk
• Current pooling approach ensures that
bad groups cannot change carriers
CLHIA Cat Drug Task Force
• Constituted Fall 2008
• Representatives from
– GWL, Manu, Sun
– Greenshield, Desjardins
– Empire, Wawanesa
– RGA, CLHIA
Task Force Mandate
– Propose rules acceptable to member
companies to address the industry
reputational risk arising from lack of
affordability or availability of medical
coverage for groups where a member
makes a claim for an expensive drug.
– Propose an industry pooling mechanism or
other solution that will allow all member
companies of whatever size to abide by the
rules in (a) without unacceptable impact on
their other clients or bottom line
Task Force Proposals
• Two sub-groups
• Proposal to companies sent earlier this
week
– CLHIA Transfer Guidelines
– Industry Pool
• Discussion on 7 Dec at CLHIA Group
Committee
• Look for agreement in principle in early
2010
Task Force Proposal
CLHIA Transfer Guidelines
• Exclude ASO & Refund accounted
• Each company decides what they will offer re
large drugs
• Compulsory for insured plans
• Must be well communicated up front
• Limits rate action on large claims
• A new company must also offer a plan if
employer had plan with previous insurer
– Pre-ex otherwise
Task Force Proposal
Industry Drug Pool
• Protect Insurers not employers/employees
• Only a % of large recurrent claims after 2
years
• Multiple pools to cover provincial
differences
• What drugs will be covered?
• Must be simple
Next Steps
• Companies are provided with clarification
as needed
• Agreement in principle
• CLHIA Details finalised
– Administration
– What drugs covered by pool
• Companies design their pooling programs
• Implementation (2011?)