Transcript A new world of protection?

The 2004 Healthcare Conference
25-27 April 2004, Scarman House, University of Warwick
A New World Of Protection?
Ian Sissons and Peter Banthorpe
Munich Re UK Life Branch
Contents
What is Protection?
What do we do at the moment?
What risks can the customer be encouraged to
manage?
Delivering personal risk management
Where next?
What is protection?
What is Protection?
Dictionary says:
Protect 1. Keep safe (a person, thing etc); defend;
guard…..
Protection 1 a the act or an instance of protecting. b the
state of being protected; defence. c a thing, person, or
animal that provides protection.
Source: The concise Oxford Dictionary. Ninth Edition.
Do current products protect?
Life Assurance
Critical Illness Insurance
Income Protection
Private Medical Cover
Long-term Care
Hospital Cash
What do we do at the moment?
What do we do at the moment?
A selection:
 Bright Grey – free gym trial, discounted health
screening, discounted health foods
 BUPA – health screening
 Axa – Denplan dental check-ups
What risks can customers be
encouraged to manage?
The major causes of claim - CIC
Cancer
Heart Attack
Stroke
CABG
MS
Kidney Failure
TPD
Others
Source: Claims Submitted to CMIB 2000 CI Investigation – excludes death claims
The major causes of claim - IP
Mental disorders
Ischaemic heart disease
Other musculoskeletal
Malignant neoplasms
Other nervous system
Arthritis and spondylitis
Other specified diseases
Others
Source: Wilkie Data. All years. Top 40 Causes of Claim. DP26.
The major causes of claim - PMI
Musculoskeletal
system diseases
Neoplasms
Digestive system
diseases
Genito-urinary
system diseases
Circulatory system
diseases
Others
Source: MRe Specific Client Data
The major causes of claim - summary
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Cancer
Heart Attack
Stroke
Musculoskeletal injuries
Psychological
How do we reduce the risk?
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Exercise
Diet
Environment
Preventative Drug Treatments
Exercise
 Numerous studies for classifying the benefits of moving
from inactive to moderate to vigorous exercise
 Studies concentrate on death from cause rather than
incidence but can proxy
 Direct benefits and also benefits on risk factors:
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BMI
Blood pressure
Cholesterol levels
Reduced levels of stress
Relative Risk From Exercise For
Various Diseases
Men
Illness
Females
Moderate Inactive Moderate Inactive
CHD
1.07
1.43
1.16
1.47
Diabetes
1.74
2.33
1.33
1.96
Prostate/Breast
Cancer
Lung Cancer
1.06
0.96
1.10
1.69
1.14
1.45
0.92
1.01
Source: The case for active exercise insurance. Estelle V. Lambert et al.
Diet
 Diet thought to account for 30% of cancers in Western
Countries but proof of cause/effect is limited
 Balanced diet of fruit, vegetables and cereals
recommended
 Effects on other risk factors:
 Blood pressure
 Lower cholesterol
 Control Weight
Source: The effect of diet on risk of cancer; Timothy Key et al; Lancet Volume 360; September 14 2002
BMI and Disease Risk
Adjusted Relative Risks for Various Diseases (14.8
year average follow up)
BMI
<20
20- 22-
24-
26-
28-
30-
Major coronary
event
Major Stroke
Event
Diabetes
0.79 1
1.12 1.38 1.49 1.81 2.13
1.23 1
1.09 1.20 1.39 1.21 1.70
0.66 1
1.12 1.83 3.58 5.20 9.68
Source: Body Weight: implications for the prevention of coronary heart disease, stroke and diabetes mellitus in a cohort study of middle
aged men; Shaper et al. BMJ 1997; 314:1311
Drug Treatments and CHD
 Aspirin: the perennial wonder drug!
 For high risk over 50’s reduces chance of
stroke and CHD by 20%
 Costs c37p a month
 Impact on quality of life/reduce fear of disease
Psychological/Musculoskeletal
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Could be work or lifestyle related
Lifestyle underwriting excludes many
Work related difficult to address
Addressed through group insurances?
Psychological exclusions?
Delivering personal risk management
What does the insurance industry
need?
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Activities that are verifiable
Cost effective
Scientific proof/data on benefits
Attractive to the public
No side effects
What do people want?
 Health improvements
 Financial Incentives
 Things people really want!
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Cheap cinema tickets
Cheap travel
Cheap gym membership
Reward points(?)
 Insurance Benefits
 Reduced premiums
 Greater benefits
Where does the value come from?
 Explicit Charging
 Does this work in a competitive environment?
 Lower claims
 Better quality of life at outset
 Improving quality of life over term of policy
 Better persistency
 Cheaper costs of obtaining and running business
 Non-Insurance Benefits cheaper due to
commercial/affinity deals
Lower Claims
 Better Quality of life at Outset
 Verified by preferred/lifestyle underwriting factors?
 What about other pools of risk?
 Improving quality of life over term of policy
 Verifiable?
 Does this benefit annual policies?
How to structure the products
 Need to encourage those lives which are improving
(and discourage those that aren’t)
 Age at entry rates
 Competitive market
 Annually Costed Long-term products
 Less competitive market
 More flexible in passing on discounts
 Short-term products
 Reserving implications?
Where next?