The 2004 Healthcare Conference

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The 2004 Healthcare Conference

• 25-27 April 2004, Scarman House, University of
  Warwick

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A New World Of Protection?

• Ian Sissons and Peter Banthorpe
• Munich Re UK Life Branch

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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?

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What is protection?
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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.
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Do current products protect?
Life Assurance Critical Illness Insurance Income
Protection Private Medical Cover Long-term
Care Hospital Cash
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What do we do at the moment?
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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

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What risks can customers be encouraged to manage?
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The major causes of claim - CIC
Source Claims Submitted to CMIB 2000 CI
Investigation excludes death claims
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The major causes of claim - IP
Source Wilkie Data. All years. Top 40 Causes of
Claim. DP26.
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The major causes of claim - PMI
Source MRe Specific Client Data
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The major causes of claim - summary

• Cancer
• Heart Attack
• Stroke
• Musculoskeletal injuries
• Psychological

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How do we reduce the risk?

• Exercise
• Diet
• Environment
• Preventative Drug Treatments

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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
• BMI
• Blood pressure
• Cholesterol levels
• Reduced levels of stress

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Relative Risk From Exercise For Various Diseases
Source The case for active exercise insurance.
Estelle V. Lambert et al.
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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
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BMI and Disease Risk
Adjusted Relative Risks for Various Diseases
(14.8 year average follow up)
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 3141311
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Drug Treatments and CHD

• Aspirin the perennial wonder drug!
• For high risk over 50s reduces chance of stroke
  and CHD by 20
• Costs c37p a month
• Impact on quality of life/reduce fear of disease

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Psychological/Musculoskeletal

• Could be work or lifestyle related
• Lifestyle underwriting excludes many
• Work related difficult to address
• Addressed through group insurances?
• Psychological exclusions?

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Delivering personal risk management
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What does the insurance industry need?

• Activities that are verifiable
• Cost effective
• Scientific proof/data on benefits
• Attractive to the public
• No side effects

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What do people want?

• Health improvements
• Financial Incentives
• Things people really want!
• Cheap cinema tickets
• Cheap travel
• Cheap gym membership
• Reward points(?)
• Insurance Benefits
• Reduced premiums
• Greater benefits

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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

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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?

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How to structure the products

• Need to encourage those lives which are improving
  (and discourage those that arent)
• 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?

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Where next?