Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 2 Agenda Japanese Cancer Plans Cancer Pricing Data Cancer Incidence Trends Cancer Screening Cancer Treatment and Mortality Selective Lapsation Conclusions Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 3 Japanese Cancer Plans Core Benefits – Cancer Diagnosis – Cancer Hospitalisation – Cancer Surgery – Cancer Death / TPD Other Benefits – Discharge from Hospital / Convalescence – Outpatient Treatment – Long-Term Hospitalisation – Palliative Care – Survival / Maturity / No Claim Bonus – Non-Cancer Death Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 4 Japanese Cancer Plans Definition of Cancer – Carcinoma in Situ – Non-Melanoma Skin Cancer – Minor Cancers Premium Rate Guarantees – With the approval of the FSA – Customer disclosure requirements Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 5 Cancer Pricing Data Company Experience Data – eg Aflac and other major players National Population Incidence – Cancer Registry – under-reported and delayed National Population Hospitalisation – Patient Survey National Population Mortality – Death Registry LIAJ Mortality Studies  Risk of Misestimation / Mispricing? Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 6 Cancer – Major Sites Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 7 Cancer – Major Sites Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 8 International Comprisons – Male Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society Cancer Site% of Cancers in Japan Incidence Comparison with Asian Countries Incidence Comparison with Western Countries 1. Stomach 20-25%20% lower than Korea, 3 to 5 times higher than Singapore and Hong Kong 7 to 10 times higher than the UK and US. 2. Lung 10-15%30-40% lower than Korea, Singapore and Hong Kong % lower than the UK and US. 3. Colon 10-15%20-40% higher than Singapore and Hong Kong, 80% higher than Korea % higher than the UK and US. 4. Liver 8-12%20% higher than Singapore, 25-50% lower than Hong Kong and Korea. 4 to 8 times higher than the UK and US. 5. Rectal 5-10%Similar to Hong Kong, Singapore and Korea % higher than the US and UK. 6. Oesophagus 3-7%40% higher than Hong Kong and Korea, 130% higher than Singapore. 30% higher than the UK, 120% higher than the US. Top 6 Cancers 70-75%

Slide 9 International Comprisons – Female Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society Cancer Site% of Cancers in Japan Incidence Comparison with Asian Countries Incidence Comparison with Western Countries 1. Breast 25-30%30% higher than KR, similar to HK and 40% lower than SG. 60% lower than the UK and US. 2. Stomach 10-15%20% lower than KR, 3 to 4 times higher than SG and HK. 7 to 8 times higher than the UK and US. 3. Colon 8-12%70% higher than KR but similar to HK and SG. 30% higher than the UK and similar to the US. 4. Lung 5-10%20-40% lower than HK and SG, but similar to KR % lower than the UK and US. 5. Cervix Uteri 3-7%30-40% lower than SG and KR, but similar to HK. 30% higher than the UK and US. 6. Rectum 3-7%Similar to HK, SG and KR.Similar to the UK and US. 7. Ovary 3-7%30% higher than KR, 20-30% lower than HK and SG 20-40% lower than the UK and US. 8. Thyroid 3-7%60% lower than KR, similar to HK and SG. 120% higher than the UK, 50% lower than the US. Top 8 Cancers 75-80%

Slide 10 Cancer Incidence Trends - Males Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 11 Cancer Incidence Trends - Males Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 12 Cancer Incidence Trends - Females Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 13 Cancer Incidence Trends - Females Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 14 Cancer Incidence Trends Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society Cancer SiteJapanese TrendsAsian Trends Western Trends Long-TermRecent Stomach  3-4% pa HK:  1-2% pa SG:  5-7% pa UK:  3-6% US:  0-3% Breast  ~4% pa HK:  2-3% pa SG:  4-5% pa UK:  ~2% pa US:  3-4% pa Lung M:  then  F:  steadily M:  ~1% pa F:  ~2% pa HK:  1-2% pa SG:  5-6% pa UK:  0-3% pa US:  3-5% pa Colon  to 1990s then   1-2% pa HK: stable SG:  1-2% pa UK:  1-2% pa US:  2-3% pa Rectum  to 1990s then stable  0-1% pa HK:  1-3% pa SG: M  1%,F  5-6% UK: stable US:  0-3% pa Liver  to 1990s then   3-5% pa HK:  4-5% pa SG:  3-5% pa UK: M  1%,F  1-2% US: M  4%,F stable Cervix Uteri  to 1990s then flattening  ~1% pa HK:  ~4% pa SG:  5-6% pa UK:  ~2% pa US:  5-6% pa

Slide 15 Cancer Incidence Trends Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society Cancer SiteJapanese TrendsAsian Trends Western Trends Long-TermRecent Oesophagus  1-2% pa HK:  5-7% pa SG: M  5%,F stable UK: M  1%,F  1% US:  2-5% pa Thyroid stable M: no trend F:  ~2% pa HK:  ~1% pa SG:  0-1% pa UK:  5-6% pa US:  5-7% pa Corpus Uteri  ~3% pa HK:  ~3% pa SG:  ~3% pa UK:  1-2% pa US:  ~2% pa Ovary  ~4% pa HK:  3-4% pa SG:  ~5% pa UK:  ~2% pa US:  ~4% pa Prostate  5-6% pa HK:  ~10% pa SG:  6-7% pa UK:  ~8% pa US:  1-2% pa All Malignant Cancers M:  F:  M:  1-2% pa F:  0-1% pa HK:  0-1% pa SG: M  3%,F stable UK:  0-1% pa US:  ~2% pa

Slide 16 Cancer Screening Programmes Stomach Cancer (1983) – Photofluorography – Endoscopy / Gastrofiberscopy Cervical Cancer (1983) – Pap Smear Breast Cancer (1987) – Palpation – Mammogram only since 2004 Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 17 Cancer Screening Programmes Lung Cancer (1987) – Chest X-ray and Sputum Cytology Colorectal Cancer (1992) – Faecal Occult Blood Test (FOBT) Employer Examinations (Occupational Health & Safety) – Chest X-ray and Sputum Cytology (compulsory) – Other optional tests depending on employer / clinic – Gastrofiberscopy – FOBT – Mammogram – Pap Smear Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 18 Changes in Screening Tests Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society Cancer SiteScreening TestSojourn Time (Years) Sensitivity Stomach Photofluorography360% Gastrofiberscopy570% Breast Mammogram580% Lung Chest X-ray + Sputum150% Computer Tomography (CT) Scan580% Colorectal Faecal Occult Blood Test (FOBT)250% Barium Enema570% Total Colonoscopy1070% Prostate Prostate Specific Antigen (PSA)1070%

Slide 19 Impact of Increased / Improved Screening Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society Accelerated Diagnosis Increased Incidence

Slide 20 Cancer Screening Programmes Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society Screening ScenarioEstimated Impact on Cancers Detected MalesFemales Stomach 50% by Gastrofiberscopy vs 20% by Photofluorography +19.9%+15.6% Colon 50% screened by Colonoscopy vs 20% by FOBT +60.2%+49.8% Breast 50% vs 15% screened by Mammogram N/A+2.5% Lung 80% screened by CT Scan vs 80% by X-ray +53.7%+35.5% Prostate 15% vs 5% screened by PSA +27.9%N/A

Slide 21 Cancer Risk Factors Stomach Cancer – Diet/Food – westernisation, refrigeration, freshness – Helicobacter pylori bacterium – Smoking Breast Cancer – Fertility – delay in having children, fewer children Lung Cancer – Smoking – prevalence decreasing by cohort Colorectal Cancer – Diet/Food – westernisation, meat and fat – Obesity Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 22 Cancer Risk Factors Liver Cancer – Hepatitis – especially HCV from blood transfusion Cervical Cancer – Pap Smear screening – Human papilomavirus (HPV) - vaccination Prostate Cancer – PSA screening Thyroid Cancer – Ultrasound screening Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 23 Cancer Shock Scenarios Sudden increase in screening rates Upgrade of screening tests to best available Mass screening of minor cancers – PSA screening for minor prostate cancers – Checking of spots, moles and blemishes on the skin for cancer – Pap smears and mammograms detecting carcinomas in situ and cancers of the cervix and breast – Full body scans Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 24 Cancer Trends Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society Cancer SiteTrend Impact ScreeningRisk FactorsOverall Stomach  Breast Young , Old  Lung  M , F stableM stable, F  Colon  stable Rectum  Stable Liver  Cervix Malignant , CiS  Corpus Uteri N/A  Ovary N/A  Prostate  stable 

Slide 25 Cancer Treatment and Mortality Underlying claim patterns and trends follow claim patterns and trends of cancer diagnosis Second-order factors – Earlier cancer diagnosis – More frequent and shorter hospital stays – Less invasive surgical treatment (esp endocopic) – Better prognosis and lower mortality Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 26 Cancer Hospitalisation Trends Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society MalesFemales Incidence Trend +6.4% pa+8.2% pa Duration Trend -7.8% pa-9.5% pa Combined Trend -1.8% pa-1.6% pa Male – Average Duration Male - % staying 30+ days 42.9%36.5%26.5% Male - % staying 20+ days 58.2%51.0%39.3% Male - % staying 10+ days 76.3%70.5%59.5% Female – Average Duration Female - % staying 30+ days 40.0%33.0%24.2% Female - % staying 20+ days 55.6%47.1%36.4% Female - % staying 10+ days 75.9%68.1%58.0%

Slide 27 Cancer Surgery Trends Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society Type of Treatment Surgical Treatment Only 21.9%39.4% Medical Treatment Only 10.8%14.2% Radiotherapy Only 4.7%2.5% Endoscopic Treatment Only 0.0%15.6% Endoscopic and Other Treatment 0.0%2.0% Surgical and Medical Treatment 26.9%8.1% Surgical and Radiotherapy 4.4%2.4% Medical Treatment and Radiotherapy 12.7%8.2% Surgical, Medical and Radiotherapy 13.0%1.8% Conservative Treatment 5.6%5.8% TOTAL 100.0% All Cases with Surgical Treatment 66.2%53.4% All Cases with Medical Treatment 63.4%32.7% All Cases with Radiotherapy 34.8%15.1%

Slide 28 Cancer Mortality Trends Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society Population Data 5yrs to 2005 Population Data 10yrs to 2005 LIAJ Data 5yrs to 2002 Male -2.5%-2.6%-2.8% Female -1.3%-1.4%-1.6%

Slide 29 Selective Lapsation Healthy lives are happy to lapse Unhealthy lives stay in the portfolio Especially for cancer treatment and death benefits (ie those lives already diagnosed with cancer will stay in the portfolio) Especially relevant for those policies that are designed to be lapsed Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society

Slide 30 Selective Lapse Model Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society Healthy (l x a ) Cancer (l x i ) LapsedDead non-Cancer Dead Cancer d x aw d x ad d x id d x ic d x ai

Slide 31 Cancer Mortality Trends Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society 5% pa “Selective” Lapses 10% pa “Selective” Lapses 20% pa “Selective” Lapses Policy Year Male Entry Age 40 Female Entry Age 40 Male Entry Age 40 Female Entry Age 40 Male Entry Age 40 Female Entry Age % %104.1% 111.4%108.8%126.6%120.4% %107.1% 120.5%115.4%151.6%137.7% %114.1% 140.7%132.7%223.9%193.7% %120.5% 156.5%150.4%304.0%270.2% %126.7% 169.2%169.5%390.5%372.7% %132.9% 180.7%189.4%471.1%478.0% %137.7% 188.4%204.8%507.8%506.7%

Slide 32 Conclusions Limted availability of relevant and credible pricing data Underlying incidence trends for many major cancer sites Increasing ability and capacity to detect and diagnose early cancers, minor cancers and carcinomas in situ Selective lapsation risk for cancer treatment and cancer mortality benefits High cost of long-term premium rate guarantees Cancer Products in Japan Lawrence Tsui Singapore Actuarial Society