1. 2009 General Meeting ● Assemblée générale 2009 Ottawa, Ontario ● Ottawa (Ontario) 2009 General Meeting ● Assemblée générale 2009 Ottawa, Ontario ● Ottawa (Ontario) Canadian Institute of Actuaries Canadian Institute of Actuaries L’Institut canadien des actuaires L’Institut canadien des actuaires Session/séance :Pooling Speaker(s)/conférencier(s) : Gary Walters

2. Outline of presentation Outline of issues Progress of CLHIA task force on Cat drugs –Transfer Rules –Industry Pooling Next steps

3. 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

4. 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

5. The issue for Insurers Industry Reputation Risk Insurer Viability Risk Current pooling approach ensures that bad groups cannot change carriers

6. CLHIA Cat Drug Task Force Constituted Fall 2008 Representatives from –GWL, Manu, Sun –Greenshield, Desjardins –Empire, Wawanesa –RGA, CLHIA

7. 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

8. 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

9. 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

10. 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

11. 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?)