1. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 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

2. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 CRITICAL ILLNESS INCIDENCE STUDY UPDATE (PD-15 ) Charlie Philbrook Emile Elefteriadis CIA General Meeting 19 November 2009, 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009

3. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Introduction – Emile Elefteriadis Incidence Rate Development Overview- Charlie Philbrook Incidence Rate Development Example- Emile Elefteriadis Experience Study-Charlie Philbrook Agenda 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009

4. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Introduction Living Benefits Subcommittee formed in late 2006 Initial mandate to focus on Critical Illness (CI) and develop a base table and experience study. –two reports; one for the table and its development and one for the experience study –to assist the profession –a rich source of population based data to derive incidence rates –display various methodologies of construction –it will be a table showing population adjusted incidence –collect and compare experience to a reference table Similar to Staple Inn reports on CI Report on table to be published before Q2 2010 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009

5. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Introduction Current committee members –Alethea Lyn –Anke Roman –Banasha Shah –Charlie Philbrook –Chris Piper –Debra Shelley –Dominic Hains –Frederic Jacques –Geoff MacDonell –Graham Dixon –Ian Jack –Martin Vezina Former members: Cathy Shum-Adams, Saul Gercowsky 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009

6. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Purpose and Scope of the Study To develop a base table from Canadian data which can be used for benchmarking experience and determining appropriate pricing and valuation bases. There is differentiation by age and sex but not by smoking status. There is no adjustment for insured selection and underwriting impact (other than prevalence and first-ever adjustments). It’s a population based table. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009

7. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Illnesses Covered Cancer (Life-threatening, Benign Brain Tumour, Malignant Melanoma, Early Stage Prostate, Ductal Carcinoma in situ Heart (Heart Attack (AMI), Coronary Artery Bypass Graft (CABG), Coronary Angioplasty, Heart Valve Surgery, Aortic Surgery Stroke Kidney Failure Major Organ Failure/Transplant Multiple Sclerosis Alzheimer’s Disease Parkinson’s Disease Loss of Independent Existence Minor Conditions (Coma, Occupational HIV, Blindness & Deafness, Paralysis, Severe Burns, Loss of Limbs/Dismemberment, Loss of Speech, Bacterial Meningitis, ALS-Motor Neuron)

8. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Data Sources Most sources cover the general population in Canada. Major Sources Canadian Institute for Health Information (CIHI) Statistics Canada (StatsCan) Canadian Cancer Statistics, 2007. Institute for Clinical and Evaluative Studies (ICES)

9. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Development of Incidence Rates Definition Base source Trending First-ever adjustment Sudden death adjustment Overlap Prevalence 31-day mortality Summary

10. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 General Process Identify the insurance definition for condition Find applicable data useful for calculating incidence rates Make adjustments to the data to reflect definition, gender and age, first occurrence, prevalence, etc. Document the assumptions and process Present to sub-group with peer review and once final present to entire group

11. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 CI Definition of Multiple Sclerosis Benchmark Definition: Multiple Sclerosis is defined as “a definite diagnosis of at least one of the following: –two or more separate clinical attacks, confirmed by magnetic resonance imaging (MRI) of the nervous system, showing multiple lesions of demyelination; or, –well-defined neurological abnormalities lasting more than 6 months, confirmed by MRI imaging of the nervous system, showing multiple lesions of demyelination; or, –a single attack, confirmed by repeated MRI imaging of the nervous system, which shows multiple lesions of demyelination which have developed at intervals at least one month apart. The diagnosis of Multiple Sclerosis must be made by a Specialist.” Thanks to Chris Piper for this section!

12. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Possible MS Data Sources Canadian MS Sources: – MS Society of Canada – Study on incidence and prevalence of MS in Saskatoon. – Alberta study using Alberta Health Care Insurance Plan data International MS Sources: – European sources – Finland has high rate of MS similar to Canada – Staple Inn Report (Exploring the Critical Path)

13. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Saskatoon Study Why use Saskatoon study data? – Canadian source with best level of detail – age and gender splits – Need to decide whether good representative data for all of Canada

14. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Saskatoon Study Incidence Rates Incidence of multiple sclerosis in Saskatoon, 1970 to 2004 MenWomenTotal AgeRate* 0-14—0.30.15 15-244.118.311.5 25-3411.525.918.7 35-448.520.014.5 45-545.97.76.8 55-641.64.83.2 65-741.10.40.7 75——— Total4.711.28.1 Incidence rate per 100,000 Saskatoon population, 2001. Source: Incidence and Prevalence of Multiple Sclerosis in Saskatoon, Saskatchewan

15. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Population Mix Adjustment Are there significant differences in the characteristics of the population in Saskatoon relative to Canada in general which could impact the incidence rates? MS incidence and prevalence has been shown to vary based on: – Ethnicity – Country / Region – higher in Canada and within specific regions in Canada (prairies) – Gender – higher in females (F:M – 2.1 to 3.6 depending on study) Overall incidence adjusted to Canadian population is 102.8% for Male and 102.4% for Female

16. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Progressive Form Adjustment The insurance definition of MS pays out on a more progressive form of the condition – not initial diagnosis. This means that a method is needed to adjust the data to reflect when the payment would occur under the CI definition. Sources: – Staple Inn Paper – Kurtze Expanded Disability Status Scale – MS Society

17. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Progressive Form Adjustment Without further data the Modified Staple Inn approach is preferred approach: – Simple approach – Approach: 10% occur immediately with 90% occurring evenly over the next 14 years.

18. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Trending Adjustment Nothing conclusive to suggest an increase in incidence in the population since 2001. There was evidence of increases in the 50 years prior but could be due to advancements in medical technology and ability to diagnose.

19. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Recurrence Adjustment Not relevant for MS as it is a progressive condition with symptoms that change over decades of the diagnosed person’s lifespan.

20. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Overlap Adjustment The overlap adjustment is important for other conditions such as Stroke, Coronary Artery Bypass Surgery, etc. as there exists a strong correlation in the incidence of the conditions. No overlap adjustment was assumed for MS as there is no available evidence linking MS to any of the other critical illness conditions in the study.

21. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Prevalence Adjustment Same source as incidence rates – essentially zero adjustment by age and gender. Estimates are that 55,000 to 75,000 cases exist in Canada.

22. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 30 Day Survival Adjustment General population mortality as initial mortality rate not known to increase significantly. More important for conditions such as heart attack and stroke.

23. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Final Incidence Rates

24. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Comparison to Other Sources Source: Staple Inn Report (Exploring the Critical Path)

25. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Canadian Individual Critical Illness Morbidity Study Purpose is to study CI experience relative to the reference tables and report results along dimensions that are of interest to actuaries Similar to individual mortality report, but tailored to Critical Illness »by covered condition »by ROP vs non-ROP »by # of covered conditions »results presented in pivot table format

26. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Canadian Individual Critical Illness Morbidity Study Basis of Investigation –Canadian adult lives, individual, single life only –fully underwritten (nonmed, paramed, medical) –standard and substandard –stand-alone and acceleration –conversions and plan changes (original age and duration) First study will cover claims and exposures for policies with policy anniversary years ending in 2003 – 2007 6 insurers have agreed to participate so far (with a 7 th committed for next year) and a few others are still deciding

27. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Canadian Individual Critical Illness Morbidity Study Study contracted to Barbara Thomson of Thomson Data Analysis Three files required –Exposure File –Coverage File –Claims File Coverage File will permit analysis by impairment –will be able to capture full benefit and partial benefits Plan for publication of report is October of 2010 –could be significant delays depending on timing and quality of data submissions

28. 2009 General Meeting Assemblée générale 2009 2009 General Meeting Assemblée générale 2009 Canadian Individual Critical Illness Morbidity Study Coverage file may be time consuming to produce in the first year –Requires knowledge of what conditions are covered under all contracts sold over time –If not stored on system, could require manually pulling contracts Common link between three submission files is key Submission request reflects the fact that there can be partial benefit payments Unsure of overlap impact –A stroke followed by a coma… which one is reported? Expect to see higher proportion of litigated claims Enough data is there to do a mortality or lapse study as well, though not in scope for 2010