1. 2008 General Meeting Assemblée générale 2008 Toronto, Ontario 2008 General Meeting Assemblée générale 2008 Toronto, Ontario Canadian Institute of Actuaries Canadian Institute of Actuaries L’Institut canadien des actuaires L’Institut canadien des actuaires

2. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Group Living Benefits Critical Illness Role of Medical Director Howard Minuk Chief Medical Officer Swiss Re Life & Health

3. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Group Living Benefits team player working with actuarial, underwriting, sales, claims Medical Director

4. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Medical Director and Pricing Actuary provide reliable incidence information for covered CI speculate what factors might affect population CI incidence trends help determine what impact underwriting will have on insured CI incidence determine detailed knowledge about how the product is priced and understand the impact that changing risk factors for CI will have on premium rate speculate what impact changes in medical technology, medical definitions, and legislation, may have on the CI risk classification process and the bottom line

5. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Distribution of the “Big Four” United States Cancer 44.6% 1,258,000 MI 23.7% 670,000 CABG 13.9% 392,000 CVA 17.7% 500,000 Canada Cancer 49.4% 129,000 MI 26.1% 68,000 CVA 19.1% 50,000 CABG 5.4% 14,000

6. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Coronary Artery Mortality Trends Ford ES et al. CAD Mortality Among Young Adults in USA 1980-2002. (J Am Coll Cardiol 2007;50:2128–32) Among both men & women age > 35 years, the age-adjusted mortality rates from coronary heart disease have decreased steadily from 1980 through 2002. 49% 52% About 50% of the decrease in mortality is related to a reduction in CV risk factors and the remainder is related to improvements in medical technology

7. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Ford ES et al. CAD Mortality Among Young Adults in USA 1980-2002. (J Am Coll Cardiol 2007;50:2128–32) Among both men & women age 35- 54 years, the age- adjusted mortality rates from coronary heart disease have already plateaued Coronary Artery Mortality Trends

8. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Storm Clouds on the Horizon Obesity ‘Metabolic Syndrome’ - Clustered heart attack risks (diabetes, prediabetes, lipids hypertension) associated with central obesity threaten to reduce or even reverse the declining trend in population cardiovascular mortality. Are CI insurers protected from these epidemics?

9. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 2003 Health Canada’s Wt Guidelines Underweight< 18.5 Normal18.5–24.9 Overweight25.0–29.9 Obese, class I30.0–34.9 Obese, class II35.0–39.9 Obese, class III40.0+ Lemieux S et al. CMAJ, Nov 23,2004 BMI (kg/m 2 ) Body Shape indicators of increased risk Waist circumference Male: > 40 inches (102m) Female: > 35 inches (88cm)

10. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Canada Obesity Prevalence 1979 vs 2004 Percent Obese BMI > 30 Tjepkema. Adult Obesity in Canada. Statistics Canada-Cat. No.82-620-MWE Canadian Adult Age Bands

11. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Obesity & CV Risk Clustering 0 30 45 60 Age CVD PVD Retinopathy Nephropathy Type 2 DM Pre DM Genetic susceptibility plus Childhood obesity & inactivity BP Fats & Insulin resistance Metabolic Syndrome Excess CV Morbidity NGT

12. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Epidemic of MS in USA/CDA by Age Ford ES et al. Prevalence of the Metabolic Syndrome in US Adults.JAMA.2002;287:356-359 This data on the prevalence of the MS comes from an analysis of information obtained from 8814 US men & women age > 20 who participated in the Third National Examination survey from 1998-1994. This is a cross sectional survey of a nationally representative sample of the US population. Up to the time of this report, there was little available information on the US prevalence of the metabolic syndrome. This study indicates a very high prevalence of the MS increasing with age.

13. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Page 13 Swiss Re Canadian Group Claims Cancer Stroke MI MS Other

14. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Page 14 Distribution of Denied Swiss Re Claims Does not meet contractual definition 90 day waiting period Previously diagnosed Other Pre-ex

15. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Age-specific cancer incidence rates Incidence per 1000 0 5 10 15 20 25 30 35 40 45 15- 19 25- 29 35- 39 45- 49 55- 59 65- 69 75- 79 85+ Age at diagnosis Male Female 1.2 1.6 2.7 4.2

16. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 SEER Incidence and U.S. Mortality All Cancers, Female (per 1000) Year of Cancer Diagnosis and U.S. Female Mortality 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 ‘74‘76 ‘78 ‘80‘82‘84‘86‘88‘90‘92‘94 Incidence per 1000 3.11 3.08 3.03 3.07 3.14 3.27 3.36 3.43 3.47 3.48 3.42 4.0 1999-2005 Annual % change (APC) = -0.7%

17. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 4.82 '74'76'78'80'82'84'86'88'90'92'94 3.72 3.89 3.95 4.09 4.13 4.25 4.36 4.51 4.78 5.34 1.0 2.0 3.0 4.0 5.0 6.0 SEER Cancer Incidence rate and U.S. Mortality All Cancers, Male (per 1000) Incidence /1000 Year of Cancer Diagnosis and U.S. Male Mortality 1995-2005 APC = -0.6%

18. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Prostate Cancer Incidence Rates USA by Year http://seer.cancer.gov/faststats/sites.php?site=Prostate+Cancer&stat=Incidence#tr end Lung Prostate Colon White Males

19. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Incidence Common Male Cancers (2000-USA, All Ages - Seer) 0 50 100 150 200 250 Prostate LungColorectalUrinary Incidence in Thousands Total 2000 661,200 2002 637,500 2008 745,180 31%(of all male cancers) 15% 10% 9%

20. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Incidence Common Female Cancers (2000-USA, All Ages - Seer) 0 20 40 60 80 100 120 140 160 180 BreastColorectalLung Incidence in Thousands 30% 12% 13% Total 2000 596,000 2002 647,400 2008 692,000 (of all female cancers)

21. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 CA Incidence Trends (1973-94, Seer, US Female, All Ages) 0 20 40 60 80 100 120 140 % increase Lung Melanoma Non-Hodgkin’s Kidney Thyroid Liver Breast All Cancers 122% 82% 67% 53% 35% 34% 23% 13%

22. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 % increase 0 20 40 60 80 100 120 140 160 Prostate Melanoma Non-Hodgkin’s LiverTestis Kidney All Cancers 141%142% 90% 75% 50% 36% 27% CA Incidence Trends (1973-94, Seer, US Male, All Ages)

23. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 0 20 40 60 80 100 Whole Life< 85 < 75< 65 % of Cancers Diagnosed Age 100% 93% 71% 41% Impact of Contract Duration on Cancer Diagnosis (Seer 1987 - 1991)

24. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 CI pays a lump sum benefit on the diagnosis of one of the pre selected critical illnesses. Product

25. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Risks in CI definitions Increasing incidence rates Client perceptions about cover & exclusions Evolving legislation Scientific medical advances

26. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Myocardial infarct: definition flexibility? 2008 Benchmark MI Definition 1999 New myocardial infarction tests Troponin –T Current myocardial infarction definition CP, EKG changes enzyme rise & fall Changing sensitivity and specificity of tests Risks in CI definitions

27. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 CI Individual concern about behaviour pattern of applicants epidemic of informed applicants who have been over represented in claims possibly poor mix of applicants because of reduced sales

28. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 CI Individual Applicant Underwriter Actuary

29. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Incomplete Underwriting information Informed Applicant Underwriter Actuary CI Individual

30. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Page 30 Pre-Existing Condition A Critical Illness that is directly or indirectly related to a condition for which the employee obtained medical care, or for which a reasonably prudent person would have sought medical attention within 24 months before he became insured. Medical care is considered to be obtained when he consults a doctor or other health care practitioner, uses medication on the advice of a doctor, or receives other medical services or supplies, advice or treatment, whether or not a specific diagnosis is made. This exclusion does not apply if the illness is diagnosed after he has been continuously insured for 24 months.

31. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 CI Individual Can informed applicants hurt us? Yes!

32. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Materially Important Nondisclosure not commonly involved in contestable life insurance claims may be one important unrecognized factor responsible for adverse mortality experience especially in preferred lines of business more commonly recognized in other lines of business, such as DI and CI Recent increasing sales of CI insurance have really been an eye opener in understanding the behavior pattern of insurance applicants

33. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 Group CI law of large numbers we hang our hat on pre-existing unless excess 8 out of 10 Group CI claims are paid CV claims seen are sometimes seen at young ages-late 30’s early 40’s potential worsening experience with increases in population risk factor clustering partnering with experienced reinsurer

34. 2008 General Meeting Assemblée générale 2008 2008 General Meeting Assemblée générale 2008 CI Benchmark Definitions Alzheimer’s Aortic surgery Aplastic anemia Bacterial meningitis Benign brain tumour Blindness Cancer Coma Coronary angioplasty CABG Deafness MI Heart valve replacement Kidney failure Loss of independent existence Loss of limbs Loss of speech Major organ failure Major organ transplant Motor neuron disease Multiple sclerosis Occupational HIV Paralysis Parkinson’s disease Severe burns Stroke