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The 2003 Healthcare Conference Actuaries Adding Value 5-7 October 2003 Scarman House, The University of Warwick
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Workshop Session C1 : Risk Factors in Insured Lives Mortality and Critical Illness Experience nNeil Robjohns nRajeev Shah
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Risk Factors in Insured Lives Mortality and Critical Illness Experience A comparison of Critical Illness versus Mortality n Historic Trends n Pointers to Future Trends n Select Patterns n Causes of Claim n The impact of claim delays and IBNR
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Risk Factors in Insured Lives Mortality and Critical Illness Experience A comparison of Critical Illness versus Mortality n Historic Trends n Pointers to Future Trends n Select Patterns n Causes of Claim n The impact of claim delays and IBNR
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Historic Trends n Population trends n Impact of falling prevalence of smoking n Variations by socio-economic group
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Summary of Trends in CI Incidence and Mortality Best Estimate Avg Change % pa, England & Wales, 1980-2000 Men, aged 40 - 60 Size of balls represents relative importance of CI measured by incidence rates
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Summary of Trends in CI Incidence and Mortality Best Estimate Avg Change % pa, England & Wales, 1980-2000 Men, aged 40 - 60 Size of balls represents relative importance of CI measured by incidence rates
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Summary of Trends in CI Incidence and Mortality Best Estimate Avg Change % pa, England & Wales, 1980-2000 Women, aged 40 - 60 Size of balls represents relative importance of CI measured by incidence rates
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Summary of Trends in CI Incidence and Mortality Best Estimate Avg Change % pa, England & Wales, 1980-2000 Women, aged 40 - 60 Size of balls represents relative importance of CI measured by incidence rates
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Overview of CI Trends research Impact of Changes in Smoking Prevalence Rough estimates of the risks faced by ‘typical’ smokers relative to those who have never smoked are : n Heart Attack risk - 2 to 3 times higher n Stroke risk - 2 to 4 times higher n Overall Cancer risk - around double n Lung Cancer risk - 10 to 15 times higher
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Summary of Trends in CI Incidence and Mortality Rough Estimate Avg Change % pa, England & Wales, 1980-2000 Men, aged 40 - 60
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Summary of Trends in CI Incidence and Mortality Rough Estimate Avg Change % pa, England & Wales, 1980-2000 Women, aged 40 - 60
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Summary of Trends in CI Incidence and Mortality Estimates for 40 – 60 age group, England & Wales, 1980-2000 At aggregate population level : n Mortality rates have fallen 2½%pa for men, 2%pa for women. n CI incidence fell 1%pa for men, but has risen ½%pa for women. So, for smoker-segregated rates in the 1990’s the picture looks far worse : n CI incidence rose by ½ to 1%pa for men n CI incidence rose by 1 to 1½%pa for women. n Mortality rates fell by 2%pa for men, 1½%pa for women. But : n Changes in smoking prevalence accounted for falls of a little over 1%pa for men and ½%pa for women in the 1980’s. n This effect is waning and was much smaller in the 1990’s. n Even after allowing for this smoking prevalence effect, trends for the 1990’s were worse than for the 1980’s.
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Relative CI Rates by Deprivation Category Scotland, 1989 – 93, Ages 40 – 59, Males
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Relative CI Rates by Deprivation Category Scotland, 1989 – 93, Ages 40 – 59, Females
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Summary of Trends in CI Incidence and Mortality Avg Change % pa, Scotland, Population & Insured (Dep Cat 1 - 3) Men, aged 40 – 60, 1981 - 2000 Size of balls represents relative importance of CI measured by incidence rates
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Summary of Trends in CI Incidence and Mortality Avg Change % pa, Scotland, Population & Insured (Dep Cat 1 - 3) Men, aged 40 – 60, 1981 - 2000 Size of balls represents relative importance of CI measured by incidence rates
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Summary of Trends in Cancer Incidence and Mortality Avg Change % pa, Scotland, Population & Insured (Dep Cat 1 - 3) Men, aged 40 – 60, 1981 - 2000 Size of balls represents relative importance of cancer site measured by incidence rates
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Summary of Trends in Cancer Incidence and Mortality Avg Change % pa, Scotland, Population & Insured (Dep Cat 1 - 3) Men, aged 40 – 60, 1981 - 2000 Size of balls represents relative importance of cancer site measured by incidence rates
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Summary of Trends in CI Incidence and Mortality Avg Change % pa, Scotland, Population & Insured (Dep Cat 1 - 3) Women, aged 40 – 60, 1981 - 2000 Size of balls represents relative importance of CI measured by incidence rates
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Summary of Trends in CI Incidence and Mortality Avg Change % pa, Scotland, Population & Insured (Dep Cat 1 - 3) Women, aged 40 – 60, 1981 - 2000 Size of balls represents relative importance of CI measured by incidence rates
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Summary of Trends in Cancer Incidence and Mortality Avg Change % pa, Scotland, Population & Insured (Dep Cat 1 - 3) Women, aged 40 – 60, 1981 - 2000 Size of balls represents relative importance of cancer site measured by incidence rates
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Summary of Trends in Cancer Incidence and Mortality Avg Change % pa, Scotland, Population & Insured (Dep Cat 1 - 3) Women, aged 40 – 60, 1981 - 2000 Size of balls represents relative importance of cancer site measured by incidence rates
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Summary of Trends in CI Incidence and Mortality Population & Insured (Dep Cat 1 - 3) Estimates for 40 – 60 age group, Scotland, 1980-2000 For the ‘insured group’ relative to the population : n Rates for heart attack and stroke are around 75% to 80%. n Rates for lung cancer are around 65% to 70%. n Rates for other cancers are around 95% to 110%. So, n Cancer is a larger part of total cost for insured lives than population. And for trends on each major CI, the ‘insured group’ : n Fared better in the 1980’s (bigger falls, lesser rises). n Fared worse in the 1990s’.
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Risk Factors in Insured Lives Mortality and Critical Illness Experience A comparison of Critical Illness versus Mortality n Historic Trends n Pointers to Future Trends n Select Patterns n Causes of Claim n The impact of claim delays and IBNR
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Simplistic Model of Disease Timeline
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Simplistic Model of Disease Timeline Prevention - Possible Outlook for Trends n Generally positive for both Mortality and CI, n… but beware lifestyle changes and obesity. n Likely steady trend, n… but possible leaps forward (eg: Genetics, Polypill, ??). n Positive impact of falling prevalence of smoking will run out of steam. n Reduced impact on insured lives ? n Little impact on cancer ? n Strong positive impact of prevention measures on heart attack rates over last 20 years.
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Simplistic Model of Disease Timeline Detection - Possible Outlook for Trends n Almost all negative for CI (earlier claims, less severity), n But positive for mortality, n Probable step change / shocks. n Even if not developed into national screening programmes, unleashes clear scope for anti-selective behaviour by insureds. n CI definitions without a severity underpin are clearly vulnerable.
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Simplistic Model of Disease Timeline Treatment - Possible Outlook for Trends n Expect improvements in mortality / morbidity, but after CI claim event. n May reduce CI rates where CI definitions have a credible, effective severity underpin. n If morbidity post CI-event is reduced, benefits become nearer to “windfall” status.
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Pointers to Future Trends n Consider how our interests are aligned with medical advances and social change n Outlook for mortality remains very positive n But impact of medical advance on CI is far less clear nPotential steady gains from prevention measures, nBut likely step-increases from disease / event detection, nPossible gains from treatment mainly accrue to insureds under current definitions.
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Risk Factors in Insured Lives Mortality and Critical Illness Experience A comparison of Critical Illness versus Mortality n Historic Trends n Pointers to Future Trends n Select Patterns n Causes of Claim n The impact of claim delays and IBNR
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Select Patterns n Population Comparisons n Male / Female Differentials n Initial Selection n Smoker Selection n Selection by Distribution Channel
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Comparison against population rates for Males
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Comparison against population rates for Females
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Male-Female Differentials
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Initial Selection
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Smoker differentials
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100A/Es Split by Sales Channel - Males
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100A/Es Split by Sales Channel - Females
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Risk Factors in Insured Lives Mortality and Critical Illness Experience A comparison of Critical Illness versus Mortality n Historic Trends n Pointers to Future Trends n Select Patterns n Causes of Claim n The impact of claim delays and IBNR
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Causes of Claim n 100 A/E n Major Causes
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Claims by Cause - Males Critical Illness Groupings Cancer Heart Attack Stroke Kidney Failure All* All neoplasms Heart Attack & CABG Stroke Kidney Failure The above & MS, MOT, TPD Cause of Death Groupings Cancer Heart Attack Stroke Kidney Failure All** All neoplasms Acute MI, Other IHD & HD & Other Circulatory Cerebrovascular & Hypertensive Cirrhosis of liver & Nephritis/Nephrosis The above & other causes analysed
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Claims by Cause - Females Critical Illness Groupings Cancer Heart Attack Stroke Kidney Failure All* All neoplasms Heart Attack & CABG Stroke Kidney Failure The above & MS, MOT, TPD Cause of Death Groupings Cancer Heart Attack Stroke Kidney Failure All** All neoplasms Acute MI, Other IHD & HD & Other Circulatory Cerebrovascular & Hypertensive Cirrhosis of liver & Nephritis/Nephrosis The above & other causes analysed
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100A/Es - Critical Illness vs Life Assurance - Males 100A/E Cause of Claim / Death Life Assurance Critical Illness
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100A/Es - Critical Illness vs Life Assurance - Females 100A/E Cause of Claim / Death Life Assurance Critical Illness
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Claims by Cause as percentage of All Claims Critical Illness vs Life Assurance - Males % Cause of Claim / Death Life Assurance Critical Illness
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Claims by Cause as percentage of All Claims Critical Illness vs Life Assurance - Females % Cause of Claim / Death Life Assurance Critical Illness
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Risk Factors in Insured Lives Mortality and Critical Illness Experience A comparison of Critical Illness versus Mortality n Historic Trends n Pointers to Future Trends n Select Patterns n Causes of Claim n The impact of claim delays and IBNR
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IBNR n Diagnosis to Notification n Diagnosis to Settlement n Diagnosis to Settlement*
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Diagnosis – Notification (By Benefit Type) Cumulative Claim (%) Delay Stand Alone Full Acceleration
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Diagnosis – Notification (By Sex) Cumulative Claim (%) Delay Males Females
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Diagnosis – Notification (By Cause) Cumulative Claim (%) Delay CABG Cancer Heart Attack Multiple Sclerosis Stroke TPD
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Diagnosis – Settlement (By Benefit Type) Cumulative Claim (%) Delay Stand Alone Full Acceleration
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Diagnosis – Settlement (By Sex) Cumulative Claim (%) Delay Males Females
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Diagnosis – Settlement (By Cause) Cumulative Claim (%) Delay CABG Cancer Heart Attack Multiple Sclerosis Stroke TPD
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Diagnosis - Settlement* (By Benefit Type) Cumulative Claim (%) Delay Stand Alone Full Acceleration
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Diagnosis – Settlement* (By Sex) Cumulative Claim (%) Males Females Delay
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Diagnosis - Settlement* (By Cause) Cumulative Claim (%) CABG Cancer Heart Attack Multiple Sclerosis Stroke TPD Delay
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Diagnosis - Settlement* (By Cause – Amounts) Delay CABG Cancer Heart Attack Multiple Sclerosis Stroke TPD Cumulative Claim (%)
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Workshop Session C1 : Risk Factors in Insured Lives Mortality and Critical Illness Experience nNeil Robjohns nRajeev Shah nQuestions and Discussion
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