1. CMI IP Experience: A User’s Perspective Darshan Singh, Gen Re

2. A User’s Perspective  Inception rates: trends and the economy  Termination rates: is there scope for more?  Comments on the CMI graduation and;  More data please!

3. 2001-2002 experience vs 1995-96

4. Trends in Male Class I inceptions As % of Year 2002. Ages 18-59

5. Trends in Female Class I inceptions

6.  Changes in contributing offices  Offices do not necessarily provide figures on all their business  Reclassification of Class Unknown into Class 1 Some points to watch out for…

7. Some reasons for inception trends  The Economy  Change in state benefits in 1995  Replacement of invalidity benefit by incapacity benefit  Underwriting developments  Occupational reclassification of doctors, nurses, teachers etc  Changes in product design  Early notification  Changing definitions of incapacity

8. Male Class 1 Inceptions vs Unemployment

9. The economic link elsewhere  Australian study shows link  http://ecocomm.anu.edu.au/research/papers/pdf/2001-01.pdf http://ecocomm.anu.edu.au/research/papers/pdf/2001-01.pdf  American study by UNUM also shows a link  http://library.soa.org/library/record/2000-09/rsa02v28n233of.pdf http://library.soa.org/library/record/2000-09/rsa02v28n233of.pdf  Link with the local economy is apparent for state benefits

10. Will the trend turn?  The UK economy has enjoyed tremendous growth  Is a downturn inevitable?  Should insurers price in an economic cycle?  For guaranteed rates?  For reviewable rates?  How much of the recent trend is permanent and how much cyclical?

11. Trends in recoveries Male Class 1 CMIR12 A/E as % of 2002 A/E

12. Scope for more recoveries  Case management focus  Get in there early!  Rehab is here to stay  Use of the telephone  Specialist approaches for different causes of claim

13. New CMI graduation of recoveries  Main changes:  No longer ‘unified’ model  Different for different DPs

14. Comments on the new graduation  At some point recovery rates for the different DPs should converge  The graduation is based on 1991-98 data trends to 2002 have not been calculated on this basis

15. Good CMI data is crucial To increase supply… We need to maintain and improve the data the CMI gives the industry A scene replicated across the UK…. Demand for IP is high

16. More data please!  Rating factors in CMI  Age  Sex  Deferred period  Occupational class  Rating factors not in CMI  Disability definition  Exact Occupation  Self-employment  Smoking status  Benefit amount  Replacement ratio  Policy duration  Claims management practices  Socio-economic group  Geographic location ....

17. More technology please!  Individual year data still circulated as word documents  Flexibility reduced by hard coded age categories  Termination data especially difficult to work with: age and duration categories change from year to year

18. Questions