critical illness cover: past, present & future...pegasus and skandia life by early 1990’s over...

PENSIONS INVESTMENTS LIFE HEALTH

CRITICAL ILLNESS COVER: PAST, PRESENT & FUTURE


PRESENT

PENSIONS INVESTMENTS LIFE HEALTHPENSIONS INVESTMENTS LIFE HEALTH

in claims paid in 2017

€2.4m

paid per week

claimspaid

CIC – Present (estimate)

paid every working day

€110,000,000 2,000

€500,000


paid per week

ALMOST2,6claims paid

CIC claims paid in every county in Ireland


“It will never happen to me “- SPECIFIED ILLNESS CLAIMS PAID

Stroke

Only 10 months in force

€142,000

Malignant Cervical Cancer

< 1 Yearin force

€24,000

Heart Attack

< 1 Year in force

€30,000

Stroke

< 2 years in force

€105,000

MALE 40s

Engineer

MALE 50s

Farmer

FEMALE 30s

Nurse

FEMALE 30s

Homemaker

(Source : IL)


A FINANCIAL ADVISER’S RECENT CLAIMS EXPERIENCE WITH ONE OF THEIR CUSTOMERS ….

“It’s only at the claims stage do we fully appreciate how valuable a role we play in providing good advice and products to our clients.

It certainly gives me a great sense of satisfaction to know that we have made a difference to this young family at a difficult time. ”

Plan taken out in August 2011

MALE in late 30s

Malignant Bowel Cancer

€70,000 CIC claim paid

Married 2 young kids

Mortgage etc.

Background:

(Source : IL)


10 YEARS OF CIC CLAIMS

(2007 TO 2016)

Over 9 in 10 CLAIMS ARE FOR

TOP 5 CONDITIONS:

• Malignant Cancer • Heart Related• Stroke• MS• LOI/PTD

TOP 5 ILLNESS ARE:

• 1,035 claims for Breast Cancer 17%

• 618 claims for Heart Attack 10%

• 495 claims for Prostate Cancer 8%

• 395 claims for Stroke 6%

• 220 claims for Angioplasty 4%

6,110claims paid in

10 years€386m

in total

(Source : IL)


CRITICAL ILLNESS CANCER CLAIMS 2017

Cancer claims paid in the last

6 years

Total

€175m Paid in last 6

years

2,749

(Source : IL)


TIME PLANS INFORCE FOR 2016 CIC CLAIMS

NUMBER OF CLAIMS

(Source : IL)


WE’RE REALLY QUICK PAYING SIC CLAIMS & MAKE IT EASY FOR YOUR CUSTOMERS

DURATION NO OF CLAIMS

% OF CLAIMS

<2 weeks 212 25%

2 to 3 weeks 233 27%

4 to 5 weeks 103 12%

6 to 10 weeks 139 16%

11 to 15 73 8%

>15 93 10%

64% less than 5 weeks (548)

(Source : IL)


WE’RE IN THIS BUSINESS FOR THE LONG HAUL . . .LIFE COVER

94 year old

62 years in force

Started Nov 1954!!


WE’RE IN THIS BUSINESS FOR THE LONG HAUL . . .CIC

€67,800 paid

56 year old female

23 years in force

44% over 15 years

in force

(Source : IL)


CHILDREN’S CLAIMS 2017

80 CHILD DEATH CLAIMS

21 CHILD SIC CLAIMS

14% Other

5% Stroke

73% Other

2% Heart Related

3% Respiratory

1% Stroke

12% Accident

9% Cancer

10% LOI/PTD

71% CANCER

(Source : IL)


Irish adults believe that only 51% of claims are paid

out.

Only 7% believe than >90% of claims paid out

PERCEPTIONS OF LIFE INSURANCE CLAIMS PAY OUT

Base: All adults aged 18+ - 1,000Coyne Research - 2017


CONFIDENCE IN IRISH LIFE- OVERALL 95% OF CLAIMS PAID

98% of all death

claims

90% of all SIC claims

Including 96% of Malignant

Cancer Claims

IN 2017,IRISH LIFE HAVE PAID:

(Source : IL)


REASONS FOR NOT PAYING A CIC CLAIM ARE:

2. Definition of illness

not met – (some conditions need

to met certain criteria before being payable i.e.

Diagnosis plus certain level of impairment).

1. Illness not covered

3.Non Disclosure

-(information that would have affected the

acceptance of cover was not disclosed).


EXAMPLES OF NON-DISCLOSURES

PLAN A

Plan take out: May 2015Nov 16 – Stroke

Non Disclosure of very raised blood pressure and pending investigation

€65,000

PLAN B

Plan take out: Jan 2013Dec 16 – Metastatic Cancer

Non Disclosure of history of malignant prostate cancer

€20,000

(Source : IL)


CIC – frauds (1)

“…if I showed you my scar would you pay my claim?”


CIC – frauds (2)

“…if I use somebody else's tissue would you pay my claim? “


CIC – frauds (3)

A number of attempted frauds on death & SIC claims in Ireland recent years – Asia & Africa in particular.

All death & SIC & death claims from abroad are comprehensively investigated.

A number of on-going ‘suspicious’ claims in the Market in Ireland.


BE PROUD – THE INDUSTRY DOES A SUPER JOB FOR CUSTOMERS

“I was used to operating on people and boasting about my great results of patients surviving five or six years. But all of sudden I saw the social and financial implications. I knew nothing about insurance but I knew life insurance paid out on the diagnosis of death. But to me, my patients lived for years but in this time they died financially.”

THE STORY BEGINS . . . . .


CIC – the origins

Abbey Life also launch in Ireland – shortly taken over by Canada Life

1983 • Crusader Insurance launch “Dread Disease” product in South Africa• Cancer, heart attack, stroke and CABG• First claim- Dec 1984!

1986 • Critical Illness launched in the UK market• Lloyds market – “Living Assurance” rider – low sales• Cannon Lincoln – “Critical Illness” rider – low sales

1986• Abbey Life launched through it’s large Direct Sales Force • Benefits up to £100,000 • Cancer, heart attack, stroke, CABG, major organ transplantation,

renal failure and total permanent disabilityHugely successful – significant sales


CIC – rapid expansion

Allied Dunbar were leaders in IFA distribution channel – followed by the likes of Pegasus and Skandia Life

By early 1990’s over 50 companies entered the market in UK, SA, Australia,New Zealand etc.

Added ‘Multiple Sclerosis’ to plan and increased maximum sum insured to £250,000

1991 – Pegasus offered Children’s CI – another idea from Marius Bernard

Products became more complex with 30+ conditions being covered

Sales started to grow more significantly

2001 Discovery Life in South Africa launched the first severity based product


CIC – Association of British Insurers

1998 Critical Illness Working Party established

Revisions have been made • May 2002, August 2004, April 2006, February 2011 and December 2014

April 1999 – Association of British Insurers released the first “Statement of Best Practice for Critical Illness”

Model wordings, generic terms (e.g. ‘permanent’)

Reviews – keep the product in keeping with medical advancements and takes into consideration the claims experiences from the market

Next review = 2017/Ongoing


CIC – not all plain sailing

2002: Pivotal year for Serious/Critical Illness

Large contraction of capacity with other reinsurers pulling out of the market.

Swiss Re withdrawal of support for guaranteed rates

Revios and GE Insurance Solutions only 2 players in guaranteed SI/CI market –hold the guaranteed market together

Others only offered reviewable rates

Large increase in premium rates and reduced sales in the market


CIC – claim after the storm

Market Stabilisation since mid-2004, with gradual price decreases – mostly of guaranteed CI

2006: big year for reinsurance market• Swiss Re buy GE Insurance Solutions – together with their considerable book

of guaranteed CI• New ABI definitions - new confidence in the product

From 2005, other reinsurers slowly started to re-enter market

2007 - All reinsurers re-enter Guaranteed CI market

In last 10 years, price have decreased but slowing up/reversing


CIC – claim after the storm (2)

Some changes driven by changing medicine , screening etc.

Prostate cancers – less serious ones now covered for partial/additional payment.

Definitions have changed over time e.g. ‘heart attack’, ‘stroke’ , ‘multiple sclerosis’.

Actual claims experience – e.g. ductal cancinoma in situ of the breast.

However, since:


LONG HISTORY OF INNOVATING IN SPECIFIED ILLNESS COVER

45 full payment conditions

Plus

23 additional (partial) payment conditions

• Cancer• Heart attack• Stroke• Coronary Artery

Disease surgery• Kidney failure• Major organ transplant• Paralysis

SEVEN ILLNESSES: 2018

(Source : IL)


CIC – some trends in last 5-10 yrs


PARTIAL/ADDITIONAL PAYMENT SPECIFIED ILLNESS COVER

116Additional

Benefit SIC claims paid

since launch –Oct 2009.

Over €1.3m paidsince launch

2 in 3 - Ductal

Carcinoma in-situ Breast is most claimed

condition

19partial

paymentsin 2017

Cause of ClaimNo. of Claims

Ductal Carcinoma in-situ Breast 78Single Vessel Angioplasty 9Cerebral aneurysm - with surgery or radiotherapy 4

Crohn’s disease - treated with surgical intestinal resection 4

Low level Prostate cancer 4

Serious Accident Cover resulting 28 days in hospital 4

Severe burns - 5% of body surface 3

Craniotomy for AV malformation 2

Loss of one limb 2

Surgical removal of one eye 2

Carotid Artery Stenosis- treated by Endarterectomy or Angioplasty 1

Pituitary Tumour - resulting in permanent symptoms or Surgery 1

Significant Visual Impairment 1Single lobectomy 1

Grand Total 116

67%8%

3%

3%

3%

3%

3%2%2%2%

1%

1%

1%1%

(Source : IL)


CIC – some recent trends

More movement to the “quality” product i.e. adding more benefits

Some full benefit conditions added, but mainly partial /additional payment benefits

Adoption of ABI SoBP changes & improvement to existing definitions – e.g. heart attack, stroke

Significant developments to children’s cover ie cover to age 25 and / or cover from birth

Support services e.g. Medical Second Opinion, Nurse Assist, global treatment, Best Doctors, Red Arc etc.

Guaranteed premium rates


CIC – Old vs New - changing cover involves risk

• Within same life office or between life offices?

• Number of conditions?

• Full and / or partials?

• Are all partials independent or accelerated ie‘additional’ ?

• Definition changes over time eg heart attack?

• Children’s cover?

• Conversion vs new application with underwriting?

• Change of health ?

• Are customers clear ?

• What cover for angioplasty –single vessel or more ?

• Cancer of prostate – full or partial ? Changes c 2003

• Cancer of breast – DCIS ?

CAN BE COMPLEX

• Just be careful

• Underwriters can help

• Remember the Top 5

General Male vs Female


FUTURE


CIC – UK (1)

AIG LIFE - SIMPLE CIC

• 3 conditions

VITALITY:• 170 conditions with 7 levels of

benefits

• Most conditions do not pay 100% of benefit

• Offers ‘non-insurance’ incentive's to buy – free cinema tickets, reduced gym membership , premium reductions if you stay fit.

• Expensive and complex


CIC – UK (2)

AVIVA UK• Basic plan with 36 full and 2 additional

benefit conditions

• Upgrade option – 52 full and 40 additional benefit conditions

• Upgrade option - children’s cover

• More expensive for upgraded cover options

• Booster payment option e.g. 150% of the full SA if diagnosed under age 45 for:

Alzheimer’s disease, Dementia, Motor neurone disease, Multiple system atrophy, Parkinson’s, Progressive supranuclear palsy


CIC – UK (3) Children’s cover

• Removal of congenital exclusion provided parents are unaware of any increased risk

• Add specific conditions for children’s CI• hydrocephalus, spina bifida, cerebral palsy, cystic

fibrosis, muscular dystrophy, intensive care• diabetes type 1, Down’s syndrome (both expensive)

• Double payment if treatment necessary overseas

• Potential to add more child specific conditions

• Not cheap …

• Child cover becomes more expensive = optional benefit ?


CIC – is the future already somewhere ?


CIC – is the future already somewhere ?- Tiered

PPS Critical Illness Cover – the benefit pays a percentage (25%, 50%, 75% or 100%) of the sum assured depending on the severity of the disease, for all listed conditions.

PPS Critical Illness Core 100% – covers the 4 most common dread diseases (Cancer, Stroke, Heart Attack and CABG) at 100% regardless of severity level, and all other listed conditions paid a percentage, depending on the severity level.

PPS Critical Illness CI 100% – covers all listed critical illnesses at 100%, irrespective of the severity level, offering greater peace of mind.


CIC – tiered benefit for malignant cancer

LEVEL Definition Sample pay-out %

Level A Stage 4 cancer 100%

Level B Stage 3 cancer 75%

Level C Stage 2 cancer 50%

Level D Stage 1 cancer 25%



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CIC – if price was the only thing?

Recommend less cover?

Recommend cover for

shorter terms?

Plans with less conditions – e.g. main 4/5 or cancer only?

Make children’s cover optional?

Basic cover vs Upgraded cover?

Cover waiting periods e.g. no cancer claims in first 6

months?

No add on services e.g. Medical Second Opinion or Nurse Assist telephone lines?

More tiered plans - less conditions

where 100% paid?


CIC – longer term challenges?

• More conditions vs simpler?• Move to more tiered benefits – do we

need to pay 100% benefit for a stage 1 cancer that has a 95% complete cure rate?

• Children’s cover improvements?• Multipay products?• Buyback options?• Sales/underwriting/claims issues

caused by increasing complexity?• Customer reaction to more complexity?• What cover do millennials want / need?• Reward for fitness / wearable

technology ?

• Impact of more medical screening – breast, prostate, cervical , colorectal?

• Obesity, DMT2

• Better medical knowledge

• What about genetic testing?

• Self testing ?

• Impact of ‘liquid’ biopsies?

• Advances in medicine e.g. enhanced MRI scanning , high sensitive troponins./

• Changes to staging due to medical advances

• Disability Act / FH

PRODUCT

MEDICINE

BACK TO . . . . PRESENT


BE PROUD – THE INDUSTRY DOES A SUPER JOB FOR CUSTOMERS


“Irish Life were there for me when I needed them, I had paid a lot of money in to this policy over the years, but I’m really glad I did.”

WHAT OUR CUSTOMERS SAY ABOUT OUR SERVICE

“I was just so pleased that the policy was there when I became ill. A serious illness policy would have been the last thing on my mind, and it was my agent who told me to keep it going. I didn’t think I would need it at my age.”

“I am extremely happy with the overall experience. The people I dealt with during the claim were very knowledgeable and understanding of the situation, and to me it's the staff that makes the company.”

“The Serious Illness product is very good, and I didn't know such a thing existed until I was told about

“Their staff are extremely helpful, knowledgeable, and empathetic to people with a serious illness, and very understanding.”

CUSTOMER SATISFACTION SCORENOW FOR SIC CLAIMS OVER 90%

(Source : IL)


CIC – Summary - Present & Future

Present

Nobody can predict the life

journey our customer go on.

Protection is core to the

advice we give customers

Unexpected CIC illness occur and result in

claims.

The core CIC products we

recommend in Ireland are very

good by international standards

Cancers –biggest cause of claim & largely a

sudden diagnosis.

Over 90% of paid SIC claims are for Top 5 –

malignant cancer, heart, stroke, MS,

LOI/PTD.

Children’s cover is a very

valuable benefit

Very high percentages of

paid claims We pay quickly

Customers really value a claim being

paid


CIC – Summary - Present & Future

Future

The future is not without

its challenges -

price, underwriting and claims.

Medical science

developments will probably impact over

time

We’ve revolutionised in the past as

a result of changes

Plenty of innovation

opportunities for the future


www.irishlife.ie

Irish Life Assurance plc is regulated by the Central Bank of Ireland. Irish Life Investment Managers Limited is regulated by the Central Bank of Ireland. Irish Life Health dac is regulated by the Central Bank of Ireland.Irish Life Assurance plc, Registered in Ireland number 152576, VAT number 9F55923G

ILA 13050 (NPI 03-17)

“ Critical Illness Cover –Past, Present & Future”

critical illness cover: past, present & future...pegasus and skandia life by early 1990’s over...

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