cancer: past, present and future – view from the korean market · cancer product (5.7% for...

Cancer: Past, Present and Future –

View from the Korean market

HyeSun Lim, FIAA Swiss Re Korea, Life & Health

Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/

Session Number: WBR8

Market: past and present

R isks: on-going concerns

Products to come

2

Agenda


Market

3

4

Top 5 products in Korea


5

Cancer products –history in the Korean market

Started with cancer death, cancer surgery and hospitalisation in 19 8 0 's ; outpatient benefit added in late 19 8 0 's ; cancer diagnosis in 19 9 0 's

Bad experience mainly due to costing and long term guarantee

– use of reference rate or little flexibility in setting premium rates

– policy term up to age 8 0 , with level premium

Insurers ' repositioning in the cancer market in late 2 0 0 0 's

– shortening the policy term : renewable, shorter term guarantee

– reducing coverage

– withdrawing from the market

Joint IACA, IAAHS and PBSS Colloquium in Hong Kong

www.actuaries.org/HongKong2012/

6

Cancer products –history in the Korean market; continued

Total number of cancer policies in life insurance industry : around 8 ,0 3 8 ,0 0 0 as at Sep 2 0 0 9 .

High persistency of existing policyholders

– Recent study on lapse experience by product line showed lowest lapse rate for cancer product (5 .7 % for duration year 5 , during the period of 2 0 0 3 - 2 0 07, )

No of life companies selling cancer products

as at Sep 2 010 ,

– 3 companies with renewable cancer products , 4 offering long term guarantee

– the rest including market leading companies provide only cancer riders

Year 2006 2007 2008 2009 2010(as at Sep 2010)

No of life companies 16 11 9 6 7


7

Typical cancer product

Description

Issued age • Inception: age 15 ~ 55/ 60

Max Sum insured • KRW 40-60m

Diagnosis Benefit (as % of S I)

• Cancer (excl. C4 4 &C73 ): 10 0 % • Other Skin cancer: 10 % • CIS : 10 % • Borderline: 2 0 % • Thyroid: 10 -2 0 %

• waiting period of 9 0 days for Cancer; no waiting period for CIS or Borderline

Reduced payment • 5 0 % benefit in case of diagnosis within 1 year or 2 years • 10 % of the benefit payable, in case of Breast Cancer diagnosis within 9 0 days after waiting period


8

Cancer products – changes in 2011-2012

Re-launching of cancer products: 13 life insurers selling standalone cancer products (as at March 2 012 )

More companies offering long term guarantee: small to medium players

– 11 companies offering up to age 8 0 or above (up to 10 0 / W OL)

– More players , if including non-life insurers

New design

– Varying benefit amount by cancer type

– Multiple payment

Regulator’s view

– Reference table covering up to age 10 0

– Concern on people who do not have protection against cancer

– More open to new ideas e.g. staged cancer


Risks

9

10

Risks

Deterioration of cancer experience

– Early detection

– Increase of incidence

Claim issues

– C73

– CiS (D01 vs C18 )

Costing

– risk rate derivation in practice


11

Cancer experience: industry

Loss ratio : claim paid/premium received (KIDI, 10 life insurers)

W hy still selling the business?

– Good sales

– Profitable in aggregate

– Re-pricing and revis ion of the product design

– Optimistic view: the worst has gone

year diagnosis surgery hospitalisation2005 111.9% 196.5% 100.0%2006 115.6% 195.9% 102.0%2007 120.6% 202.6% 102.4%2008 128.3% 213.8% 103.2%2009 133.5% 221.8% 102.0%


12

Deterioration of cancer experience: early detection Advancement of Medical technique

Awareness of the general public: national cancer campaign

Utilisation of the medical sector/insured lives

Age-adjusted incidence rate per 10 0 ,0 0 0

0

2 0

4 0

6 0

8 0

1 0 0

1 2 0

1 4 0

1 6 0

1 8 0

2 0 0

female thyroid cancer - population

male thyroid cancer population

male thyroid cancer - insured Company A

female thyroid cancer - insured Company A


13

Deterioration of cancer experience: early detection – Thyroid cancer Free screening at the regular medical check up

W hat will be the "next Thyroid" cancer?

– Prostate?

– anything else?

Joint IACA, IAAHS and PBSS Colloquium in Hong Kong

www.actuaries.org/HongKong2012/

14

Deterioration of cancer experience: early detection – Prostate

incidence per 100,000

Population data shows around 15 % p.a. increase

W ill we follow US example?

0

5 0 0

1 0 0 0

1 5 0 0

2 0 0 0

2 5 0 0

3 0 0 0

3 5 0 0

4 0 0 0

4 5 0 0

2 7 1 2 1 7 2 2 2 7 3 2 3 7 4 2 4 7 5 2 5 7 6 2 6 7 7 2 7 7 8 2 8 7

male prostate - population

male prostate - population US

male prostate - population J P

0

5

1 0

1 5

2 0

2 5

19

99

2

00

0

20

01

2

00

2

20

03

2

00

4

20

05

2

00

6

20

07

2

00

8

male prostate - population


15

Deterioration of cancer experience: increase of incidence Detection of cancer cells , not previously detectable, due to medical

technique development

Change in life style/eating habit

– Colon cancer

Age-adjusted incidence rate per 10 0 ,0 0 0

– Breast cancer

0

5

10

15

20

25

30

35

40

45

50

male Colon cancer -population

female Colon cancer -population


16

Risk rate derivation Companies' own experience

– recent 3 years of experience

– no consideration for future trend but safety loading

– safety loading – will it be enough?

Old age – portfolio/population not mature enough

incidence per 10 0 ,0 0 0

0 .0

5 0 0 .0

1 ,0 0 0 .0

1 ,5 0 0 .0

2 ,0 0 0 .0

2 ,5 0 0 .0

3 ,0 0 0 .0

3 ,5 0 0 .0

4 ,0 0 0 .0

2 1 2 2 2 3 2 4 2 5 2 6 2 7 2 8 2

male all cancer population

female all cancer population

male call cancer Company B

female all cancer Company B

0

1 0 0 0

2 0 0 0

3 0 0 0

4 0 0 0

5 0 0 0

6 0 0 0

7 0 0 0

2 1 2 2 2 3 2 4 2 5 2 6 2 7 2 8 2 9 2

male all cancer population J P

male all cancer Company C J P

female all cancer population J P

female all cancer Company C J P


17

Risk rate comparison - male

0.000000

0.010000

0.020000

0.030000

0.040000

0.050000

0.060000

15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81

MA male

GH male

YP male

SL male

SA male

SC male

YA male


18

Risk rate comparison - female

0.000000

0.005000

0.010000

0.015000

0.020000

0.025000

15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81

MA female

GH female

YP female

SL female

SA female

SC female

YA female


19

Other issues Court decis ion made on claims

– CiS (D01 ) -> Cancer (C18 )

– next?

Fraudulent claims : C73 ->C77.

Cancer surgery

– multiple payments

– simpler procedure and more frequent


20

Improvement of cancer experience Smoking

– known to cause cancers of lung, mouth, esophagus, pharynx, bladder, pancreas, kidney, cervix, stomach and acute myeloid leukemia.

– quitting smoking dramatically reduces the risk of cancers , e.g. 10 years after a person quits smoking, his or her risk of lung cancer is decreased to about 1 /3 -1 /2 that of a person who continues to smoke

– expect to see the impact of the decrease in smoking to be materialized in near future

Other behavioral factors – preventive actions etc

7 9 7 1 7 5 7 5 7 3 7 0 6 5 6 8 7 0

6 1 5 7 5 8 5 0 4 9 4 8 4 6 4 4

1 3 8 8 5 4 5 4 3 3 6 4 4 3 3 2 3 2 0

2 0

4 0

6 0

8 0

1 0 0

smok

ing

rate

(%)

year

Smoking rate (for age 2 0 and above)

smoking rate (male) smoking rate (female)


21

Cancer experience - population Excluding Thyroid cancer and prostate cancer

– incidence rates are on increasing trend from 19 9 9 to 2 0 0 5

– relatively severe deterioration observed from 2 0 0 4 to 2 0 0 5 , with trend of 4 -5 %. possibly due to wider range of population becoming eligible for free cancer diagnosis under the National cancer diagnosis program

– From 2 0 0 5 , the cancer incidence rates seem to be stabilized, esp for male (female still increasing due to breast cancer)

– stabilis ing/slight decreasing for stomach, lung and liver for male; stomach, liver and cervix uteri for female

0

5 0

1 0 0

1 5 0

2 0 0

2 5 0

3 0 0

3 5 0 1

99

9

20

00

2

00

1

20

02

2

00

3

20

04

2

00

5

20

06

2

00

7

20

08

male cancer excluding C7 3 & C6 1 - population

female cancer excluding C7 3 & C6 1 - population


Products

22

Multiple cancer/ CI – benefit payable upon the diagnosis of the second cancer

– definition of the 2 nd cancer varies company by company

– 2 nd cancer is the acceleration of death benefit

Cancer/CI products for those with specific diseases

– for those with diabetes and/or hypertension

– diabetes: low sales due to strict underwriting

23

New Products introduced in the market 2011-2012:


Staged cancer

– benefit payments varying by the severity of the cancer condition

– FSS 's guideline on the product features

– expected to be the major cancer product in 2 012 -2 013

Major challenges

– R isk rate derivation

– potential disputes at claim stage

24

New Products to be introduced in the market: Staged cancer


New market creation

Major challenges

– requires approvals on risk rates, application form and product

– comparison with the fully underwritten product at sales stage

25

New Products under discussion: simplified issue/ guaranteed issue


Cash flow pricing from April 2013

– Regulator's approval on risk rates may not be required

– Expect more flexibility in derivation of risk rates

More variations of the products in the market

Major life players back in the cancer market

26

Market changes – opportunities


Thank you

28

Legal notice

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Although all the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial and/ or consequential loss relating to this presentation.

cancer: past, present and future – view from the korean market · cancer product (5.7% for...

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