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
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/
Market
3
4
Top 5 products in Korea
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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
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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
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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
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Risks
9
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Risks
Deterioration of cancer experience
– Early detection
– Increase of incidence
Claim issues
– C73
– CiS (D01 vs C18 )
Costing
– risk rate derivation in practice
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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%
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/
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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
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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/
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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
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/
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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
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/
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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
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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
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/
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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
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/
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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
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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)
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/
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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
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/
Products
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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:
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/
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
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New Products to be introduced in the market: Staged cancer
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/
New market creation
Major challenges
– requires approvals on risk rates, application form and product
– comparison with the fully underwritten product at sales stage
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New Products under discussion: simplified issue/ guaranteed issue
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/
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
Joint IACA, IAAHS and PBSS Colloquium in Hong Kong www.actuaries.org/HongKong2012/
Thank you
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