© General Reinsurance AG Group Cover: Income Protection OESAI Life Insurance Technical Training: Harare, April 2015 Adriaan Rowan, FIA

© General Reinsurance AG

Group Cover: Income ProtectionOESAI Life Insurance Technical Training: Harare, April 2015Adriaan Rowan, FIA


> Quick overview of Group Market in SA

> Group Business Process

> Products offered

> A focus on Income Protection

- Product design

- Quotes

- Underwriting

- Claims assessment

> Additional staff skill requirements

> Recent developments

Topics covered in the presentation

Product

Design

Quotes

Under

writing

Claims

Assess


> Size of Group Market in SA

– Total Premiums = R 189 Billion; Reinsured = R 2.1 billion

> Size of Gen Re’s Group Premiums

– Total = R600 million or 28% of All premiums

– PHI share = R270 million or 47% of Group premium

• Gen Re’s Premiums split of business

Overview of Group Market in SA

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1,600,000,000

1,800,000,000

2,000,000,000

Indivdual Life Group


Group Business Process

OESAI, Zimbabwe 20154

Broker approaches insurers for

quote

Scheme priced, FCL decided –

quote provided

UW members over the FCLClaims assessed

Annual rebroke

Input from reinsurers


Product variation offered

Group products

Family Cover

Individual

Spouse and Child

Rider benefits

Flexi Cover

Conversion option

Retrenchment

Benefit Option

Income Replacement

Lump Sum


A Focus on Income Protection

Group products

Family Cover

Individual

Spouse and Child

Rider benefits

Flexi Cover

Conversion option

Retrenchment

Benefit Option

Income Replacement

Lump SumIncome Protection


Product

Design


> Two IP products: similar but – TTD pays for limited period (usually 24 months) and RR up to 100%

– PHI pays for longer than TTD (usually until retirement) and RR usually 75%

Income protection design

IP Product feature Common practices VariationsIncome replacement Usually 75% of salary on disability

after waiting periodSome insurers offer 100%

Waiting Period 3 or 6 months 1, 3 , 6 or 12 months

Disability definition - Own occupation with own employer- Own or alternate occupation with any employer

- Activities of Daily Work

- Activities of Daily Living

Escalations Inflation Inflation + x%Inflation up to a limit

Retirement Age 65 60, 63, 65 years


Other key terms to consider> Eligibility criteria

– Actively at work clause

> Exclusion clauses:

– pre-existing conditions: members claiming within 12 months of joining a scheme

– standard (self-inflicted injuries / suicide in first 2 years / illegal activities etc)

– travel?

– hazardous Pursuits?

Product design – Additional terms


Quotes


> Relevant Factors in rating a quote – One rate for all

– Scheme’s age and gender profile

– Scheme’s salary profile

– Type of industry

– Basic mortality table

– AIDS mortality

> Determining the FCL:

– Nature of Scheme / Industry

– Size of Scheme

– Distribution of income and sum assured within scheme

– Profitability of the scheme

– Market Competition

Quotes Stage Factors


Under

writing


> Only members above the FCL are underwritten*

> Travel & Pursuits and Financial UW

> Requirements increase with age and benefit size

> Advance / Forward cover

> Individual vs Group UW

Underwriting requirements

Sum Assured over FCL pm

Ages <= 35

Age 36-49 Age 50-65

R0 – R10,000 p.m. 1 1 2

R10,001 – R20,000 p.m. 1 3 4

R20,001 – R50,000 p.m. 3 4 4

>R50,001 p.m. 5 6 7


> Possible UW decisions– Accept

– Load premium rate*

*loadings usually applied to the portion over FCL (but depends on admin)

– Exclude certain risks

– Require more tests

– Restrict cover to FCL (decline)

> Waiving of UW loadings– Admin simplicity

– Better message to member/broker

– Price implication

Underwriting results


Focus areas in SA> Efficiency, Convenience & Speed of service

– Travelling nurse services

– Online completion of Declaration of Health questions by member

– Insurer accessing medical information from their Doctor

– On site underwriting by senior underwriters

– Tele-interviewing & Auto-underwriting

Underwriting Process


Claims

Assess


> Claims assessed for all members (under/over FCL)

> Initial Claims assessment

– checks: is waiting period up; actively at work at inception

– obtain standard claims requirements

• claim forms by member, employer & doctor

• relevant medical reports from treating doctor

– Claim size under FCL: check for pre-ex conditions

– Claims size over FCL: check UW terms, check for non-disclosure

– assess claim against product definition

– possible claims decisions: admit/decline/defer/requirements

• additional requirements may be a functional capacity assessment or work site visit

Claims


> Claims Reviews

– ongoing monitoring of longer term claims

– requirements depend on severity of medical condition

• minor (eg. leg fracture): up to date medical exam by treating doctor/occupational therapist/physiotherapist

• intermediate (eg. spine injury): medical reports by treating health professionals / functional capacity evaluation / work site evaluation

• serious (eg. severe stroke): certificate of continued existence

> Individual Case Management

– for claims that have potential to be longer term

– for ‘red flag’ or suspect claims

– where intervention is likely to be effective

Claims


MD Guidelines


Focus areas in SA

> Efficiency, Convenience & Speed of service – same as for Underwriting!

– Online completion of claim forms by member / employer

– Tele-claims

> Other

– Settlements

– Confidentiality issues

– Gather & analyse Management Information:

– feedback in to the underwriting process

Claims Process


Managing PHI business requires the follow skills:

Underwriting

> Cases are more complex to assess - conditions not previously an issue could cause a claim

> Costs and time necessary to underwrite a case are higher - typically need:

– medically trained people (physio / OT / nurse / lab technician) who understand insurance products and underwriting principles

Claims

> Long claims periods require initial assessment plus ongoing follow ups and case management

> Experienced staff required to be able to identify warning signs and ‘fraudulent’ activity

– OTs are hired frequently, sometimes Physiotherapists as well; also need insurance knowledge

Actuarial

> Experienced staff required to manage the increase in pricing and reserving requirements

> More data and analysis are needed in order to correctly calculate the premium rates

Administration

> Generally more intense than on lump sum products

Additional skills requirement to manage IP


SA Group Claims causes

22

Muscu

lo-skeletal

AIDS/H

IV

Cardio-va

scular

disord

ersOth

er

Neurologic

al

Cance

r and tu

mours

Respira

tory

conditions

Psychiat

ric co

nditions

Multiple co

nditions

Endocrine/M

etabolic

0%

5%

10%

15%

20%

25%

Top 10 Group PHI 2004-2006

200420052006


SA Group Claims causes

23

Muscu

lo-skeletal

Multiple Conditions

Psychiat

ric Diso

rder

Cance

r

Neurologic

al Diso

rder (e

xcl CVA)

Other

Cardio-va

scular

disease CVA

Respira

tory

Disease HIV

0%

500%

1000%

1500%

2000%

2500%

Top 10 Group PHI 2010-2012

201220112010


What we see

> Less formal employment

> More self employed

> Highly skilled

– No longer best class of life

– More stressed

– Lifestyle diseases

– Psychiatric

> Is HIV still the biggest concern on Group disability claims?

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Social media & technological advances

> Enabling fundamentally different approaches that allow us to “see into a group” and adapt

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Conclusion

> In South Africa Group business is a R189 Billion industry

> Group products can take many different forms

> Options offered should reflect availability of

– Actuarial data to price

– Underwriters to evaluate the risk

– Claims assessor to identify valid claims

> Main cause of claims are constantly changing – need to adapt

> Analytics and use of social media gives new options

OESAI, Kenya 201426


Disclaimer

OESAI, Kenya 2014

This presentation is protected by copyright. All the information contained in it has been very carefully researched and compiled to the best of our knowledge. Nevertheless, no responsibility is accepted for its accuracy, completeness or currency. In particular, this information does not constitute legal advice and cannot serve as a substitute for such advice. It may not be duplicated or forwarded without the prior consent of the Gen Re.

Diese Präsentation ist urheberrechtlich geschützt. Alle hierin enthaltenen Informationen sind sehr sorgfältig recherchiert und nach unserem besten Wissen zusammengestellt. Dennoch können wir keine Haftung hinsichtlich ihrer Genauigkeit, Vollständigkeit oder Aktualität übernehmen. Insbesondere stellen diese Informationen keine Rechtsberatung dar und können auch nicht als Ersatz für eine solche Beratung dienen. Eine Vervielfältigung oder Weiterleitung ist nur mit vorheriger Zustimmung der Gen Re gestattet.

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© General Reinsurance AG Group Cover: Income Protection OESAI Life Insurance Technical Training: Harare, April 2015 Adriaan Rowan, FIA