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PPT

  1. 1. 2009 Annual Meeting ● Assemblée annuelle 2009 Halifax, Nova Scotia ● Halifax (Nouvelle-Écosse) Canadian Institute of Actuaries L’Institut canadien des actuaires
  2. 2. Ins and Outs of Health Insurance Coverage for Canadians <ul><li>Dave Burry </li></ul><ul><li>President </li></ul><ul><li>Travel Insurance Specialists Ltd. </li></ul>2009 Annual Meeting Assemblée annuelle 2009
  3. 3. Plan Design Tools <ul><li>Eligibility Criteria (eliminate the poorest risks). </li></ul><ul><li>Red light versus Green light </li></ul><ul><li>Impacts both premiums and claims in different magnitudes (eg. lowers premiums by 1000 but reduces claims by 5000) </li></ul>
  4. 4. A La Carte Eligibility Requirements <ul><li>1. You must not have: </li></ul><ul><li>a) ever been diagnosed with congestive heart failure [CHF]; </li></ul><ul><li>b) had your most recent coronary artery by-pass or angioplasty surgery before January 1, 1999; </li></ul><ul><li>c) an aneurysm that has not been surgically repaired; </li></ul><ul><li>d) had 2 or more of the following: coronary artery by-pass, coronary angioplasty, stenting, pacemaker insertion or valve replacement; or </li></ul><ul><li>e) been advised by any physician not to travel on your trip. </li></ul><ul><li>2. In the past 24 months you must not have: </li></ul><ul><li>a) received treatment or taken medication for a terminal illness; </li></ul><ul><li>b) required dialysis; or </li></ul><ul><li>c) been prescribed home oxygen. </li></ul><ul><li>3. In the past 12 months you must not have been hospitalized </li></ul><ul><li>for 24 or more consecutive hours for: </li></ul><ul><li>a) abnormal heart rhythm, high blood pressure, blood clot(s); </li></ul><ul><li>b) cardiomyopathy, valvular disease of the heart, valve replacement, coronary artery disease (including angina), heart attack (myocardial infarction), stroke or mini-stroke [TIA]; or </li></ul><ul><li>c) chronic lung condition (including emphysema, chronic bronchitis, chronic asthma or Chronic Obstructive Pulmonary Disease [COPD]). </li></ul>4. In the past 12 months you must not have: a) been prescribed or taken 5 or more medications (including nitroglycerine in any form) in total (regardless of whether you used the medications) for one or more of the following conditions: - stroke or mini-stroke [TIA] (transient ischemic attack); - abnormal heart rhythm, high blood pressure, blood clot(s); - cardiomyopathy, valvular disease of the heart, valve replacement, coronary artery disease (including angina), heart attack (myocardial infarction); - diabetes; - diverticulitis, Crohn's disease, ulcerative colitis, chronic constipation, Irritable Bowel Syndrome [IBS], or any other chronic bowel disorder; - kidney (or renal) failure; - liver disorder, pancreatitis; or - chronic lung condition (including emphysema, chronic bronchitis, chronic asthma or Chronic Obstructive Pulmonary Disease [COPD]); b) had a coronary angioplasty procedure or stenting; c) received treatment for metastatic cancer; or d) had surgery for a heart, lung or gastrointestinal condition refused or postponed by you or any physician.
  5. 5. Plan Design Tools (cont’d) <ul><li>2) Plan Selection </li></ul><ul><li>price poorer risks at higher levels (i.e. match expected claim pattern with the premium needed to cover the risk) </li></ul><ul><li>use plan selection criteria that “pushes” sicker people into higher priced plans </li></ul><ul><li>how many plans do you need? </li></ul>
  6. 6. A La Carte Underwriting Questions <ul><li>A. Have you used tobacco products at any time in the last 12 months?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 points </li></ul><ul><li>B. Was your last complete medical examination by a physician more than 18 months ago? . . . . . . . . . . . . . . . . . . . . . . .25 points </li></ul><ul><li>C. In the last 6 months have you been prescribed or taken any medication for, or as the result of: coronary, vascular or carotid artery surgery, heart attack (myocardial infarction), coronary artery disease (including angina), cardiomyopathy, blood clot(s), pericarditis, abnormal heart rhythm? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 points </li></ul><ul><li>D. Do you have high blood pressure requiring medication and, in addition, do you have diabetes (including diet </li></ul><ul><li>controlled)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 points </li></ul><ul><li>E. In the last 12 months, have you: </li></ul><ul><li>1) been prescribed or taken cholesterol medication? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 points </li></ul><ul><li>2) been prescribed or taken Coumadin (Warfarin)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 points </li></ul><ul><li>3) been prescribed or taken, for 30 or more consecutive days, Prednisone (or equivalent steroid medication) in pill form or Lasix (Novo-Semide/Furosemide)? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 points </li></ul><ul><li>4) had cancer requiring surgery, chemotherapy, radiation and/or laser therapy (excluding removal of skin lesions)?. . 35 points </li></ul><ul><li>5) been prescribed or taken medication for anxiety? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 points </li></ul><ul><li>6) received treatment for urinary tract infection [UTI], urinary retention, kidney stones, gallstones or pancreatitis? . . . 15 points </li></ul><ul><li>7) had an episode of pneumonia? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 points </li></ul><ul><li>8) been prescribed or taken 3 or more medications for high blood pressure (hypertension)? . . . . . . . . . . . . . . . . . . . . 30 points </li></ul><ul><li>9) been prescribed or taken 2 or more medications (including inhalers) for a chronic lung condition (including </li></ul><ul><li>emphysema, chronic bronchitis, chronic asthma or Chronic Obstructive Pulmonary Disease [COPD])? . . . . . . . . . 30 points </li></ul><ul><li>10) been prescribed or taken medication for dementia (including Alzheimer’s Disease)? . . . . . . . . . . . . . . . . . . . . . . . . 40 points </li></ul><ul><li>11) had a blood transfusion for anemia? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 points </li></ul><ul><li>12) received treatment for syncope or fainting? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50 points </li></ul><ul><li>13) had a gastrointestinal bleed? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 points </li></ul><ul><li>F. In the last 24 months, have you: </li></ul><ul><li>1) been diagnosed with a stroke or mini-stroke [TIA]? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 points </li></ul><ul><li>2) been diagnosed with, received treatment for or taken medication for any chronic bowel condition (including </li></ul><ul><li>ulcerative colitis, Crohn’s disease, chronic constipation, diverticulitis or Irritable Bowel Syndrome [IBS])? . . . . . . . . 50 points </li></ul><ul><li>3) had a bowel obstruction or bowel surgery? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 points </li></ul><ul><li>G. Do you have peripheral vascular disease [PVD] (excluding varicose veins and venous stasis)? . . . . . . . . . . . . . . . . . . .40 points </li></ul>
  7. 7. Plan Design Tools (cont’d) <ul><li>3) Rate Table Construction </li></ul><ul><li>how many age bands (What is maximum age?) </li></ul><ul><li>higher daily rate by length of trip (Why?) </li></ul><ul><li>Single trip versus Annual Multi-Trip </li></ul><ul><li>Top-ups (good or bad?) </li></ul>Travel Insurance Specialists Ltd.
  8. 8. Plan Design Tools (cont’d) <ul><li>4) Wording for the Policy </li></ul><ul><li>Pre-existing condition coverage </li></ul><ul><ul><li>Length of period </li></ul></ul><ul><ul><li>Buy down to a lower period </li></ul></ul><ul><ul><li>Medication changes </li></ul></ul><ul><ul><li>Impact of using “treated” versus “stable” </li></ul></ul><ul><li>Requirement for notification </li></ul><ul><ul><li>Must call assistance company within 24 hours of seeking care (why, how and what happens if not compliant?) </li></ul></ul>Travel Insurance Specialists Ltd.
  9. 9. Does the insured understand the importance of the “24 hour rule”. . .
  10. 10. Claims <ul><li>What is so important? </li></ul><ul><li>can they be stopped </li></ul><ul><li>how to mitigate </li></ul><ul><li>payment methods </li></ul><ul><li>managing is the key </li></ul><ul><li>reserving is important too </li></ul>Travel Insurance Specialists Ltd.
  11. 11. Claims <ul><li>What happens when the answers are not accurate? </li></ul><ul><li>How do you find out? </li></ul><ul><li>Costs incurred – can they be recovered? </li></ul><ul><li>Results – deny claim? </li></ul><ul><ul><ul><ul><ul><li>– void policy? </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>– return premium? </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>– pay only part of the claim? </li></ul></ul></ul></ul></ul>Travel Insurance Specialists Ltd.
  12. 12. … claim denied? …policy void? … return of premium? What happens when the answers on the application are not accurate? . . .
  13. 13. How to Fix the Loss Ratio? <ul><li>reduce who you sell to by eliminating the poor risks. (easier said than done) </li></ul><ul><li>reduce costs ( someone should be willing to work for less!) </li></ul><ul><li>make it up with volume (If you believe this, I have some “ undervalued ” stocks and real estate to speak with you about). </li></ul><ul><li>much better to reduce claims than to increase premiums . </li></ul>Travel Insurance Specialists Ltd.
  14. 14. … eliminate the poor risks… Fixing the loss ratio… … reduce costs…
  15. 15. Example <ul><li>Premium Expenses Claims 100% 0% 105% Solution 1: Increase premiums by 5 % Solution 2: Decrease claims by 5 % </li></ul><ul><li>Premium Expenses Claims 100% 30% 75% Solution 1: Increase premiums by 7.1 % Solution 2: Decrease claims by 5 % </li></ul><ul><li>Premium Expenses Claims 100% 50% 55% Solution 1: Increase premiums by 10 % Solution 2: Decrease claims by 5 % </li></ul>Travel Insurance Specialists Ltd.
  16. 16. … other strategies… … not quite as successful…
  17. 17. Marketplace Differences <ul><li>CANADA TOPIC U.S.A__ </li></ul><ul><li>Not an issue. . . . . . . . . . . Filing . . . . . . . . . . State by state </li></ul><ul><li>Marketplace. . . . . . . . . . . Rates . . . . Technical justification </li></ul><ul><li>Marketplace . . . . . . . . . . Benefits . . . . . . . . . . . . Mandated </li></ul><ul><li>Scrutinized . . . . . . . . . . Marketing . . . . . . . . . . . .Monitored </li></ul><ul><li>Mostly fee for service . . . . Legal . . . . . . . . .Contingent fees </li></ul><ul><li>Rarely awarded . . . . . . Damages . . . . . . . . . . . . . . Liberal </li></ul><ul><li>Guidelines . . . . . . . Marketing Material . . . . . . . . . . . Filing </li></ul><ul><li>Rely on Contract . . . . . . Courts . . . . . . . Consumer friendly </li></ul><ul><li>1/10 of U.S. . . . . . . . . . . . Size . .10 times larger than Canada </li></ul><ul><li> Licensing </li></ul><ul><li>Province . . . . . . . . . . . . . Agents . . . . . . . . . . . . . . . . State </li></ul><ul><li>National . . . . . . . . . . . . Carriers . . . . . State (OFC coming?) </li></ul>Travel Insurance Specialists Ltd.
  18. 18. Marketplace Differences – Claims <ul><li>Canada </li></ul><ul><li>Coverage is for “Emergency Only” </li></ul><ul><li>Elective treatment excluded </li></ul><ul><li>Claims management is more aggressive </li></ul><ul><li>Claims are re-priced with savings of 25-75% </li></ul><ul><li>Air ambulance used to repatriate to Canada </li></ul><ul><li>U.S.A. </li></ul><ul><li>Regulated coverage for most benefits (mandated) </li></ul><ul><li>Claim management highly regulated (bad faith) </li></ul><ul><li>Re-pricing used where possible </li></ul><ul><li>Prompt payment required </li></ul>Travel Insurance Specialists Ltd.
  19. 19. Premium Differences <ul><li>Example: Age 73, travelling 180 days </li></ul><ul><li>Plan 1 (best price) 1123 </li></ul><ul><li>Plan 2 1210 (+8%) </li></ul><ul><li>Plan 3 1814 (+50%) </li></ul><ul><li>Plan 4 2891 (+60%) </li></ul><ul><li>Plan 5 (worst price) 4044 (+40%) </li></ul><ul><li>make it up with volume (I have some “ undervalued” stocks and real estate to speak with you about). </li></ul><ul><li>much better to reduce claims than to increase premiums . </li></ul>Travel Insurance Specialists Ltd.
  20. 20. … will put you ahead of the competition! <ul><li>Good plan design </li></ul><ul><li>Proper claims management </li></ul><ul><li>Fixing your loss ratio </li></ul>
  21. 21. Thank you. Any questions? <ul><li>Dave Burry </li></ul><ul><li>President </li></ul><ul><li>Travel Insurance Specialists Ltd. </li></ul>

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