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