Medical Insurance Risks

Report
Medical Insurance
Risks and Mitigants
Amiad BenMeir,
Swiss Reinsurance Company
Medical insurance Risks and Mitigants
• Healthcare and PMI Challenges
• Medical Insurance Risks
• How to Mitigate these Risks
• Risk Management
• Reinsurance
• Q&A
Medical insurance Risks and Mitigants
Healthcare challenges
• Ageing populations
• increasing complexity of diseases and health care needs
• Increase in Chronic diseases
• environmental and socioeconomic factors as well as increasingly by
lifestyle
• Structural challenges
• increasing economic burden of preserving high quality,
comprehensive care without undue financial barriers to access
against….
• …. ever more intense public expectations of what healthcare can and
should deliver
Medical insurance Risks and Mitigants
Private Medical Insurance challenges
• Rapid Increase in Healthcare Costs
• General Inflation
• Specific Inflation: Expensive New Technology
• Growth Trend in Utilization
• Higher Consumer Awareness
• Aging Population
• Ability to Treat more
• Political issue
• Heavily regulated, on political focus
• Regulatory changes encouraging Private Medical Insurance (PMI)
• Increase in demand for insurance expertise
• product design and claims management
• capital invested
Medical insurance Risks and Mitigants
Demand side statistics
Global PMI utilisation patterns
Medical insurance Risks and Mitigants
Supply side statistics
Number of hospital beds per 10,000 population
ADICIONE O TÍTULO
Medical insurance Risks and Mitigants
Medical Insurance Risks
• Medical technologies
• Ageing
• Costs per service
• Demand/Awareness
• Political (regulations)
• Catastrophic risk (pandemics,forex, govt)
• Expense risk (TPAs)
• Selective lapse risk
Medical insurance Risks and Mitigants
Scenarios for high inflation
• Medical inflation (US example and others). above CPI!
Medical insurance Risks and Mitigants
Risks of covering medical
over the long run
• Ageing population => increased Costs
• Renewal Guarantee
• Rate Guarantee
• Scope Guarantee (minimum benefit)
=> Need to set-up reserves
=> What can we do to reduce risks?
Medical insurance Risks and Mitigants
Risk Management
• AVOID
• ACCEPT
• REDUCE
• TRANSFER
Medical insurance Risks and Mitigants
Risk Management - REDUCE
• By Design
• u/w terms , limits, exclusions
• co-payment (shares risk with the insured)
• By Management
• Claims control, pre authorisation, protocols, Managed Care
• Portfolio management (risks, lapses), concentration of risks (groups)
• Monitoring, Controls, Premium increases
• By Structure
• Alignment of interests
• Risk-based premiums and reviews
• Medical Providers Network
Medical insurance Risks and Mitigants
Risk Management - TRANSFER:
Reinsurance solutions (R/I)
• Quota Share (Q/S)
• Specific Stop Loss (i.e. specific XoL)
• (Working) Specific Stop Loss+ Aggregate Deductible
• CataXL
• Stop Loss
• Structured Solutions (tailor-made)
Medical insurance Risks and Mitigants
R/I example:
Quota Share
$100,000
Reinsurance: $140,000
$85,000
($15,000+$32,500+$42,500+$50,000)
$65,000
50%
retention
$30,000
Retention: $140,000
($15,000+$ $32,500+$42,500+$50,000)
A
copyright 2010 Swiss Re
B
C
D
Total annual claims of four individuals
R/I example:
Specific Stop Loss
$100,000
Specific SL: $100,000
$85,000
($15,000+$35.000+$50,000)
$65,000
$50,000
retention
$30,000
Retention: $180,000
$30,000 +$50,000 X 3
A
copyright 2010 Swiss Re
B
C
D
Total annual claims of four individuals
R/I example:
Aggregating Specific Stop Loss
$100,000
Specific SL: $70,000
$85,000
($20.000+$50,000)
$65,000
Aggregate Satisfied
with Claimants B & C
Aggregating Specific:
$30,000
$50,000
retention
$30,000
Retention: $180,000
$30,000 +$50,000 X 3
A
copyright 2010 Swiss Re
B
C
D
Total annual claims of four individuals
Specific Stop Loss coverage:
Leveraged Trend
• A higher rate of increase (trend) than underlying medical
trend
• Leveraged Discounts (Network discount) work in a similar
way to leveraged trend.
Example
2011 experience
From
Ground up
Claim 1
Claim 2
Claim 3
Claim 4
Total
Increase
500
1,000
1,500
2,000
5,000
2012 projection (+10%)
Excess
1,000
500
1,000
1,500
From
Ground up
550
1,100
1,650
2,200
5,500
10%
Excess
1,000
100
650
1,200
1,950
30%
Medical insurance Risks and Mitigants
Excess
1,100
550
1,100
1,650
10%
Consideration in choosing R/I
• Risk appetite
• Capital needs
• Diversification
(i.e. mono-line insurer, self funded groups)
• Exposure and Volatility of risks
(i.e. what is covered)
• Size
• Other constraints
Medical insurance Risks and Mitigants
Medical Insurance Risks – R/I SOLUTION
• Medical technologies / Costs per service high cost claims/Medical inflation – Q/S & Specific XoL
• Ageing/ Long-term risk - capital solutions.
• Demand/Awareness – utilization trend – Q/S
• Political (regulations) – misprice lock-in – Q/S
• Catastrophic risk – Stop Loss, (CatXL cover)
• Expense risk (TPAs) – operational issue
• Selective lapse risk – operational & design issue
Medical insurance Risks and Mitigants
Swiss Re's Global medical reach
SR in Europe
• Health proposition across all Europe.
SR in Asia
• A health R/I leader in
China, India, Japan,
Hong Kong, Malaysia &
Korea
• Strong presence in
Thailand, Singapore,
SR in the US
Swiss Re specialises in
insuring the excess medical
risks of self-funded,
employer-sponsored health plans
SR in Latin America
• Strong focus currently on
Mexico & Brazil
• Diversified presence in
Central America
SR in Middle East
• Largest books in UAE,
Lebanon and KSA
• TPA partnerships
Swiss Re Value Proposition for
Medical Insurance
SERVICES
RISK
CARRIE
R
Risk transfer
Capital solutions
UW SUPORT &
TOOLS
ACTUARIAL
MONITORING
CLAIMS
SUPPORT
Product design
Risk management
Data management
Medical insurance Risks and Mitigants
SALES
MARKETING
Customer service
Portfolio admin
Claims Admin
THANK YOU
OBRIGADO
Q&A
contato: Amiad BenMeir | Product Actuary, Life & Health
Swiss Reinsurance Company | Mythenquai 50 / 60, 8022 Zurich, Switzerland
Direct: +41 43 285 79 64 E-mail: [email protected]
Legal notice
©2012 Swiss Re. All rights reserved. You are not permitted to create
any modifications or derivatives of this presentation or to use it for
commercial or other public purposes without the prior written
permission of Swiss Re.
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.

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