THE NEED AND ABILITY TO WRITE
PROTECTION BUSINESSBUSINESS
JUG PARMAR
6th CILA, MUMBAI
23 NOVEMBER 201023 NOVEMBER 2010
AGENDA
OVERVIEW
PURE LIFE COVERS
CRITICAL ILLNESS
HEALTH INSURANCE
ANNUITIES, DISABILITY INCOME, LONG TERM CARE
SUCCESS FACTORSSUCCESS FACTORS
OVERVIEW
CRITICAL ILLNESSDEATH HOSPITALISATION
DISABILITYLONGEVITY LONG TERM CARE
THERE IS A CLEAR NEED FOR INSURANCE
ARE ALL NEEDS INSURABLE?
Financial loss indemnified on
contingent eventContingent Event
Clearly definableNot too frequent / rare
Insured cannot influence the occurrence of the eventFinancial Loss
RatableMeasurableManageable
Not too small a financial impact
A material section of the population is exposed to this
riskthe insured must not be able to influence the size of the
financial loss after the event has occurred
ENVIRONMENT
ROLE OF PUBLIC SECTOR / PRIVATE SECTOR / INDIVIDUALS
REGULATION – COMPULSION
EDUCATION AND AWARENESS
CULTURAL ATTITUDES
PRODUCT DESIGN
ADDITIONAL BENEFITS
CORE BENEFITS
OTHER FEATURES - RISK CONTROLS e.g. exclusions, limits
COMBINATION OF BENEFITS
PRODUCT PRICING
UNDERSTANDING RISKS
DATA
POPULATION / INDUSTRY / OWN PORTFOLIO EXPERIENCE
OTHER MARKETS
TRENDS
ANTI-SELECTION AND UNDERWRITING
SENSITIVITIES
MANAGING RISKS
AVOID
MITIGATE
TRANSFER
EXPLOIT
MARKETING AND SELLING
ENVIRONMENT
HANDLING COMPLEXITY
POSITIONING FOR ATTRACTION
KNOW YOUR CUSTOMER (KYC)
NEEDS BASED SELLING
SELL BENEFITS – MAKE IT REAL WITH STORIES
BEST ON PRICE OR SOMETHING ELSE?
SELLING
REDUCTION OF MARGIN (VOLUME)
BEST ON PRICE
EXTRA BENEFITS AND FEATURES
PRICING FOR VALUE
( )
MINIMISE BENEFITS AND FEATURES BRAND LOYALTY – SELL MORE
NICHE
SUPERIOR COST MANAGEMENT
SERVICE QUALITY –EASE OF USE
INCENTIVES
UNDERWRITING AND CLAIMS
GREATER ROLE FOR UNDERWRITING AND CLAIMS EXPERTISE
SUCCESS DEPENDS ON FOCUSSED RISK CONTROL
BALANCE THESE BY PRODUCT TYPE
PURE TERM – EMPHASIS AT UNDERWRITING STAGE
HEALTH – EMPHASIS ON CLAIMS MANAGEMENT
ADDRESS RISK MANAGEMENT THROUGH PRODUCT DESIGN
CONTROL CYCLE
MONITOR
MEASURE
ANALYSE
FEEDBACK – ADJUSTMENTS, ENHANCEMENTS
PRODUCTS
LIFE COVERS
LUMP SUM OR ANNUITY PAYABLE ON DEATH
TERM ASSURANCE FAMILY INCOME BENEFIT
WHOLE OF LIFE REDUCING
ESCALATING
GROUP
ESCALATINGMORTGAGE
HIGH NETINTERNET
MONEY BACKWORTH PREFERRED
LIFENON-SMOKER
LIFEKEY MAN
LIFE COVERS - RISKS
WIDE VARIATION OF EXPERIENCE BETWEEN SEGMENTS
MORTALITY RISK ACCURACY
O O C S G S
ANTI-SELECTION, SELECTIVE LAPSE, FRAUD
HIGH COVERS REQUIRE FINANCIAL AND MEDICAL UNDERWRITING
SURPLUS BASIS REINSURANCE
LIFE COVERS - CHALLENGES
FINANCIAL UNDERWRITING INFORMATION AVAILABILITY
EDUCATION - VALUE OF COVER WITHOUT PAYOUT
MEDICAL UNDERWRITING COST AND EFFECTIVENESS
HIGHLY COMPETITIVE FOR FINANCIALLY SOPHISTICATED CUSTOMERS
LIFE COVERS – SUCCESS FACTORS
UNDERWRITING STRENGTH
EFFECTIVE TARGETING
EFFICIENT INTERNAL PROCESSES - AUTOMATED UNDERWRITING, COST CONTROL
FAST AND EASY SALES PROCESS - CUSTOMER SERVICE
BRAND
CRITICAL ILLNESS
E.G. HEART ATTACK, CANCER, STROKE
LUMP SUM PAID ON DIAGNOSIS OF A SPECIFIED CONDITION
, ,
NUMBERS OF CONDITIONS RANGE UP TO 40
STAND-ALONE, ADDITIONAL, ACCELERATED
SINGLE CONDITION, JUVENILE, WOMEN TARGETED, COMBINATION
CRITICAL ILLNESS - RISKS
ANTI-SELECTION
LOOSE POLICY WORDING AND DEFINITIONS
INADEQUATE CLAIMS CONTROL
DETECTION ADVANCES, ANTI-SELECTIVE LAPSES
DETERIORATING INCIDENCE TRENDSDETERIORATING INCIDENCE TRENDS
DIABETES AND HEART DISEASE - INTERNATIONAL DIFFERENCES
LIFESTYLE EFFECTS (DIET, OBESITY)
PRODUCT COMPLEXITY HAMPERING SALES
CRITICAL ILLNESS – DEVELOPMENTS
SIMPLICITY, MORE CONDITIONS, DIFFERENT CONDITIONS
PRODUCT DIFFERENTIATION
, ,
MULTIPLE PAY POLICIES
REPEAT CLAIM COVER
TIERED BENEFITS
STANDARD DEFINITIONS
HEALTH INSURANCE
TREATMENT / SURGERY COSTS
HOSPITALISATION COSTS
MAJOR / DAY CARE
PRE AND POST HOSPITALISATION
DOMICILIARY HOSPITALISATION
HEALTH INSURANCE - RISKS
EXPENSE INFLATION
PRICING
UTILISATION RATES
FRAUD
POLITICAL AND REGULATORY
REPUTATION AND DAMAGE TO BRAND
HEALTH INSURANCE - CHALLENGES
CLAIMS MANAGEMENT AND CONTROL
COMPLEXITY – PRODUCT AND ADMINISTRATION
AFFORDABILITY
EXCLUSIONS/PRE-EXISTING CONDITIONS
START UP COSTSSTART UP COSTS
DIFFERENCES TO LIFE BUSINESS
COMPETING AGAINST LOSS MAKING PORTFOLIOS
COMPETITION FROM GENERAL INSURERS, STAND-ALONE HEALTH COMPANIESCOMPANIES
LACK OF STANDARDISED PROVIDER BILLING MECHANISMS
HEALTH INSURANCE – DEVELOPMENTS
COMPETITION FROM NEW ENTRANTS
GOVERNMENT SCHEMES WIDENING COVERAGE
MORE GRANULAR PRICING
DIFFERENTIATION BY BENEFITS
PORTABILITY OF HEALTH POLICYPORTABILITY OF HEALTH POLICY
LIFELONG RENEWABILITY
PREFERRED PROVIDER NETWORK (PPN)
EXHAUSTIVE RISK MANAGEMENTEXHAUSTIVE RISK MANAGEMENT
STANDARDISATION OF POLICY WORDINGS
LIFE ANNUITIES
IMMEDIATE OR DEFERRED
SERIES OF INCOME PAYMENTS CONTINGENT ON LIFE
FIXED, INCREASING, INDEX-LINKED, WITH PROFIT
SPOUSE, DEPENDENTS, GUARANTEED/ LIMITED PAYOUT TERM
ANNUITIES – RISKS AND CHALLENGES
KEY RISKS OF LONGEVITY AND INVESTMENT DURATION
PRICING – GUARANTEE ON VESTING
PENSIONS/ANNUITY WORKING GROUP
INITIAL REPORT – IDENTIFYING THE ISSUES
SECOND REPORT – KEY RECOMMENDATIONS
LONG TERM CARE
BENEFITS TO COVER NURSING CARE AND ASSOCIATED COSTS
TO THE ELDERLY SUBJECT TO MEETING CLAIM CRITERIA
BASED ON INABILITY TO PERFORM ACTIVITIES OF DAILY LIVING (ADLS)
INDEMNITY BASIS, INDEMNITY WITH CAP, FIXED AMOUNTS
DATA FOR TRANSITION TO CLAIM STATESDATA FOR TRANSITION TO CLAIM STATES
POTENTIALLY EXPENSIVE FOR ADEQUATE COVER
SELECTION AND ANTI-SELECTIVE LAPSES
CLAIMS MANAGEMENT
LIMITED SUCCESS INTERNATIONALLY
DISABILTY INCOME
REGULAR CASH BENEFITS PROVIDED DISABILITY CRITERIA ARE MET
OWN, SUITED OR ANY OCCUPATION VARIATIONS
CLEAR NEED BUT RISKS ARE CHALLENGING IN THIS MARKETCLEAR NEED, BUT RISKS ARE CHALLENGING IN THIS MARKET
DATA AVAILABILITY AND SUITABILITY FOR PRICING IS AN ISSUE
CLAIM VERIFICATION, CLAIM MANAGEMENT, FRAUDULENT CLAIMS
DEVELOPING THE PRODUCT WOULD START WITH LIMITED BENEFITS WITH STRICT CRITERIA
MARKETING AND SALES CONSIDERATIONS?
SUCCESS FACTORS
ENVIRONMENT REGULATION AND AWARENESS
UNDERSTAND RISKS FOR PRODUCT DESIGN AND PRICING – DATA
ENVIRONMENT – REGULATION AND AWARENESS
UNDERWRITING AND CLAIMS EXPERTISE REQUIRED
KNOW YOUR CUSTOMER – TARGET MARKET, NEEDS
LEARN LESSONS FROM OTHER MARKETS – RIGHT PRODUCT FOR MARKET, CUSTOMER AND OWN BRAND
INCENTIVISATION STRUCTURE
THANK YOU
JUG PARMAR
23 NOVEMBER 2010