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CMI IP Experience: A User’s Perspective

CMI IP Experience: A User’s Perspective. Darshan Singh, Gen Re. A User’s Perspective. Inception rates: trends and the economy Termination rates: is there scope for more? Comments on the CMI graduation and; More data please!. 2001-2002 experience vs 1995-96.

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CMI IP Experience: A User’s Perspective

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  1. CMI IP Experience: A User’s Perspective Darshan Singh, Gen Re

  2. A User’s Perspective • Inception rates: trends and the economy • Termination rates: is there scope for more? • Comments on the CMI graduation and; • More data please!

  3. 2001-2002 experience vs 1995-96

  4. Trends in Male Class I inceptions As % of Year 2002. Ages 18-59

  5. Trends in Female Class I inceptions

  6. Some points to watch out for… • Changes in contributing offices • Offices do not necessarily provide figures on all their business • Reclassification of Class Unknown into Class 1

  7. Some reasons for inception trends • The Economy • Change in state benefits in 1995 • Replacement of invalidity benefit by incapacity benefit • Underwriting developments • Occupational reclassification of doctors, nurses, teachers etc • Changes in product design • Early notification • Changing definitions of incapacity

  8. Male Class 1 Inceptions vs Unemployment

  9. The economic link elsewhere • Australian study shows link • http://ecocomm.anu.edu.au/research/papers/pdf/2001-01.pdf • American study by UNUM also shows a link • http://library.soa.org/library/record/2000-09/rsa02v28n233of.pdf • Link with the local economy is apparent for state benefits

  10. Will the trend turn? • The UK economy has enjoyed tremendous growth • Is a downturn inevitable? • Should insurers price in an economic cycle? • For guaranteed rates? • For reviewable rates? • How much of the recent trend is permanent and how much cyclical?

  11. Trends in recoveries Male Class 1 CMIR12 A/E as % of 2002 A/E

  12. Scope for more recoveries • Case management focus • Get in there early! • Rehab is here to stay • Use of the telephone • Specialist approaches for different causes of claim

  13. New CMI graduation of recoveries • Main changes: • No longer ‘unified’ model • Different for different DPs

  14. Comments on the new graduation • At some point recovery rates for the different DPs should converge • The graduation is based on 1991-98 data trends to 2002 have not been calculated on this basis

  15. Good CMI data is crucial A scene replicated across the UK…. Demand for IP is high To increase supply… We need to maintain and improve the data the CMI gives the industry

  16. Rating factors in CMI Age Sex Deferred period Occupational class Rating factors not in CMI Disability definition Exact Occupation Self-employment Smoking status Benefit amount Replacement ratio Policy duration Claims management practices Socio-economic group Geographic location .... More data please!

  17. Individual year data still circulated as word documents Flexibility reduced by hard coded age categories Termination data especially difficult to work with: age and duration categories change from year to year More technology please!

  18. Questions

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