2008 General Meeting Assemblée générale 2008 Toronto, Ontario

1. Canadian Institute of Actuaries L’Institut canadien des actuaires 2008 General Meeting Assemblée générale 2008 Toronto, Ontario

2. Group Living Benefits Critical Illness Role of Medical Director Howard Minuk Chief Medical Officer Swiss Re Life & Health

3. Group Living Benefits Medical Director • team player working with actuarial, underwriting, sales, claims

4. Medical Director and Pricing Actuary • provide reliable incidence information for covered CI • speculate what factors might affect population CI incidence trends • help determine what impact underwriting will have on insured CI incidence • determine detailed knowledge about how the product is priced and understand the impact that changing risk factors for CI will have on premium rate • speculate what impact changes in medical technology, medical definitions, and legislation, may have on the CI risk classification process and the bottom line

5. United States CVA17.7%500,000 Cancer44.6%1,258,000 CABG13.9%392,000 MI23.7%670,000 Distribution of the “Big Four” Canada CVA19.1%50,000 Cancer49.4%129,000 MI26.1%68,000 CABG5.4%14,000

6. Coronary Artery Mortality Trends About 50% of the decrease in mortality is related to a reduction in CV risk factors and the remainder is related to improvements in medical technology Among both men & women age > 35 years, the age-adjusted mortality rates from coronary heart disease have decreased steadily from 1980 through 2002. 52% 49% Ford ES et al. CAD Mortality Among Young Adults in USA 1980-2002. (J Am Coll Cardiol 2007;50:2128–32)

7. Coronary Artery Mortality Trends Among both men & women age 35-54 years, the age-adjusted mortality rates from coronary heart disease have already plateaued Ford ES et al. CAD Mortality Among Young Adults in USA 1980-2002. (J Am Coll Cardiol 2007;50:2128–32)

8. Storm Clouds on the Horizon • Obesity • ‘Metabolic Syndrome’-Clustered heart attack risks (diabetes, prediabetes, lipids hypertension) associated with central obesity threaten to reduce or even reverse the declining trend in population cardiovascular mortality. Are CI insurers protected from these epidemics?

9. 2003 Health Canada’s Wt Guidelines BMI (kg/m2) Underweight < 18.5 Normal 18.5–24.9 Overweight 25.0–29.9 Obese, class I 30.0–34.9 Obese, class II 35.0–39.9 Obese, class III 40.0+ Lemieux S et al. CMAJ, Nov 23,2004

10. Canada Obesity Prevalence 1979 vs 2004 Percent Obese BMI > 30 Canadian Adult Age Bands Tjepkema. Adult Obesity in Canada. Statistics Canada-Cat. No.82-620-MWE

11. Obesity & CV Risk Clustering CVDPVD Retinopathy Nephropathy Insulin resistance Metabolic Syndrome NGT Geneticsusceptibility plus Childhoodobesity & inactivity Type 2DM BP Pre DM & Fats Age 0 30 45 60 Excess CV Morbidity

12. Epidemic of MS in USA/CDA by Age This data on the prevalence of the MS comes from an analysis of information obtained from 8814 US men & women age > 20 who participated in the Third National Examination survey from 1998-1994. This is a cross sectional survey of a nationally representative sample of the US population. Up to the time of this report, there was little available information on the US prevalence of the metabolic syndrome. This study indicates a very high prevalence of the MS increasing with age. Ford ES et al. Prevalence of the Metabolic Syndrome in US Adults.JAMA.2002;287:356-359

13. Swiss Re Canadian Group Claims Other MS MI Cancer Stroke

14. Distribution of Denied Swiss Re Claims 90 day waiting period Other Previously diagnosed Pre-ex Does not meet contractual definition

15. Male Female Age-specific cancer incidence rates 45 40 35 30 25 Incidence per 1000 20 15 4.2 1.6 10 2.7 1.2 5 0 15- 25- 35- 45- 55- 65- 75- 85+ 19 29 39 49 59 69 79 Age at diagnosis

16. SEER Incidence and U.S. MortalityAll Cancers, Female (per 1000) 1999-2005 Annual % change (APC) = -0.7% 4.0 3.48 3.47 3.42 3.43 3.36 3.5 3.27 3.08 3.11 3.14 3.07 3.03 3.0 2.5 Incidence per 1000 2.0 1.5 1.0 0.5 0 ‘78 ‘74 ‘76 ‘80 ‘82 ‘84 ‘86 ‘88 ‘90 ‘92 ‘94 Year of Cancer Diagnosis and U.S. Female Mortality

17. SEER Cancer Incidence rate and U.S. MortalityAll Cancers, Male (per 1000) 1995-2005 APC = -0.6% 5.34 4.82 6.0 4.78 4.51 4.36 4.25 5.0 4.13 4.09 3.95 3.89 3.72 4.0 Incidence /1000 3.0 2.0 1.0 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 Year of Cancer Diagnosis and U.S. Male Mortality

18. Prostate Cancer Incidence Rates USA by Year White Males Prostate Lung Colon http://seer.cancer.gov/faststats/sites.php?site=Prostate+Cancer&stat=Incidence#trend

19. Incidence Common Male Cancers(2000-USA, All Ages - Seer) Total 2000 661,200 2002 637,500 2008 745,180 31%(of all male cancers) 250 200 Incidence in Thousands 150 15% 10% 9% 100 50 0 Lung Colorectal Urinary Prostate

20. Incidence Common Female Cancers (2000-USA, All Ages - Seer) (of all female cancers) 30% 180 Total 2000 596,000 2002 647,400 2008 692,000 160 140 120 Incidence in Thousands 13% 100 12% 80 60 40 20 0 Breast Colorectal Lung

21. CA Incidence Trends(1973-94, Seer, US Female, All Ages) 122% 140 120 82% 100 67% 80 % increase 53% 60 35% 34% 40 23% 13% 20 0 Breast Kidney Lung Thyroid Melanoma Liver All Cancers Non-Hodgkin’s

22. CA Incidence Trends(1973-94, Seer, US Male, All Ages) 141% 142% 160 140 % increase 120 90% 100 75% 80 50% 60 36% 27% 40 20 0 Melanoma Liver Testis All Cancers Kidney Prostate Non-Hodgkin’s

23. Impact of Contract Duration on Cancer Diagnosis (Seer 1987 - 1991) 100% 93% 100 71% 80 % of Cancers Diagnosed 41% 60 40 20 0 Whole Life < 85 < 75 < 65 Age

24. Product CI pays a lump sum benefit on the diagnosis of one of the pre selected critical illnesses.

25. Risks in CI definitions Client perceptions about cover& exclusions Increasingincidencerates Scientificmedicaladvances Evolvinglegislation

26. Myocardial infarct: definition flexibility? Risks in CI definitions Changing sensitivity and specificity of tests 2008 Benchmark MI Definition 1999 New myocardial infarction tests Troponin –T Current myocardial infarction definition CP, EKG changesenzyme rise & fall

27. CI Individual • concern about behaviour pattern of applicants • epidemic of informed applicants who have been over represented in claims • possibly poor mix of applicants because of reduced sales

28. CI Individual Underwriter Actuary Applicant

29. CI Individual Incomplete Underwriting information Underwriter Actuary InformedApplicant

30. Pre-Existing Condition • A Critical Illness that is directly or indirectly related to a condition for which the employee obtained medical care, or for which a reasonably prudent person would have sought medical attention within 24 months before he became insured. • Medical care is considered to be obtained when he consults a doctor or other health care practitioner, uses medication on the advice of a doctor, or receives other medical services or supplies, advice or treatment, whether or not a specific diagnosis is made. • This exclusion does not apply if the illness is diagnosed after he has been continuously insured for 24 months.

31. CI Individual • Can informed applicants hurt us? Yes!

32. Materially Important Nondisclosure • not commonly involved in contestable life insurance claims • may be one important unrecognized factor responsible for adverse mortality experience especially in preferred lines of business • more commonly recognized in other lines of business, such as DI and CI • Recent increasing sales of CI insurance have really been an eye opener in understanding the behavior pattern of insurance applicants

33. Group CI • law of large numbers • we hang our hat on pre-existing unless excess • 8 out of 10 Group CI claims are paid • CV claims seen are sometimes seen at young ages-late 30’s early 40’s • potential worsening experience with increases in population risk factor clustering • partnering with experienced reinsurer

34. CI Benchmark Definitions Alzheimer’s Aortic surgery Aplastic anemia Bacterial meningitis Benign brain tumour Blindness Cancer Coma Coronary angioplasty CABG Deafness MI Heart valve replacement Kidney failure Loss of independent existence Loss of limbs Loss of speech Major organ failure Major organ transplant Motor neuron disease Multiple sclerosis Occupational HIV Paralysis Parkinson’s disease Severe burns Stroke