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: Amiad_BenMeir@swissre.com
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