2007 annual meeting ● assemblée annuelle 2007 vancouver

2007 Annual Meeting ● Assemblée annuelle 2007Vancouver

Canadian Institute

of Actuaries

L’Institut canadien desactuaires

IP12: Living Benefits - Hot Topics

ModeratorMartin Fortier

SpeakersAlethea A. LynNathalie TremblayFrédéric Jacques20

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Agenda

• Critical Illness Insurance (CII)

• Long Term Care Insurance (LTCI)

• Disability Income Insurance (DII)2007

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CII sales trend20

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007 91

63

109

4334

111

-5 -7-25

0

25

50

75

100

125

'99 '00 '01 '02 '03 '04 '05 '06 1q07

% C

hang

eAnn. Prem.

Source: Canadian Individual Critical Illness Insurance Survey, LIMRA International

CII – hot topics• experience study group

• standardized definitions

• guaranteed rates

• underwriting time and high proportion of declines

• lack of consumer awareness (CII & LTCI)

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Definitions Project- Three Main Objectives

1. Update the definitions for the covered CI conditions which no longer accurately describe the covered condition or reflect current practices or diagnosis process

2. When the intent of a condition is to cover the same risk, a “benchmark” definition which is clear, concise and objective and as similar as possible across the industry should be used by insurers and reinsurers

3. It is appropriate for a definition to differ from the benchmark definition only when a definition offers additional material coverage






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New Business Placement - 2005

Substandard6%

Standard73%

Not Placed21%`

Source: Munich Re 2006 Pricing Survey

Decline13%

Incomplete12%

Not Taken4%

Standard *59%

Substandard12%

`

* % placed standard includes 4% placed with exclusions

Life

CI

Life: App Date to Placement Date – 2005

0

10

20

30

40

50

<= 10 days 11-20 days 21-30 days 31-40 days 41-50 days 51+ daysPlacement Time (days)

% o

f App

licat

ions

58%

Source: Munich Re 2006 Pricing Survey

0

10

20

30

40

50

<= 30 days 31-45 days 46-60 days 61-91 days >=92 days

Placement Time (days)

% o

f App

licat

ions

CI: App Date to Placement Date – 2005

Source: Munich Re 2006 CI Survey

44%






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Perceived coverage20

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Source: Desjardins Financial Security Survey on Health, October 2003

Are you covered by… on a personal basis, that is by an insurance that you acquired on your own and that is not part of a group plan?

6%

8%

9%

30%

63%

Complementary health care insurance

Long Term Care insurance

Critical Illness insurance

Disability insurance

Life insurance

(42%)

(7%)

(11%)

(12%)

(74%)

CII – Market penetrationJanuary 1st, 2006

• Canada: 6 %• United Kingdom: 23 %

Assumptions:• Based on 18-65 population • 65% of the segment is insurable• Only TD bank numbers were included but

substantial 400,000!

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Source: MunichRe

LTC – Market penetration

• Canada: less than 1% • France: 15%

Assumptions:• Based on 50-70 population • Canada figures are from StatCan population

estimates and projections as of July 1st 2006 and from LIMRA at the end of 2006.

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Source: Scor Vie, LIMRA, Statcan

Agenda




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LTCI sales trend20

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Annualized Premium (000's)

$10,646 $12,896 $10,895

$45,922$56,470

$64,967

2004 2005 2006

Sales In Force

At the end of 2006, approximately 56,000 Canadians had LTCI

Source: LIMRA International

LTCI – hot topics

• experience and learning from a recent market entry

• underwriting and high proportion of declines

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LTCI – Desjardins experience

Typical sale: Annual premium: 1 353 $ Monthly benefit: 2 401$ Average age: 55 ans Waiting period: 55% chosed 90 days Benefit period: 66% Lifetime, 36% 5 years, 9% 2 years Premium duration: 94% lifetime and 6% 20 years Spousal reduction: 31% of the cases

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LTCI – Desjardins experience20

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Underwriting decisions2006

8%

24%

8% 8% 52%

AcceptedModifiedDeclinedPosponedWithdrawn

Accepted or modified cases account for 60 % of submitted cases but only 50 % of in-force. 50%

50%

In force Declined

LTCI – Desjardins experience20

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Independent Living Sales by age group

41 - 5020%

51 - 6043%

61 - 7027%

0 - 302% 31 - 40

5%71 - 80

3%

0 - 3031 - 4041 - 5051 - 6061 - 7071 - 80

•More than 90% are between 41 and 70

•Concentration between 51 and 60

LTCI – hot topics

• experience and learning from a recent market entry

• underwriting and high proportion of declines

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LTCI – placement ratios20

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40 75-85%

50 65-75%

60 55-65%

70 15-25%

2006 US LTC Wastage Rate by Age

34%

42%

55%

66%63%

29%23%25%

0%

25%

50%

75%

Less than45

45-49 50-59 60-64 65-69 70-74 75-79 80+

15 companies reporting

2006 total wastage = 35%

Source : LifePlans Inc, 2007 US survey

2006 US LTC - Average Issue Times from Date of Receipt

18%

30%

22%25%

0%

20%

40%

Less than 10 days 10 to 20 days 21 to 30 days 31 to 60 days

17 companies reportingSource : LifePlans Inc, 2007 US survey

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DII sales trend20

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-10

-5

0

5

10

'00 '01 '02 '03 '04 '05 '06 1q07

% C

hang

e

Ann Prem

Source: Canadian Individual Disability Income Insurance Sales,U.S. Individual Disability Income Insurance Sales,LIMRA International

DII – hot topic

• Flat sales experienced in recent years

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DI – Market penetrationCanada (2005)

• Around 64 % of workers, salaried or self-employed are covered by DI

Assumptions:• Part time employees could be covered by DI• Unemployed are unlikely to be covered

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Source: ACCAP 2005, StatCan

Workers numbers VS disability coverages

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1995 1998 2001 2004

In th

ousa

nd

Disabilty insured persons (group or individual)Workers numbers

Average increase of 5.2%

Average increase

of 2%

Long term care

Retirement

Long term disability

Critical illnesses

85

Assets protection

Life insurance

Income protection

30 40 55 65 75

Financial security planning

IP12: Living Benefits - Hot Topics

Questions?

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2007 annual meeting ● assemblée annuelle 2007 vancouver

Documents