Transcript Dread Disease in Australia

Critical Illness Pricing Update
Mel Yates
GeneralCologne Life Re Australia
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New Zealand Society of Actuaries Conference, November 2002
Agenda
• Incidences
– Big 4 – Trends & Comparison with “Fabrizio & Gratton 1994”
– Other conditions including TPD
• Mortality
– Trends in population mortality
– Proportion of deaths due to critical illness
• Life + accelerated critical illness pricing
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New Zealand Society of Actuaries Conference, November 2002
Footnotes
• New basis 2003 v. “Fabrizio & Gratton” 1994
• Population incidence and mortality - NOT assured lives
• Australian data NOT New Zealand
• Aggregate NOT smoker/non-smoker
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New Zealand Society of Actuaries Conference, November 2002
IAA – Trauma Claims 1995-1997
Males
Females
Stroke 4%
Other 20%
Heart Attack 1%
Other
10%
Bypass 1%
Stroke 7%
Cancer
46%
Cancer
84%
Heart
Attack
17%
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Actual / Expected by cause of claim
Event
Males
Females
Cancer
66%
77%
Heart Attack
22%
5%
Bypass Surgery
58%
42%
Stroke
29%
23%
Big 4 combined
43%
61%
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Actual / Expected by age
Age
Males
Females
25-34
51%
74%
35-44
40%
55%
45-54
41%
66%
55-64
59%
43%
All
43%
61%
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Actual / Expected by age (assured lives)
Age
Males
Females
25-34
51%
(0.78)
74%
(1.06)
35-44
40%
(0.67)
55%
(0.70)
45-54
41%
(0.64)
66%
(0.86)
55-64
59%
(0.87)
43%
(0.57)
All
43%
61%
Figures in brackets estimate the A/E ratio after applying an assured lives adjustment to the expected.
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Incidences - Cancer
• Australian Association of Cancer Registries (AACR) and
Australian Institute of Health & Welfare (AIHW)
• Annual reports of new cancer diagnosis from 1983-98
• Excludes in-situ & non-melanocytic skin cancers but includes
all melanomas
• Adjustment for melanomas less than 1.5mm thick
– 85% at young ages falling to 50% at older ages
– Females higher percentages than males – but males rising towards
female levels
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New Zealand Society of Actuaries Conference, November 2002
Cancer Incidence Ages 25-34
Incidence per 100,000
80
75
70
65
60
55
50
45
40
1983
1988
“Cancer in Australia” - AACR & AIHW
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New Zealand Society of Actuaries Conference, November 2002
1993
1998
2003
Cancer Incidence Ages 35-44
Incidence per 100,000
200
180
160
140
120
100
80
1983
1988
“Cancer in Australia” - AACR & AIHW
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New Zealand Society of Actuaries Conference, November 2002
1993
1998
2003
Incidence per 100,000
Cancer Incidence Ages 45-54
440
390
340
290
240
1983
1988
“Cancer in Australia” - AACR & AIHW
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New Zealand Society of Actuaries Conference, November 2002
1993
1998
2003
Cancer Incidence Ages 55-64
Incidence per 100,000
1200
1100
1000
900
800
700
600
1983
1988
“Cancer in Australia” - AACR & AIHW
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New Zealand Society of Actuaries Conference, November 2002
1993
1998
2003
Cancer Incidence Rates - Males
Age
A/E
(IAA 95-97)
2003/1994
Future
Trend
25-34
85%
1.12
1.3%
35-44
77%
1.05
0.5%
45-54
55%
0.98
-0.2%
55-64
59%
0.99
-1.1%
All
66%
1.00
0.2%
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Cancer Incidence Rates - Females
Age
A/E
(IAA 95-97)
2003/1994
Future
Trend
25-34
81%
1.14
0.9%
35-44
70%
1.02
0.2%
45-54
87%
1.10
1.1%
55-64
53%
1.22
1.3%
All
77%
1.14
1.3%
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Heart attack
• WHO MONICA (Monitoring of Trends & Determinants of
Cardiovascular Disease) Project 1985-93
– Average of 3 centres: Newcastle, Perth, Auckland
• Australian and international data show improvement in the
incidence of “first-ever” heart attacks
• Favourable changes in CHD risk factors
– Blood pressure
– Smoking
– Saturated fat content in diet
• Project 2% p.a. decline in heart attack incidence rates
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New Zealand Society of Actuaries Conference, November 2002
Heart Attack Incidence Rates - Males
Age
A/E
(IAA 95-97)
25-34
2003/1994
Future
Trend
0.89
-2%
35-44
15%
0.43
-2%
45-54
28%
0.62
-2%
55-64
48%
0.78
-2%
All
22%
0.67
-2%
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Heart Attack Incidence Rates - Females
Age
2003/1994
Future
Trend
25-34
0.77
-2%
35-44
0.43
-2%
0.46
-2%
0.64
-2%
0.56
-2%
45-54
A/E
(IAA 95-97)
10%
55-64
All
5%
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Procedure rate per 1,000,000
Coronary artery bypass surgery
1200
+0.1% p.a.
1000
+7.0% p.a.
800
600
400
Projected future trend 3.6% p.a.
200
0
1986
1988
1990
1992
Source: Australian Institute of Health and Welfare (2001)
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New Zealand Society of Actuaries Conference, November 2002
1994
1996
1998
Bypass Surgery Incidence Rates - Males
Age
A/E
(IAA 95-97)
25-34
2003/1994
Future
Trend
0.60
+3.6%
35-44
71%
0.79
+3.6%
45-54
51%
0.84
+3.6%
55-64
76%
0.92
+3.6%
All
58%
0.88
+3.6%
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Bypass Surgery Incidence Rates - Females
Age
A/E
(IAA 95-97)
2003/1994
Future
Trend
25-34
1199%
7.36
+3.6%
35-44
75%
1.59
+3.6%
45-54
0.97
+3.6%
55-64
0.90
+3.6%
0.95
+3.6%
All
42%
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Stroke
• Community based studies for complete case ascertainment
• Wide variation in international incidence time trends
• Increased incidence in Denmark and USA
• Reduced in Finland, Japan and Russia
• Perth 1995/96 by Jamrozik (1999) -~ 5% improvement p.a.
• Melbourne 1996/97 by Thrift (2000) ~ less improvement
• Project 3% p.a. improvement in stroke incidence rates
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New Zealand Society of Actuaries Conference, November 2002
Stroke Incidence Rates - Males
Age
A/E
(IAA 95-97)
2003/1994
Future
Trend
25-34
10%
0.88
-3%
35-44
18%
0.90
-3%
45-54
40%
0.97
-3%
55-64
65%
0.74
-3%
All
29%
0.84
-3%
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Stroke Incidence Rates - Females
Age
A/E
(IAA 95-97)
2003/1994
Future
Trend
25-34
47%
1.43
-3%
35-44
15%
0.93
-3%
45-54
20%
0.67
-3%
55-64
71%
0.69
-3%
All
23%
0.75
-3%
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Big 4 Incidence Rates - Males
Age
A/E
(IAA 95-97)
2003/1994
Future
Trend
25-34
51%
1.03
0.1%
35-44
40%
0.73
-0.6%
45-54
41%
0.81
-0.8%
55-64
59%
0.88
-0.5%
All
43%
0.84
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Big 4 Incidence Rates - Females
Age
A/E
(IAA 95-97)
2003/1994
Future
Trend
25-34
74%
1.16
0.1%
35-44
55%
0.94
-0.2%
45-54
66%
0.94
0.5%
55-64
43%
1.00
0.5%
All
61%
0.98
The Institute of Actuaries of Australia – Report of the Mortality Investigation 1995-1997
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New Zealand Society of Actuaries Conference, November 2002
Incidences – Other Conditions
Aplastic
Anaemia
Coma
Multiple
Sclerosis
Parkinson’s
Disease
Encephalitis
Severe
Lung Failure
Burns
Blindness
Cardiomyopathy
Liver Failure
Deafness
Angioplasty
Muscular
Loss of Limbs
Dystrophy
Brain Tumour
Kidney
Loss of Speech
Paralysis
Dementia
Failure
Head Trauma
Organ
Motor
Transplant
Neurone
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New Zealand Society of Actuaries Conference, November 2002
Total and Permanent Disability
• IAA TPD experience 1995-97
– Combined TPD rider and TPD add-on experience
• GeneralCologne Re TPD experience
• Increased overlap with Critical Illness
• Reduced Add-on cost
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New Zealand Society of Actuaries Conference, November 2002
TPD Add-on to Trauma Cost
Male Aged 45
Female Aged 45
800
800
700
700
600
600
500
400
tpd
500
overlap
400
trauma
300
300
200
200
100
100
0
0
1994
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2003
New Zealand Society of Actuaries Conference, November 2002
1994
2003
Comparison of Incidence Rates - Males
Age
29
Big 4
Others
(2003/1994) (2003/1994)
TPD Add-on
(2003/1994)
All
(2003/1994)
25-34
1.03
0.73
0.60
0.81
35-44
0.73
0.69
0.86
0.74
45-54
0.81
0.66
0.90
0.79
55-64
0.88
0.66
0.92
0.85
All
0.84
0.67
0.88
0.82
New Zealand Society of Actuaries Conference, November 2002
Comparison of Incidence Rates - Females
Age
30
Big 4
Others
(2003/1994) (2003/1994)
TPD Add-on
(2003/1994)
All
(2003/1994)
25-34
1.16
0.76
0.98
0.98
35-44
0.94
0.74
0.45
0.82
45-54
0.94
0.65
0.57
0.81
55-64
1.00
0.64
0.78
0.87
All
0.98
0.67
0.70
0.85
New Zealand Society of Actuaries Conference, November 2002
Comparison of Incidence Rates - Males
800
Male Aged 45
700
11%
600
23%
500
400
300
13%
6%
9%
21%
6%
11%
32%
200
66%
21%
66%
100
19%
27%
1994
2003
0
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New Zealand Society of Actuaries Conference, November 2002
TPD
OTHERS
BYPASS
STROKE
HEART
CANCER
Comparison of Incidence Rates - Females
700
Female Aged 45
600
16%
500
400
300
17%
9%
9%
15%
11%
8%
5%
67%
200
47%
61%
1994
2003
100
0
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New Zealand Society of Actuaries Conference, November 2002
76%
TPD
OTHERS
BYPASS
STROKE
HEART
CANCER
Mortality
• Accelerated Dread Disease Pricing: “Dash & Grimshaw”
ix + qx (1-kx )
• Trends in population mortality qx
• Trends in proportion of deaths due to dread disease kx
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New Zealand Society of Actuaries Conference, November 2002
Mortality Ages 25-34
Mortality Rate per 1000
1.6
1.4
Trend +0.5% p.a.
Males
1.2
1
0.8
0.6
Females
Trend +0.3% p.a.
0.4
0.2
0
1983
1988
“Deaths Australia” - ABS
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New Zealand Society of Actuaries Conference, November 2002
1993
1998
2003
Mortality Ages 35-44
Mortality rate per 1000
2.1
1.9
Males
Trend –0.8% p.a.
1.7
1.5
1.3
1.1
Females
Trend +0.0% p.a.
0.9
0.7
0.5
1983
1988
“Deaths Australia” - ABS
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New Zealand Society of Actuaries Conference, November 2002
1993
1998
2003
Mortality rate per 1000
Mortality Ages 45-54
6
5.5
5
4.5
4
3.5
3
2.5
2
1.5
Males
Females
1983
1988
“Deaths Australia” - ABS
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New Zealand Society of Actuaries Conference, November 2002
1993
1998
2003
Mortality Ages 55-64
Mortality rate per 1000
18
16
Males
14
12
10
8
Females
6
4
1983
1988
“Deaths Australia” - ABS
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New Zealand Society of Actuaries Conference, November 2002
1993
1998
2003
Proportion of deaths due to Critical Illness
• Accelerated Dread Disease Pricing: “Dash & Grimshaw”
ix + qx (1-kx )
• Mortality improvements due to improved
incidence/survival from cancer, heart attack and stroke
• Mortality from other causes not changed significantly
• Therefore proportion of deaths (kx) has reduced
• Limits the impact of mortality improvement on CI pricing
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New Zealand Society of Actuaries Conference, November 2002
Life + Critical Illness
Male Aged 45
900
800
700
600
500
400
300
200
100
0
Life+CI -21%
CI -25%
Life -9%
1994
39
CI
Life
New Zealand Society of Actuaries Conference, November 2002
2003
Life + Critical Illness
Female Aged 45
900
800
700
600
500
400
300
200
100
0
Life+CI -18%
CI -23%
Life -2%
1994
40
CI
Life
New Zealand Society of Actuaries Conference, November 2002
2003
Accelerated Risk Premiums - Males
Ratio of 2003 rates to 1994 rates
Age
41
Incidence Life rate
ix
qx
Life+CI
Acc CI Rider
ix + qx(1-kx)
ix-kxqx
25-34
0.81
1.02
0.90
0.82
35-44
0.74
1.00
0.82
0.74
45-54
0.79
0.83
0.80
0.80
55-64
0.85
0.76
0.86
0.90
All
0.82
0.84
0.84
0.84
New Zealand Society of Actuaries Conference, November 2002
Accelerated Risk Premiums - Females
Ratio of 2003 rates to 1994 rates
Age
42
Incidence Life rate
ix
qx
Life+CI
Acc CI Rider
ix + qx(1-kx)
ix-kxqx
25-34
0.98
0.99
0.99
0.98
35-44
0.82
1.04
0.87
0.83
45-54
0.81
0.88
0.84
0.83
55-64
0.87
0.85
0.88
0.89
All
0.85
0.89
0.87
0.87
New Zealand Society of Actuaries Conference, November 2002
Summary - 1994 to 2003
• Reduced incidence rates
• Reduction in overall mortality rates
• Increase in non-CI mortality reduces the impact
• Overall Life+CI premiums reduced
• Much of reduction since 1994 already incorporated into
companies CI risk rates
• Assured Lives adjustments to be more tailored
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New Zealand Society of Actuaries Conference, November 2002
Summary – 2003 onwards
• Future trends in incidence rates
Males -0.5% p.a. , Females +0.3% p.a.
• Future trend in mortality rates
Males –2.5% p.a. , Females –2% p.a.
• Future trend in Life+CI premiums
Males –0.5% p.a. , Females +0.2% p.a.
• Future trend in CI Rider cost
Males +0.1% p.a. , Females +0.6% p.a.
• Accelerated CI Rider = ix – kxqx
• Mortality improvements increase the rider cost
• Kx is reducing which increases the rider cost further
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New Zealand Society of Actuaries Conference, November 2002