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

AVOID ACCEPT REDUCE TRANSFER Risk Management 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 ($15,000+$32,500+$42,500+$50,000) $85,000 $65,000 50% retention $30,000 Retention: $140,000 ($15,000+$ $32,500+$42,500+$50,000) A B C D copyright 2010 Swiss Re Total annual claims of four individuals

R/I example: Specific Stop Loss $100,000 Specific SL: $100,000 ($15,000+$35.000+$50,000) $85,000 $65,000 $50,000 retention $30,000 Retention: $180,000 $30,000 +$50,000 X 3 A B C D copyright 2010 Swiss Re Total annual claims of four individuals

R/I example: Aggregating Specific Stop Loss $100,000 Specific SL: $70,000 ($20.000+$50,000) $85,000 $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 B C D Total annual claims of four individuals copyright 2010 Swiss Re

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. Medical insurance Risks and Mitigants

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 RISK CARRIER SERVICES SALES MARKETING UW SUPORT & TOOLS ACTUARIAL MONITORING CLAIMS SUPPORT Risk transfer Product design Customer service Capital solutions Risk management Portfolio admin Data management Claims Admin Medical insurance Risks and Mitigants

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

Legal notice ©2012 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivatives of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re. Although all the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial and/or consequential loss relating to this presentation.