1. Medical Insurance Risks and Mitigants Amiad BenMeir, Swiss Reinsurance Company

2. 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

3. 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

4. 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

5. Demand side statistics Global PMI utilisation patterns
Medical insurance Risks and Mitigants

6. Supply side statistics Number of hospital beds per 10,000 population
ADICIONE O TÍTULO
Medical insurance Risks and Mitigants

7. 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

8. Scenarios for high inflation
Medical inflation (US example and others). above CPI!
Medical insurance Risks and Mitigants

9. 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

10. AVOID ACCEPT REDUCE TRANSFER Risk Management
Medical insurance Risks and Mitigants

11. 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

12. 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

13. 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

14. R/I example: Specific Stop Loss
$100,000
Specific SL: $100,000
($15,000+$ $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

15. R/I example: Aggregating Specific Stop Loss
$100,000
Specific SL: $70,000
($ $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

16. 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

17. 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

18. 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

19. 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

20. 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

21. THANK YOU
OBRIGADO
Q&A
contato: Amiad BenMeir | Product Actuary, Life & Health
Swiss Reinsurance Company | Mythenquai 50 / 60, 8022 Zurich, Switzerland Direct:

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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.