Munich - PAI Conference - Global Product Innovations

Global Product Innovations
PAI Conference
David Wright
Head of Product Development, Southeast Asia, South Asia & GCC
Agenda
 Motivation for innovation in product development
 Critical illness product landscape in South Africa
 Critical illness innovation in South East Asia
 Diabetes is on the rise
 Total and Permanent Disablement product landscape in Australia
 Fracture care product example from Canada
 Conclusion
2
Motivation for innovation in product development
Reason Developing markets Mature markets

Changing consumer needs Yes Yes
Market /agency demand for more Yes Yes
sophisticated products, especially
CI
Increase of middle to affluent Yes No
population who can afford protection
products
Health care structure Yes No
Multinationals insurance companies Yes No
influence
Developing markets have more reasons to create innovative products
Global Product Innovations 3

South African CI product Landscape
South Africa CI product landscape
 Ranges from very basic products covering only core illnesses to products covering a very
comprehensive list of illnesses
o Cancer only products (especially female cancer)
o CORE cover (covering Heart attack, CABG, Stroke and Cancer)
o Comprehensive cover (90 plus illnesses)
o Child CI products (standalone not popular, but usually included with adult CI)
o Group business more standardised (two options CORE and Comprehensive)
 Standalone products and products accelerating death cover
 Tiered benefit structures popular (i.e. paying smaller benefit for less severe conditions)
o Unrelated claims remain covered
 The definitions for CORE conditions are standardised by the industry body
 Most definitions are fairly similar across the industry
Global Product Innovations 12/09/2014 5

CI Definitions - Example
Coronary Artery Bypass Graft (CABG)

The undergoing of surgery to correct the narrowing of, or blockage to, one or more coronary artery(ies) by
means of a by-pass graft.
Level A (100%)
The undergoing of surgery to correct the narrowing of, or blockage to, three or more coronary arteries by
means of a by-pass graft.
Level B (75%)
The undergoing of surgery to correct the narrowing of, or blockage to, two coronary arteries by means of a
by-pass graft.
Level C (50%)
The undergoing of surgery to correct the narrowing of, or blockage to, the left main or proximal left anterior
descending coronary artery by means of a by-pass graft.
Level D (25%)
The undergoing of surgery to correct the narrowing of, or blockage to, any one coronary artery by means of
a by-pass graft.

Progression of CI conditions
Core - Male non-smoker Comprehensive - Male non-smoker
100% 100%
90% 90%
80% 80%
70% 70%
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
20 23 26 29 32 35 38 41 44 47 50 53 56 59 62 65 68 20 23 26 29 32 35 38 41 44 47 50 53 56 59 62 65 68
Age Age
Cancer Heart Attack Stroke CABG Cancer Heart Attack Stroke CABG Other

Progression of CI conditions
Core - Female non-smoker Comprehensive - Female non-smoker
100% 100%
90% 90%
80% 80%
70% 70%
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
20 23 26 29 32 35 38 41 44 47 50 53 56 59 62 65 68 20 23 26 29 32 35 38 41 44 47 50 53 56 59 62 65 68
Age Age
Cancer Heart Attack Stroke CABG Cancer Heart Attack Stroke CABG Other

Adult CI Pricing Basis
MNS
100%
90%
Major Organ Transplant
Major Head Trauma
80%
Connective tissue disease
70% Loss of speech
Kidneys and Urogenital tract
60% Endocrine or Metabolic
Respiratory system
50%
Gastrointestinal system
40% Nervous system

Visual
30% Ear, nose and Throat
Severe aplastic anaemia
20%
HIV / AIDS
Musculoskeletal system
10%
Cancer
0% Cardiac and arterial
20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70
Age

Child CI Pricing Basis
Male
100%
Autism
90% Uncontrolled Epilepsy
80% Hydrocephalus
Congenital anomaly repair

70%
Traumatic Head Injury
Requiring Surgery
60% Cancer
Bone Marrow Failure

50% (Aplastic Anaemia)
Cerebral Palsy
40% Surgical correction of
congenital heart disease
Open Heart Surgery
30%
Surfactant therapy
20%
Cystic Fibrosis
10% Paralysis
Deafness
0%
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Near Drowning
Age

South East Asia CI
‘Bucket ‘CI’ – Hong Kong and Singapore
Effectively a combination of early stage and multi-pay CI features
The maximum possible benefit is 700% of the sum assured

CI Group Benefit Limit
Group 1 – Cancer 300% sum assured
Group 2 – Heart related 100% sum assured
Group 3 – Nervous System related 100% sum assured
Group 4 – Major Organs related 100% sum assured
Group 5 – Other 100% sum assured
Multiple claims for early stage CI and traditional CI can be made within each group
Group 1 cancer has the ability for 3 traditional CI claims
Early Stage CI pays 20% of the sum insured. Some early stage CI claims have lower $ limits
Early Stage claims can only be claimed once (except for CIS and angioplasty)
Traditional CI pays 100% of the sum insured.
Death benefit is 100% sum assured less any earlier CI or traditional CI claims paid
Bucket CI continued
Waiting periods apply:
Waiting period for a 2nd traditional CI claim is 1 year.
If first traditional CI claim is group 1 - Cancer & 2nd traditional CI is Group 1 -
Cancer or group 4 – Major organs related, a 5 year cancer waiting period applies.
There are no waiting periods between 2 early stage CI claims.
Other product features:
Waiver of future premiums occurs if 100% sum insured has been paid.
Benefit term is Whole of Life (100).
If 100% or more of benefits have been paid at age 86, policy ceases.
Issue age 0 to 65 with underwriting based on 125% of sum assured.
Rates are non guaranteed.

Bucket CI claim example
Sum assured USD$1,000,000
CI Group Benefit Limit

Group 1 – Cancer USD 3,000,000
Group 2 – Heart related USD1,000,000
Group 3 – Nervous System related USD1,000,000
Group 4 – Major Organs related USD1,000,000
Group 5 – Other USD1,000,000
First claim
CIS, an Early Stage CI under group 1. It pays out USD 200,000 (20% sum
assured).
 Group 1 benefit paid to date = US 200,000
 Total benefit paid to date = USD 200,000
 No survival period requirement for this claim (if died death benefit would have
been paid)

Bucket CI Claim product example continued
Second claim
Invasive Cancer, a Traditional CI under group 1. It pays out USD 1,000,000 (100% sum assured, as the
Benefit Limit is USD 3,000,000 for group 1).
 Group 1 benefit paid to date = USD 1,200,000
 Total benefit paid to date = USD 1,200,000
 As over 100% of the sum assured has been paid out at this point, future premiums are waived, and
the policy will terminate at age 85 instead of age 100.
 The survival period requirement applies to this and all subsequent claims.
Third claim
Angioplasty, an Early Stage CI under group 2. It pays out USD 200,000 (20% sum assured).
 Group 2 benefit paid to date = USD 200,000

Bucket CI Claim product example continued
Fourth claim - 1CAB, an Early Stage CI under group 2. It pays out USD 200,000 (20% sum assured).
 Group 2 benefit paid to date = USD 400,000
Fifth claim - Heart Attack, a Major CI under group 2. It pays out USD 600,000 (60% sum assured, which is
Benefit Limit of 100% - 40% from previous Group 2 Early Stage CI claims).
 Group 2’s Benefit Limit of 100% sum assured has now been reached and no more Major CI or Early
Stage CI claims from Group 2 are payable. Group 1, 3, 4 and 5 can still be claimed as their
respective Benefit Limits have not been reached.
6th claim - Insured passes away one year later. As more than 100% of the sum assured has been already
paid out, there is no further Death Benefit payable

Considerations
 Innovative product or overly complex…
 Product likely to be targeted at upper income segment.
 Is it easy to sell or mis-sell creating potential brand/industry damage at claim

time?
 Does the customer understand what they are covered for?
 Is the product structure supported by internal systems including claims.
 Do claim assessors have the skills and tools necessary to assess product terms
and conditions properly.
 Are their better alternatives that meet your customers and distributors needs?

A look at diabetic products across the globe
Diabetes on the rise in Asia
 Asian population tendency towards greater

abdominal obesity and less muscle mass results
in increased propensity for insulin resistance.
 Urbanisation and Westernised diet.
 Physical inactivity: In the Nurses Health Study

each 2h/day increment of time spent watching
television was associated with a 14% increase in
diabetes risk!
Epdemic obesity and type 2 diabetes in Asia Kun-Ho Yoon et al

The lancet Vol 368 Nov 11 2006
Singapore Critical Illness products diabetic coverage
Special conditions benefits within CI
 Diabetic complications common across

leading early stage CI products include:
 Diabetic retinopathy, nephropathy and

amputations.
 Market payments capped at 25% of SA to a

maximum amount of S$30k
Challenges:
 CI eligibility at underwriting – diabetics are

generally not eligible for cover
 Does this amount really provide sufficient

cover for associated costs over the long
term?

Diabetic product - Europe
CI with 5 illnesses
 Blindness
 Amputation of lower limbs
 Chronic Renal Failure
 Kidney Transplant
 Stroke (50% benefit)
 Underwriting
 An individual shall be considered as a “good”

diabetic, if:
 - the HbA1c-value is below 8.0 and
 - the HbA1-value is below 10.6
 Otherwise, the individual’s health status shall

be assessed using the Calculator provided
About 70% of diabetics qualify as standard by Munich Re.

CI for diabetics – Korea
CI for diabetics with 4 (5) diseases and death caused by general disease and all accidents
Illnesses covered
Blindness
Amputation above ankles
Renal Disease
Stroke
Cancer
Product features
Entry age: 30-60 (20-55)
Maximum cover age: 80
Sum assured:
Blindness , Amputation, Stroke, Renal Diseases: 10 mil. KRW <SA < 30
mil. KRW
Cancer: 5 mil. KRW <SA < 20 mil. KRW
Death: 10 mil. KRW <SA < 30 mil. KRW
Borderline malignant, Thyroid cancer : 30% of Cancer’s SA
Carcinoma In situ, Other skin cancer: 10% of Cancer’s SA

What a future Diabetic product could look like?
Products at the research stage…

CI for diabetics – Europe
CI with 5 diseases CI with 23 diseases (not sold yet)
Illnesses covered Illnesses covered

Blindness Blindness, Amputation of lower limbs, Renal
Amputation of lower limbs Failure, Stroke (40 % benefit), Cancer (40
% benefit), Heart Attack (40 % benefit),
Chronic Renal Failure Paralysis, Surgery for a Disease of the Aorta,
Kidney Transplant Aplastic Anaemia, End Stage Liver Disease,
End Stage Lung Disease, Coma,
Stroke (50% benefit)
Encephalitis, Fulminant Viral Hepatitis, Major
Head Trauma, HIV due to Blood Transfusion,
Major Burns, Motor Neuron Disease,
Product features Bacterial Meningitis, Pulmonary Arterial
Survival period: 1 month Hypertension, Poliomyelitis, Primary
Amyloidosis, Sporadic Creutzfeldt-Jakob
Waiting period: 3 months Disease
Entry age: 18-60
Product features
Risk premium basis
Survival period: 1 month
Waiting period: 3 months
Entry age: 18-65
Risk premium basis

CI for diabetics – North Asia
Illnesses covered Duration of cover

4 to 23 illnesses
between 5 ,10 years or
Stroke, Blindness, Amputation until expiry age
of lower limbs, renal failure
Entry ages
Additional product features between 18-50 or 18-65
 Free medical check-up after Maximum cover age

5 years or before renewal 75
 Premium discount in case of
good results
 No renewal of cover when Distribution:
health status has worsened
 Health Reward and yearly Agency
free medical check-up

Health Reward example
 After policy inception the standard

Reward Rate premium rate increases by 2% every
Standard Rate year.
Shifted standard rate after
reward phase
 If yearly medical check-up indicates an
unchanged or improved health status,
the policyholder will receive a reward
rate which is on the same level as the
standard rate at policy inception.
+2% +2%
+2% +2%  Should the health status deteriorate at
+2% +2% any check-up date after having been
granted the reward rate, the reward rate
will increase by 2% annually as long as
the health status hasn’t improved.
 In case of no medical check-up the

standard rate, i.e. an annual 2%
increase will apply.
Design rewards diabetics who maintain their health status

Total and Permanent Disablement
Total and Permanent Disablement (TPD)
Australian environment
Market TPD definitions
 ‘Own’ occupation
 ‘Any’ occupation - reasonably qualified by

education, training or experience
 Activities of Daily Working – functional capacity

based
 Loss of Independence - Activities of Daily Living

or Severe Cognitive Impairment
 Extended Activities of Daily Living
 ‘Home duties’
 ‘Partial’ TPD – loss of use of 1 limb or 1 eye

Extended Activities of Daily Living – severity based
payments
Product benefit overview
 6 ADL categories
 Payments based on number of ADL

categories the insured is unable to perform
 Scores required in order to be considered

unable to perform the ADL category.
Refers to ‘cannot’ and ‘with help’ the
number of defined tasks in each category.
 100% - 4 out of 6 ADLs
 65% - 3 out of 6 ADLs
 40% - 2 out 6 ADLs

Activities of Daily Living – Severity based
ADL Category Specific tasks Scores to be unable

perform ADL
1. Self-care Bathing ‘cannot’ in at least one
Mobility specific task, or
Grooming, ‘with help’ in at least two
Dressing, specific tasks
Eating and feeding
Bowel & bladder function
2. Communication Speaking ‘cannot’ in at least one
Reading specific task, or
Writing ‘minimal’ in at least two
Keyboard use specific tasks
3. Physical Activity Intrinsic ‘cannot’ in at least three
standing, sitting, reclining, specific tasks, or
walking, stooping, squatting, ‘with help’ in at least six
kneeling, reaching, bending, specific tasks.
twisting

Activities of Daily Living – Severity Based
continued
ADL Category Specific tasks Scores to be unable
perform ADL
3. Physical Activity Functional
(continued) Carrying, lifting, pushing,
pulling, climbing, exercising
4. Sensory function Hearing, seeing, tactile ‘cannot’ in at least one
sensation, tasting smelling specific task, or
‘minimal’ in at least two
specific tasks
5. Hand functions Grasping, holding, pinching, ‘cannot’ in at least one
percussive movements, specific task, or
sensory discrimination ‘minimal’ in at least two
specific tasks
6. Advanced functions Travel (riding, driving), sexual Cannot or poor in at least

function, social interaction, four specific tasks
understand concepts, memory,
problem solving, stress
adaptation, sleep pattern,
recreational/social activities

Insurer and customer benefits of ESADL
 Greater certainty
o Extended ADLs provide a more objective & transparent method of assessing the
level of a claimant disability
 Partial sum assured claim payment at earlier stages of a condition or for less
severe disabilities
o This means more benefits will be paid under ‘ESADL’ and policyholders will be able
to access vital financial support at earlier stages of their condition.
 Existing self-care ADLs under Loss of Independence do not allow for assessment
of impairment with assistive devices.
o A paraplegic is unlikely to qualify for payment under existing ADL yet would receive a
partial payment under ESADL.

Fracture Care - Canada example
 Simplified issue
 Ability to claim multiple

times
 Claims excluded for:

oPre-existing condition
oHazardous / sports
oHigh risk occupations
 Entry age 50 to 75
 If diagnosed with
osteporosis at time of
fracture, $ limits apply to
Multiple claims

Conclusion
 Innovation can drive a competitive advantage.
 Current trends towards increasingly complex products.
 Suitably designed life products and processes may:
o Increase real benefits to consumers
o Protection take-up rates
o Ultimately provide Insurer’s with higher revenue and profits
Munich Re is committed to helping Indonesian insurers deliver

innovative solutions

Questions?
Thank you for your attention
David Wright
Disclaimer
© 2011 Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München

("Munich Re"). All rights reserved.
The content of this presentation (including, without limitation, text, pictures, graphics, as well as
the arrangement thereof) is protected under copyright law and other protective legislation.
These materials or any portions thereof may be used solely for personal and non-commercial
purposes. Any other use requires Munich Re’s prior written approval.
Munich Re has used its discretion, best judgement and every reasonable effort in compiling the
information and components contained in this presentation. It may not be held liable, however,
for the completeness, correctness, topicality and technical accuracy of any information
contained herein. Munich Re assumes no liability with regard to updating the information or
other content provided in this presentation or to adapting this to conform with future events or
developments.
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Global Product Innovations

 Motivation for innovation in product development

 Critical illness product landscape in South Africa

 Critical illness innovation in South East Asia

 Diabetes is on the rise

 Total and Permanent Disablement product landscape in Australia

 Fracture care product example from Canada

Reason Developing markets Mature markets

Developing markets have more reasons to create innovative products

Global Product Innovations 3

o Cancer only products (especially female cancer)

o CORE cover (covering Heart attack, CABG, Stroke and Cancer)

o Comprehensive cover (90 plus illnesses)

o Group business more standardised (two options CORE and Comprehensive)

 Standalone products and products accelerating death cover

o Unrelated claims remain covered

 Most definitions are fairly similar across the industry

Global Product Innovations 12/09/2014 5

Coronary Artery Bypass Graft (CABG)

Global Product Innovations 12/09/2014 6

Core - Male non-smoker Comprehensive - Male non-smoker

Global Product Innovations 12/09/2014 7

Core - Female non-smoker Comprehensive - Female non-smoker

Global Product Innovations 12/09/2014 8

40% Nervous system

Global Product Innovations 12/09/2014 9

Congenital anomaly repair

Bone Marrow Failure

Global Product Innovations 12/09/2014 10

Effectively a combination of early stage and multi-pay CI features

The maximum possible benefit is 700% of the sum assured

Group 1 cancer has the ability for 3 traditional CI claims

Traditional CI pays 100% of the sum insured.

Waiting periods apply:

Waiting period for a 2nd traditional CI claim is 1 year.

There are no waiting periods between 2 early stage CI claims.

Other product features:

Benefit term is Whole of Life (100).

Issue age 0 to 65 with underwriting based on 125% of sum assured.

Rates are non guaranteed.

CI Group Benefit Limit

 Group 1 benefit paid to date = US 200,000

 Total benefit paid to date = USD 200,000

Global Product Innovations 14

 Group 1 benefit paid to date = USD 1,200,000

 Total benefit paid to date = USD 1,200,000

 Group 1 benefit paid to date = USD 1,200,000

 Group 2 benefit paid to date = USD 200,000

 Total benefit paid to date = USD 1,400,000

Global Product Innovations 15

 Group 1 benefit paid to date = USD 1,200,000

 Group 2 benefit paid to date = USD 400,000

 Total benefit paid to date = USD 1,600,000

 Group 1 benefit paid to date = USD 1,200,000

 Group 2 benefit paid to date = USD 1,000,000

 Total benefit paid to date = USD 2,200,000

Global Product Innovations 16

 Innovative product or overly complex…

 Product likely to be targeted at upper income segment.

 Is it easy to sell or mis-sell creating potential brand/industry damage at claim

 Does the customer understand what they are covered for?

 Is the product structure supported by internal systems including claims.

Global Product Innovations 17

 Asian population tendency towards greater