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Statistics signal change

01 April 2017 Momentum

Statistics, in general, are very useful because they tell us what is happening in the world around us. When used correctly, statistics can highlight past patterns and signal probabilities of what can happen in future.

In our industry, this is very useful information when it comes to benefit design and refinement where critical events and human behaviour are strong drivers for change.

Claim pay-outs highlight unique needs
One insurer’s claim statistics indicate a steady decline in claim pay-outs for critical illnesses in their most advanced stages and a corresponding increase, over time, for earlier stage pay-outs.

During 2014, their pay-outs for critical illnesses at the highest severity levels was 58 per cent of the total number of pay-outs and this declined to 43 per cent of their total critical illness pay-outs in 2016. However, over the same period, the pay-outs for critical illnesses at the lowest severities increased from 10 per cent to 37 per cent of the total number of pay-outs for critical illness claims.

This highlights the importance of benefit design that provides for breadth of cover and also allows for claim pay-outs at the earlier stages and severities of critical illnesses.

There could be a number of reasons why clients are looking for risk products that can accommodate pay-outs at earlier stages. This insurer’s research indicates that clients are becoming more aware of the importance of living healthier lives. When rewarded to do so, they tend to go for more regular check-ups which leads to earlier detection of critical illnesses, while they are still at lower severity levels and more treatable.

Early detection of critical illnesses is extremely beneficial for clients because claim pay-outs at the earlier severity levels are very affordable when selected on cover with tiered claim pay-outs. Being more affordable means that clients can select higher cover amounts and, apart from having access to lower severity pay-outs when illnesses have the best chance of successful treatment, will also benefit from increasing pay-outs if the critical illnesses progress.

Widely documented statistics, for example, tells us that with the phenomenal advances in the medical field, a critical illness like stage one breast cancer has an 88 per cent chance of cure, while at stage four, the breast cancer survival rate decreases dramatically with only 15 per cent of those diagnosed surviving for more than five years.

Claims outside of the “big four”
Traditionally, the big four critical illnesses namely cancers, strokes, heart attacks and coronary artery bypass grafts (CABG) were responsible for more than 80 per cent of all critical illness claims. However, over time, other critical illnesses also started to feature more prominently.

According to the World Health Organisation (WHO), for example, Alzheimer’s disease and other forms of dementia killed 1.54 million people in 2015 which is more than twice the number of deaths from the disease in 2000, with no cure in sight.

This just goes to show that the comprehensiveness of critical illness cover is becoming a burning issue for clients who require cover against more than just the big four events. For 2016, one insurer’s claim statistics supported this statement with more than 71 per cent of their total critical illness claims paid for the “big four”. This leaves a chunk of 29 per cent of all critical illness claims paid for other critical illnesses. It is important to realise that less common critical illnesses can have the same level of impact on your lifestyle and finances as the traditional big four critical illnesses.

This is why the critical illness experts decided to only design critical illness solutions that cover a broad spectrum of claim events (not only the big four), and why they built in a feature that guarantees a pay-out for all defined critical illness events covered not only by them, but by any of the other local industry players. This provides immeasurable peace of mind to clients in knowing that they have the most complete breadth of cover available.

Although claims for less common critical illnesses are on the rise, the impact of cardiovascular diseases on our society is still significant. According to this insurer’s 2016 claim statistics, 43 per cent of all their cardiovascular claims were paid to clients in the prime of their working years; age group 30 to 49 years. This alarming fact is supported by statistics telling us that more than half the people who die from heart attacks in SA are under the age of 65.

While this insurer’s 2016 claim statistics indicate that only 38 per cent of all their critical illness claims were paid to women, the Heart and Stroke Foundation (HSF) states that one in four women will have some form of a heart condition before the age of 60 and that once they reach menopause the risk of heart disease increases threefold. This possibly highlights an area of underinsurance in South Africa that may have tragic financial consequences for many South African households if not urgently addressed through proper holistic financial planning.

The context linked to statistics
Despite the fact that statistics reveal patterns and probabilities, it is important to understand the context within which it is used. Lifestyle choices, for example, can have a major impact on claim statistics. We have all read articles that highlight the importance of a healthy lifestyle and how this can drastically reduce the chances of being diagnosed with a critical illness.

This same story is reflected in this insurer’s claim statistics where their research conclusively proves that being part of a wellness and rewards programme really does contribute towards a healthy and financially well lifestyle.

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