Covering critical illness is no longer a case of a shot in the dark
We recently highlighted the rise of Big Data and the potential benefits it can offer the insurance industry. While many product providers are still coming to terms with this, we can see the advantages that Big Data is playing in other sectors of society and how the insurance industry can use this to its advantage.
This has particular advantages in the health industry where the World Health Organisation (WHO) is doing extensive research in a number of fields. Through this research, the organisation can determine which areas are prone to a certain disease, which areas need specific medication and the life expectancy in these specific areas.
A view to a kill
One of the most recent pieces of information that was released by the WHO was a world map which shows the disease a person is most likely to die of in each region. What is important to note is that the study is a generalisation and takes into account the major deaths across the whole population of the country. It then defines an average.
The published map is very comprehensive. Not surprisingly, Sub-Saharan Africa is dominated by AIDS while the leading cause of death in North Africa is hearth disease. Tuberculosis is a major killer in the Democratic Republic of the Congo, Mali, Mauritania and Madagascar.
Heart disease is the major killer on the global scale as it is the leading cause of death in the whole of North America, the majority of South America, the whole of the East and the majority of Asia.
What is interesting to note is that diseases such as malaria and yellow fever, which were traditionally major killers in Africa and South America, are no longer considered as leading causes of death. This can either be attributed to the fact that AIDS and heart disease has overtaken them or that they are considered treatable diseases.
Using data to your advantage
Data such as this should be regarded as invaluable by life insurers as it allows them to develop innovative products with offers the widest range of cover to its policyholders.
And this is definitely the case when one looks at the global market. At the recent RGA Client Seminar, RGA’s Dr Nontuthuzelo Thomas pointed out that product development in critical illness (CI) cover have been significant over the past few years. “It is always important to revisit critical illness cover from time to time as medical advancements and access to medical care always outpaces insurance. Insurers are always one step behind medical advances,” says Thomas.
In her presentation, she focused on a few key areas. She points out that because Africa has ‘been there and done that’ when it comes to product development in CI cover, most of the development has taken place in Asia.
Asia has really segmented their market with regards to certain products. They have taken cancer and have segmented it into early stage cover which is capped, intermediate stage cancer which is covered up to 100%, and advanced stage cancer which is covered up to 150%.
Claiming for this becomes a problem. In order to qualify for intermediate cover, you have to have some form of surgical treatment in order to treat the cancer. But Thomas points out that there may be exclusions in some cases as brachytherapy is a surgical procedure, but it is typically used to treat early stages of cancer, so in this case, the pay-out would be in the capped segment.
There is also a continuous cancer pay-out product. Once a patient has received a diagnoses which meets a specified severity, the claim is submitted. The patient then receives a lump sum pay-out and returns every two years to receive a smaller pay-out until death or until the cover expires.
Africa has taken major steps in a similar direction with product development, specifically in areas around HIV and AIDS where most insurers are now treating these diseases in the same way that they would treat any other critical illness. Medical advancements in Anti-Retroviral medication has now made it possible for a person who has HIV and is taking Anti-Retroviral Medication to significantly increase their life expectancy whereby they live up to three years of the life expectancy of person who does not have HIV.
The knock-on effect
While having access to Big Data and medical advancements is good news for life insurers, it may play havoc on retirement funds as it has a significant effect on longevity.
The research being undertaken by the WHO can therefore be used by life insurers for product development purposes. The average age of the population is increasing because of improved critical illness products, as well as medical advancements.
Editor’s Thoughts:
Research proves that Big Data is making an impact on the insurance industry. It will be interesting to see how this affects the industry in the future. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.
