Issue: September 2019 | Critical Illness | Download PDF | English
By Tim Eppert , Life/Health Senior Actuary,
Cologne Sarah Hogekamp, Life/Health Actuarial Associate,
Cologne
It is
well known that cardiovascular diseases, such as heart attacks, are the leading
cause of death worldwide. As well as being life-threatening they are also often
a warning sign to individuals that can lead to lifestyle changes. It is understandable
that the insured, who was diagnosed with a heart attack, expects his Critical
Illness (CI) cover to pay a benefit. This, however, might not always be
the case, depending on the severity level and the CI definitions.
This
expectation has, in some markets, created pressure for insurers to offer CI
products based on diagnosis-only definitions. In this case, a benefit is paid
for every heart attack diagnosed by a medical professional, irrespective of the
severity of the event. But paying each claim resulting from a heart attack is
not always in the best interest of all insureds because claims payments that
exceed the insurable interest lead to higher than necessary premiums.
We have
seen enormous medical progress in the field of cardiovascular disease over the
past decades. Treatment of heart attacks has improved to the point where they
often cause less harm than they would have done 30 years ago. The Swedish
Heart Failure Registry, which conducts detailed analyses of heart attack
incidence and mortality annually, found that 365-day mortality after a heart
attack has dropped from almost 20% in 1995 to less than 10% for the years 2007
onwards.2
This
reduction reflects not only improved treatments but also changes in the
detection of heart attacks. With biomarker tests, namely troponin, and more
recently high-sensitive troponin, heart attacks can be detected earlier and
more accurately than before, resulting in earlier and more precise treatment.
Before the introduction of troponin, some heart attacks that did not cause ECG
changes or showed unclear changes (NSTEMI) were classified as Angina Pectoris
(chest pain).3 Since then, the proportion of full thickness
infarctions of the heart (so called STEMI), which are predominantly defined by
ECG changes and less by raised troponin levels, has dropped significantly over
the past years. The increasing number of diagnosed NSTEMI’s are mainly
responsible for this reduction. A higher proportion of – on average – less
severe NSTEMI infarctions, better diagnostics and therefore more precise and
faster treatment have all contributed to the observed reduction in heart attack
mortality. There are now many cases where the pumping function of the heart –
the ejection fraction (EF) – is not significantly reduced after a
heart attack.
Within
the same period, the incidence rate was also observed as stagnating or
declining in many countries.4 A major cause of this reduction is
likely to be the decline in smokers in these countries. But, the potential
gains from smoking cessation are not endless and, in several countries, we see
that progress is slowing. Negative effects of the modern lifestyle, with its
oversupply of calories and lack of physical activity, weigh heavily against the
positive effects from smoking cessation (Figure 2).
“Heart attacks have been and
still are a major health threat”
Between
1980 and 2015 the prevalence of obesity more than doubled on a global scale,
affecting both developed and developing countries.5 As a result, we
observe a pandemic of obesity, hypertension and diabetes posing a major threat
to cardiovascular health.
In
summary, heart attacks have been and still are a major health threat. The
demand for diagnosis-only benefits is understandable, but insuring every claim
comes with a high risk of future changes. Outcomes continue to improve, which
means that the negative impact on the quality of life after a heart attack will
decrease and therefore the necessity for an insurance cover of a heart attack
with a very good outcome becomes questionable.
What can be done?
Finding a
common denominator between customer expectations and needs is crucial. What
does the customer need the product for? In some markets CI cover is used as an
add-on for health insurance. In this case, the policy needs to cover all acute
heart attacks to provide a reimbursement-like benefit. But even though there is
customer demand for the expensive pay-all-diagnoses approach, it is still a
risky venture for the insurer, especially with guaranteed business. Here,
stepped benefits can help to limit costs for minor events.
In
markets where CI is used to cover debt and the long-term lack of income after a
severe infarction, a more robust definition can be in the interest of the
policyholder as it leads to more affordable rates.
The
general product setting is also important. Is it a product with long durations
and guaranteed rates? Then the risk of change and its impact on different
severity levels in the definitions must be considered. We have the risk of
increasing incidence rates due to lifestyle, which affects any definition.
There is also a trend toward improved detection of heart attacks, which can
lead to more claims for weak definitions only. A further shift to less severe
heart attacks could improve outcomes for stricter definitions but would not
change the experience for weak definitions. For these reasons, stricter
definitions can be preferable for products with long term guarantees.
For a
market operating under standard definitions set by the regulator, the potential
to change the disease wording itself is limited and the insurer may be required
to offer definitions with low to no severity levels. To limit the exposure to
certain risk factors, other product features, such as the maximum sum insured
or the duration of the contract, can be reduced.
Generally,
the insurer should always look for outdated or unclear elements. The best way
to ensure that the customer’s expectations match the insurance cover is to have
transparent and easy to understand definitions with clearly stated severity requirements
for the benefit payment. Ideally, the definitions should be reviewed regularly
to depict the changes in medical definitions and treatment standards.
What are possible thresholds?
In some
markets, we observe definitions where only STEMI infarctions are covered. This
is a clearly defined severity level, but as the proportion of STEMI on all
infarctions has decreased significantly in many markets, this may be considered
as too restrictive. Also, while STEMI has a significantly higher 30-day-mortality
than NSTEMI,6 the long-term effects are similar.7 While
STEMI infarctions theoretically pose a transparent severity criterion, the
similarity in long-term mortality and symptoms may still result in the customer
feeling unfairly treated if he suffers from a severe NSTEMI.
Some
definitions use troponin thresholds. These allow, from a medical point of view,
for much more detailed differentiation between heart attacks. However, most
laymen have hardly ever heard of troponin, let alone understand the
implication of different troponin thresholds, so the transparency of such a
definition is questionable. The upside of these thresholds are the clear
criterion for medical professionals, the downside is the necessity for
explanation by a medical professional for policyholders to understand the
cover.
Additionally,
the time that passes between the heart attack occuring and the measurement of
the troponin level will impact the magnitude of the troponin substantially,
which makes it even more difficult to use a fixed troponin value as a clear cut
off point for a decision about a claim. In the past it was more common to
measure serial troponin, which gave a detailed picture of the magnitude of the
peak. Nowadays serial troponin is not routinely measured, meaning we only observe
an excerpt of the curve, which may or may not be the peak. Hence, good policy
wording includes changes in troponin, etc. but does not exclusively use a fixed
troponin threshold.
It can be
difficult for a claims department to decide whether or not the policyholder has
a justified claim for a heart attack. Neither clinical symptoms, nor ECG
changes, nor troponin alone can determine a heart attack with certainty. Even
if the combination of all three indicates a heart attack, there are still cases
where differential diagnoses must be excluded.8 We therefore suggest
that to be understood clearly, a definition should differentiate between the
attack itself and its sequelae. Wall motion abnormalities or a reduced ejection
fraction can be good criteria to differentiate between minor and major heart
attacks. Focusing on the long-term outcome of a disease makes it easier to
explain why some events are covered and others are not. Policyholders can
understand that a permanent and significant loss of heart function requires
more financial protection than a minor infarction that allows the policyholder
to go on with life as before the event.
“Differentiation between minor
and major heart attacks is important”
If the
definition contains limitations, it is important that these are communicated
transparently and are not hidden in the small print. Only then will the
consumer be able to make an educated decision and have the awareness that not
every event is covered. This will reduce the number of unjustified claim requests
and also the reputational risk for the insurer.
A different picture for surgeries
Heart
surgeries, such as coronary artery bypass grafts or heart valve repairs, are
often included in CI covers and they, too, are affected by medical progress.
Procedure vs. Surgery
The term “procedure” describes any method for performing
a task.
A “surgery” is a procedure involving major incisions to remove,
repair, or replace a part of a body. So, every surgery is a procedure, but not
every procedure is a surgery. For example, the insertion of stents or balloon
angioplasties neither remove, repair nor replace a part of a body but rather
insert something to assist the weakened part. They are therefore procedures,
but they are not surgeries.
Minimally invasive surgeries, as the name implies, fulfill the
condition to be a surgery because they are used to remove, repair or replace
part of a body.
Many CI
definitions require open-chest surgery as a benefit trigger, but nowadays this
treatment is not always the best option from a medical point of view, given
alternatives such as minimally invasive surgeries, and “non-surgical”
procedures such as the insertion of stents. When reviewing the cover of
surgeries in a CI context, questions the insurer can ask are:
·
Is the treatment still a critical intervention that is comparable
to other CI’s and how will it impact the quality of the insured’s life?
·
Is there a major risk of increasing surgeries in the future if new
techniques are accepted?
Many
conditions that used to be treated by open-chest surgery, could technically be
declined for coverage today when treated differently. As the severity of the
underlying condition has not changed, it can be argued by the policyholder that
this is overly strict. Minimally invasive surgery is used when the insured’s health is not fit to
sustain open-chest surgery and vice versa. That does not mean that minimally
invasive surgery is the generally preferred option, rather that treatment is
based on many individual factors. For example, the duration of minimally invasive
surgery is often longer than that of open-chest surgery, resulting in more time
under anaesthesia, which is not an option for everyone. It can then be better
to use open-chest surgery even though that brings other risks through higher
blood loss and longer recovery periods. The underlying condition leading to
minimally invasive surgery can be better, similar, or even worse than that
leading to open-chest surgery. Therefore, it can be argued that CI insurance
that covers open-chest surgery should also cover minimally invasive surgery.
Non-surgical
procedures, such as the insertion of stents, present a different picture.
They are increasingly used in lower levels of cardiovascular disease
and do not display typical CI features, such as long-term effects or high
risks. Such a procedure can be a precautionary measure while the insured is
still in decent health, but it neither displays a comparable risk to the
surgeries that are covered in a CI policy, nor does it generally require long
recovery periods. For example, a bypass graft has a recovery period of
approximately 12 weeks with extensive rehabilitation training,9
whereas after the insertion of a stent, the patient can leave the hospital
usually within 24 hours.10 For these reasons we would
advise offering only partial benefits – if any – for non-surgical procedures in
a CI product.
Preventing cardiovascular events
The best
heart attack is the one that does not happen, and by now insurers have many
chances to play a part in prevention. As discussed in the first section of this
article, we are aware of many risk factors – obesity, diabetes, lack of
physical activity and smoking – that have a negative impact on the insured’s
cardiovascular health.
An
increasing number of products incorporate prevention or lifestyle elements; for
instance, measuring step count or other physical activity, or even
incentivizing or nudging the policyholder toward a healthier lifestyle. As of
now no comprehensive studies quantify the effect of increases in physical
activity on improving the insured’s health status. Still, from what is
available, it is safe to assume that incentives for a better lifestyle will
have a positive effect on health. Plus, healthy people with a high level of
physical activity may be more inclined to buy a product with lifestyle
incentives – this might also reduce the number of claims in the portfolio.
“Insurers have chances to play
their part in prevention”
Some CI
policies also offer small benefits for the diagnosis of diabetes. Such a
benefit can be useful for the insurer, as an earlier diagnosis leads to early
treatment, which is important for avoiding or at least delaying secondary
diseases, such as heart attack, stroke or blindness. This diagnosis benefit can
be combined with further benefits if the disease is well-controlled. Unlike
life-style benefits, there is a certain risk that such a prevention benefit
attracts lives with less-than-average health status, so the amount payable and
other elements – such as sales channels – need to be balanced.
Both the
lifestyle benefit and the early diagnosis benefit can lead to an improved
communication with the customer, which is valuable. The insurer learns more about
the customer and can use the information to enhance its offers to the customer.
In turn, the customer has a strong partner with aligned interests who helps to
prevent diseases or their sequelae. In a nutshell, medical progress has drastically changed the
appearance of cardiovascular diseases over the past few decades and this has
not left the definition-based product CI insurance untouched. The various needs
of different markets and different customers do not allow a one-size-fits-all
solution, but strategic decisions can help to manage the different demands.
While sedentary lifestyles can lead to problems not only for insurers but
society as a whole, increased client interaction and prevention tools give
insurers a chance to play their part in helping their customers lead a
healthier life.
Gen Re
has been involved in the design and definition of Critical Illness insurance
since the launch of the first product. Please do not hesitate to contact us if
you are looking for a trusted and knowledgeable partner to assist your product
development.
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