THE NEED AND ABILITY TO WRITE

PROTECTION BUSINESSBUSINESS

JUG PARMAR

6th CILA, MUMBAI

23 NOVEMBER 201023 NOVEMBER 2010

AGENDA

OVERVIEW

PURE LIFE COVERS

CRITICAL ILLNESS

HEALTH INSURANCE

ANNUITIES, DISABILITY INCOME, LONG TERM CARE

SUCCESS FACTORSSUCCESS FACTORS

OVERVIEW

CRITICAL ILLNESSDEATH HOSPITALISATION

DISABILITYLONGEVITY LONG TERM CARE

THERE IS A CLEAR NEED FOR INSURANCE

ARE ALL NEEDS INSURABLE?

Financial loss indemnified on

contingent eventContingent Event

Clearly definableNot too frequent / rare

Insured cannot influence the occurrence of the eventFinancial Loss

RatableMeasurableManageable

Not too small a financial impact

A material section of the population is exposed to this

riskthe insured must not be able to influence the size of the

financial loss after the event has occurred

ENVIRONMENT

ROLE OF PUBLIC SECTOR / PRIVATE SECTOR / INDIVIDUALS

REGULATION – COMPULSION

EDUCATION AND AWARENESS

CULTURAL ATTITUDES

PRODUCT DESIGN

ADDITIONAL BENEFITS

CORE BENEFITS

OTHER FEATURES - RISK CONTROLS e.g. exclusions, limits

COMBINATION OF BENEFITS

PRODUCT PRICING

UNDERSTANDING RISKS

DATA

POPULATION / INDUSTRY / OWN PORTFOLIO EXPERIENCE

OTHER MARKETS

TRENDS

ANTI-SELECTION AND UNDERWRITING

SENSITIVITIES

MANAGING RISKS

AVOID

MITIGATE

TRANSFER

EXPLOIT

MARKETING AND SELLING

ENVIRONMENT

HANDLING COMPLEXITY

POSITIONING FOR ATTRACTION

KNOW YOUR CUSTOMER (KYC)

NEEDS BASED SELLING

SELL BENEFITS – MAKE IT REAL WITH STORIES

BEST ON PRICE OR SOMETHING ELSE?

SELLING

REDUCTION OF MARGIN (VOLUME)

BEST ON PRICE

EXTRA BENEFITS AND FEATURES

PRICING FOR VALUE

( )

MINIMISE BENEFITS AND FEATURES BRAND LOYALTY – SELL MORE

NICHE

SUPERIOR COST MANAGEMENT

SERVICE QUALITY –EASE OF USE

INCENTIVES

UNDERWRITING AND CLAIMS

GREATER ROLE FOR UNDERWRITING AND CLAIMS EXPERTISE

SUCCESS DEPENDS ON FOCUSSED RISK CONTROL

BALANCE THESE BY PRODUCT TYPE

PURE TERM – EMPHASIS AT UNDERWRITING STAGE

HEALTH – EMPHASIS ON CLAIMS MANAGEMENT

ADDRESS RISK MANAGEMENT THROUGH PRODUCT DESIGN

CONTROL CYCLE

MONITOR

MEASURE

ANALYSE

FEEDBACK – ADJUSTMENTS, ENHANCEMENTS

PRODUCTS

LIFE COVERS

LUMP SUM OR ANNUITY PAYABLE ON DEATH

TERM ASSURANCE FAMILY INCOME BENEFIT

WHOLE OF LIFE REDUCING

ESCALATING

GROUP

ESCALATINGMORTGAGE

HIGH NETINTERNET

MONEY BACKWORTH PREFERRED

LIFENON-SMOKER

LIFEKEY MAN

LIFE COVERS - RISKS

WIDE VARIATION OF EXPERIENCE BETWEEN SEGMENTS

MORTALITY RISK ACCURACY

O O C S G S

ANTI-SELECTION, SELECTIVE LAPSE, FRAUD

HIGH COVERS REQUIRE FINANCIAL AND MEDICAL UNDERWRITING

SURPLUS BASIS REINSURANCE

LIFE COVERS - CHALLENGES

FINANCIAL UNDERWRITING INFORMATION AVAILABILITY

EDUCATION - VALUE OF COVER WITHOUT PAYOUT

MEDICAL UNDERWRITING COST AND EFFECTIVENESS

HIGHLY COMPETITIVE FOR FINANCIALLY SOPHISTICATED CUSTOMERS

LIFE COVERS – SUCCESS FACTORS

UNDERWRITING STRENGTH

EFFECTIVE TARGETING

EFFICIENT INTERNAL PROCESSES - AUTOMATED UNDERWRITING, COST CONTROL

FAST AND EASY SALES PROCESS - CUSTOMER SERVICE

BRAND

CRITICAL ILLNESS

E.G. HEART ATTACK, CANCER, STROKE

LUMP SUM PAID ON DIAGNOSIS OF A SPECIFIED CONDITION

, ,

NUMBERS OF CONDITIONS RANGE UP TO 40

STAND-ALONE, ADDITIONAL, ACCELERATED

SINGLE CONDITION, JUVENILE, WOMEN TARGETED, COMBINATION

CRITICAL ILLNESS - RISKS

ANTI-SELECTION

LOOSE POLICY WORDING AND DEFINITIONS

INADEQUATE CLAIMS CONTROL

DETECTION ADVANCES, ANTI-SELECTIVE LAPSES

DETERIORATING INCIDENCE TRENDSDETERIORATING INCIDENCE TRENDS

DIABETES AND HEART DISEASE - INTERNATIONAL DIFFERENCES

LIFESTYLE EFFECTS (DIET, OBESITY)

PRODUCT COMPLEXITY HAMPERING SALES

CRITICAL ILLNESS – DEVELOPMENTS

SIMPLICITY, MORE CONDITIONS, DIFFERENT CONDITIONS

PRODUCT DIFFERENTIATION

, ,

MULTIPLE PAY POLICIES

REPEAT CLAIM COVER

TIERED BENEFITS

STANDARD DEFINITIONS

HEALTH INSURANCE

TREATMENT / SURGERY COSTS

HOSPITALISATION COSTS

MAJOR / DAY CARE

PRE AND POST HOSPITALISATION

DOMICILIARY HOSPITALISATION

HEALTH INSURANCE - RISKS

EXPENSE INFLATION

PRICING

UTILISATION RATES

FRAUD

POLITICAL AND REGULATORY

REPUTATION AND DAMAGE TO BRAND

HEALTH INSURANCE - CHALLENGES

CLAIMS MANAGEMENT AND CONTROL

COMPLEXITY – PRODUCT AND ADMINISTRATION

AFFORDABILITY

EXCLUSIONS/PRE-EXISTING CONDITIONS

START UP COSTSSTART UP COSTS

DIFFERENCES TO LIFE BUSINESS

COMPETING AGAINST LOSS MAKING PORTFOLIOS

COMPETITION FROM GENERAL INSURERS, STAND-ALONE HEALTH COMPANIESCOMPANIES

LACK OF STANDARDISED PROVIDER BILLING MECHANISMS

HEALTH INSURANCE – DEVELOPMENTS

COMPETITION FROM NEW ENTRANTS

GOVERNMENT SCHEMES WIDENING COVERAGE

MORE GRANULAR PRICING

DIFFERENTIATION BY BENEFITS

PORTABILITY OF HEALTH POLICYPORTABILITY OF HEALTH POLICY

LIFELONG RENEWABILITY

PREFERRED PROVIDER NETWORK (PPN)

EXHAUSTIVE RISK MANAGEMENTEXHAUSTIVE RISK MANAGEMENT

STANDARDISATION OF POLICY WORDINGS

LIFE ANNUITIES

IMMEDIATE OR DEFERRED

SERIES OF INCOME PAYMENTS CONTINGENT ON LIFE

FIXED, INCREASING, INDEX-LINKED, WITH PROFIT

SPOUSE, DEPENDENTS, GUARANTEED/ LIMITED PAYOUT TERM

ANNUITIES – RISKS AND CHALLENGES

KEY RISKS OF LONGEVITY AND INVESTMENT DURATION

PRICING – GUARANTEE ON VESTING

PENSIONS/ANNUITY WORKING GROUP

INITIAL REPORT – IDENTIFYING THE ISSUES

SECOND REPORT – KEY RECOMMENDATIONS

LONG TERM CARE

BENEFITS TO COVER NURSING CARE AND ASSOCIATED COSTS

TO THE ELDERLY SUBJECT TO MEETING CLAIM CRITERIA

BASED ON INABILITY TO PERFORM ACTIVITIES OF DAILY LIVING (ADLS)

INDEMNITY BASIS, INDEMNITY WITH CAP, FIXED AMOUNTS

DATA FOR TRANSITION TO CLAIM STATESDATA FOR TRANSITION TO CLAIM STATES

POTENTIALLY EXPENSIVE FOR ADEQUATE COVER

SELECTION AND ANTI-SELECTIVE LAPSES

CLAIMS MANAGEMENT

LIMITED SUCCESS INTERNATIONALLY

DISABILTY INCOME

REGULAR CASH BENEFITS PROVIDED DISABILITY CRITERIA ARE MET

OWN, SUITED OR ANY OCCUPATION VARIATIONS

CLEAR NEED BUT RISKS ARE CHALLENGING IN THIS MARKETCLEAR NEED, BUT RISKS ARE CHALLENGING IN THIS MARKET

DATA AVAILABILITY AND SUITABILITY FOR PRICING IS AN ISSUE

CLAIM VERIFICATION, CLAIM MANAGEMENT, FRAUDULENT CLAIMS

DEVELOPING THE PRODUCT WOULD START WITH LIMITED BENEFITS WITH STRICT CRITERIA

MARKETING AND SALES CONSIDERATIONS?

SUCCESS FACTORS

ENVIRONMENT REGULATION AND AWARENESS

UNDERSTAND RISKS FOR PRODUCT DESIGN AND PRICING – DATA

ENVIRONMENT – REGULATION AND AWARENESS

UNDERWRITING AND CLAIMS EXPERTISE REQUIRED

KNOW YOUR CUSTOMER – TARGET MARKET, NEEDS

LEARN LESSONS FROM OTHER MARKETS – RIGHT PRODUCT FOR MARKET, CUSTOMER AND OWN BRAND

INCENTIVISATION STRUCTURE

THANK YOU

JUG PARMAR

23 NOVEMBER 2010