Session 7B How To Turn Silver To Gold By Learning From Other Long Term Care Markets. Kuan Ho Tan, FSA, CERA Ken Cheung, FIAA

Transcription

1 Session 7B How To Turn Silver To Gold By Learning From Other Long Term Care Markets Kuan Ho Tan, FSA, CERA Ken Cheung, FIAA

2 The SOA Asia Pacific Annual Symposium 6 7, July 2017 How to Turn Silver to Gold by Learning from Other Long Term Care Markets KUAN HO TAN Senior Marketing Actuary, South East Asia, SCOR KEN CHEUNG Head of Hong Kong & Taiwan, SCOR 6 7, July

3 Fast Facts For someone at the age of 65+ the probability of needing LTC over the lifetime is 68% Of the population needing LTC, ( 3 ADLs limitation) 30% have substantial LTC needs Source: American Association for Long Term Care insurance Ageing Landscape in Asia

4 Asia is the Global Home of the Elderly Asia Pacific is experiencing an explosive growth of the number of elderly people (aged 65 and above), outpacing other regions. By 2030 the number of senior people in APAC is projected to increase by 200 million (+70%) Societal ageing represent economical risks placing higher burden on economy. APAC major economies account for nearly quarter of global GDP, while being the most aged society. Elderly population projection from 2015 to 2030, million, Share of GDP by region, % % +62% % % 24% Elderly population by regions 25% 25% APAC North America Europe Rest of the World % North America Europe Rest of the world Asia Pacific 53.7 million 98.4 million million million What stands out in the APAC region is unparalleled speed at which growth of elderly population is happening. Compare : 11% Of the population China 15 years 18% 11% Germany 25 years Of the population Of the population Singapore 15 years 20% 13% France 49 years Of the population Of the population South Korea 15 years Italy 40 years 23% Of the population Source: Advancing into the Golden Years, Marsh & McLennan Companies Report, 2016 Long Term Care Financing The number of elderly people who need care is increasing; and longer period of care is needed due to medical advances This puts tremendous pressure on public healthcare financing Total health spending as a % of GDP for Asia is also well below that of OECD countries 9.2% Healthcare financing sources, %, % 90% 80% 70% 60% 50% 40% Health expenditure, % of GDP, 2014 Indonesia 3 Thailand 4 Malaysia 4 India 5 Philippines 5 Singapore 5 China 6 OECD Average 30% 20% Vietnam Korea, Rep % Japan 10 0% FR THA US JPN CHN MYS VNM KOR IDN PHIL SIN IND France USA Public Expenditure Private Insurance Out of pocket spending Source: Advancing into the Golden Years, Marsh & McLennan Companies Report, 2016; OECD Health Statistics

5 Continuum of Care Six General Stages the Elderly Take through the Care System Based on Their Health Condition Increasing Frailty Typical Aging Needs The ADL/IADL measures for assessing dependency and Dementia Transition Care Poor Recovery Partial Recovery Residential Care ADL IADL Eating / Feeding oneself Housework Hospitalization Home Care Dressing Money Management Full Recovery Family Support Substantial deterioration Mobility (level surface / transfer from bed to wheelchair) Bathing Medication Adherence Shopping Self Sufficient Low care level required Assisted living Increasing Dependency Toileting Continence Use of Telephone DEMENTIA Key Risk Factors Associated with Old Age Disability Demographics Health Conditions Lifestyle Choices Social Support

6 Demographic & Socio Economic Insights Elderly Population is Significant in France, Singapore and USA % of Elderly Population, 2012 vs. 2050, 60 30% by % by % 15% 19% France Singapore USA 27% by 2050 World Average, 11% Proportion Currently Married, 60, % 77% 84% 75% 49% 51% 48% Men Women France Singapore USA Old age support ratio (No. of age over No. of Age 65+), %, 2012 Proportion of people aged 60, who are economically active % 2 by by by 2050 Men Women France Singapore USA 8% 6% 43% 20% 35% 25% France Singapore USA Life expectancy at age 60 France: Singapore: USA: Source: 10

7 LTC Coverage (Public / Private) Singapore 12

8 Public LTC Insurance System in Singapore (ElderShield) Established June, 2002 Eligibility For aged 40 and above;opt out is allowed Benefits SGD 400 (USD 290) monthly for 72 months upon insured cannot perform 3 out of 6 ADL Cost Coverage Very basic coverage considering average nursing home costs SGD monthly (USD ) Coverage Duration Whole life Premiums Deducted from one s Medisave account until age 65 Insurer Common insurance scheme managed by 3 panel insurers (Aviva, Great Eastern and NTUC Income) 13 Private LTC market in Singapore Supplementary ElderShield Plans (by panel insurer) Private LTC LTC Market Supplementary LTC plans (by non panel insurer) 14

9 Supplementary Plans I Supplements which are extensions of basic ElderShield Eldershield 6 years II Supplements which overlap with basic ElderShield ElderShield 6 years III Supplements which integrate with basic ElderShield ElderShield 6 years 15 France 16

10 Public LTC Insurance System in France APA (Allocation Personnalisée d Autonomie) Established 2002 Eligibility to benefits Age 60 Benefits 1) Indemnity model, cash benefit according to a service plan 2) Monthly cash benefit, is paid to people belonging to GIR 1 to GIR 4 levels. 3) The benefit is capped each year, as a function of these four levels, taking into account the beneficiary s income. 4) Steeply income adjusted (up to 90% copay) Criteria There are 6 level of GIR (Groupe Iso Resource) that determine the amount of benefits AGGIR ADL Based on 6 levels, from GIR 1 to GIR 6 Definition based on loss of X out of 4, 5 or 6 ADL GIR 1 GIR2 3AVQ4 4AVQ6 GIR 3 2AVQ4 3AVQ6 GIR4 2AVQ6 Severe (Total) Loss of Autonomy Moderate (Partial) Loss of Autonomy 17 Private LTC Market in France Huge private LTCI market Subscribers Profile Distribution Group LTC Insurance Covers 5.7m out of 66m population 15% of age 40+ (2010) Supplements gap of LTC LTC costs = 3500 Avg pension = 1200 Avg APA payout = 500 Majority were age Higher % married/ have children Higher level of education Expect to leave a relatively large estate/ bequest Banks are the main channel Highly concentrated (70% of PHs and premiums collected by top 5 companies) Group LTC Insurance represents 45% of market Employers may pay for a portion of premiums However, only provide coverage while employed 18

11 Private Individual LTC Insurance Product Highlights Indemnity policies are dominant 2/3 policies cover heavy & irrecoverable dependency only Simple fixed cash monthly benefit for life Offers flexibility to subscribers Easy to understand Easier to project costs vs benefits tied to service Features of Individual LTCI Waiting Period & Claims deferred Period WP :Nil(accident); 1 year(illness); 3 year (dementia) DP : 90 days Entry age up to age 75 years Medical underwriting applies 19 USA 20

12 Public LTC System in the USA Established 1965 Eligibility Benefits Medicaid (low/no income & disabled) Medicare (Age 65, for those recovering from an acute illness or accident entailing hospitalization) Medicare (limited LTC coverage) Up to 100 days of care in a skilled nursing facility (SNF) after an acute care episode 100% of first 20 days in SNF, copayment required from day home health visits per hospitalization Hospice care at the end of life Medicaid (broad LTC benefits) From institutional to home care 21 Public LTC System in the USA According to National Health Expenditure Survey compiled by the centers for Medicare & Medicaid services, the U.S. spent $239 billion on LTC in 2014 Funding of 2014 Long Term Care Expenditures (Billions) 7(3%) 14 (6%) 19 (8%) 49 (20%) 79 (33%) Medicaid Medicare Out of Pocket LTC Insurance Other Insurance Other 70 (30%) 22

13 US LTC Products Comprehensive and Nursing Care & Residential Care Reimbursement General Information Product Highlights Long Term Care policies in USA are customizable on 5 general levels that fit various needs: Provides reimbursement upon use of multiple types of services Maximum amount of benefit payable (per day, per week, per month) Lengthof benefit period 2 out of 6 ADLs or suffered a severe cognitive impairment Bed hold reservation benefit Durable Medical Equipment Benefit Respite Care Benefit World Wide Coverage Benefit Maximum daily benefit for Home care / Community based care Waiting Period Inflation Protection Facility Benefits: nursing facility or residential care facility Home and communitybased care benefits Care Coordinator Benefits Hospice Care Benefit Waiver of Premium Benefit 28 Private LTC Market in the USA After more than two decades of rapid growth, the LTCI industry has undergone significant contraction, both in terms of sales and insurers participating in the market. One area of continued growth in the market is with combination or hybrid product Individual Market Sales: (Thousands) Source: LifePlans Analysis Based on AHIP, LIMRA and LifePlans Sales Surveys,

14 LTC Insurance Statistics Based on SCOR s Experience Actuarial Modelling Statistical Data Three transitional probability laws for a simple total dependency product increased levels of dependency require much more complicated framework Longevity of active people Incidence of dependence Longevity of dependent people Depends on age, sex, life expectancy without severe disability Depends on age, sex, medical selection effect Depends on age sex, time already spent in LTC, the main disease responsible for dependence 26

15 Actuarial Modelling Semi Markov Model Used by Scor Global Life Healthy Dead = 0, Loss of autonomy 27 Mortality of autonomous individuals 1. Insured that have not lost their autonomy (according to the retained definition) and that have not died > Life expectancy in good health (without incapacity) 2. The mortality in state of autonomy is lower than a general mortality 3. An observation on the individual insurance portfolios: the insureds live longer than what could be observed on the general population or on the official insurance tables Life Expectancy Male Female Autonomous General Pop n Autonomous General Pop n 60 y.o y.o y.o The longevity in state of autonomy corresponds to the length of premiums payment 28

16 Loss of Independence/Autonomy Definitions Total loss of independence = Loss of 3 out of 4 ADL or 4 out of 5 or 4/5 out of 6 «Do it alone without being encouraged» Bathing / Toileting Dressing Eating Mobility / Walking Transferring Continence ADL «YES/NO»ASSESSMENT Be able to maintain personal hygiene standards Be able to dress and to undress, and possibly by wearing appropriate clothing Be able to serve and to eat food already prepared and made available Be able to move inside the home on flat ground with suitable equipment Be able to move from bed to chair and from chair to bed Be able to use toilet or to ensure urinary and faecal continence, including using sanitary bandages or surgical equipment 29 Experience on the mortality of dependents Description 1. Complex law depending on several parameters (not only age and gender) 2. Various approaches: we retained a model close to the disability one, depending on age at claim and length in the state of dependency 2 4 years 2 7 years 1 6 years 4 months 2 years Polypathology Neuro psychiatric disease Cardio vascular pathology Cancer 2 10 years Dementia Findings: 1. The causes of LTC depend on age 2. The length in the state of loss of autonomy depends on the initial pathology Disease 65 y.o. 72 y.o. 77 y.o. 82 y.o. 87 y.o. Dementia 20.3% 36.0% 46.9% 49.8% 47.0% Cancer 43.7% 26.2% 15.4% 10.1% 6.3% Cardiovascular 16.4% 16.6% 15.5% 12.0% 11.3% pathology Neuropsychiatric 14.6% 12.3% 10.1% 7.0% 5.4% disease Polypathology 5.1% 8.9% 12.1% 21.1% 29.9% 30

17 Female: First Year of Mortality rate in LTC 31 Men: First Year of Mortality rate in LTC 32

18 Mortality of the first year in LTC 33 Mortality of the second year in LTC 34

19 Incidence rate in LTC by Pathology grouping Source: A semi markov model with pathologies for LTC insurance, Guillaume Biessy, SCOR Global Life 35 Experience on the incidence rates: mostly women are concerned Higher incidence among young male Example: at 70 y.o. +50% and at 75 y.o. +25% Higher incidence among older women Example: at 85 y.o. +5% and at 90 y.o. +10% Underlying Distinct Processes Higher mortality for male than for female Dependent women live longer A higher number of dependent women than dependent men at the same age 36

20 Conclusion Conclusion Government initiatives needed boost interest and success for private insurance LTC risks can be managed by tapping into expertise and research available. LTC is one of the greatest generational challenges as population ages There are good references and benchmarks to learn from other countries. You don t have to be great to start, you have to start to be great. 38

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