The Future of Critical Illness Where we’ve come from...World Cancer Research Fund - 10 Commandments First three all aimed at reducing obesity – very strong link with cancer as

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The Future of Critical Illness

Tal GilbertHead of Research and DevelopmentPruHealth and PruProtect

Where we’ve come from

UK Life expectancy 1725 – 1990

1762The first life assurance company to use premium rates which were calculated scientifically for long-term life policies was The Equitable, founded in 1762.

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20

30

40

50

60

70

80

1710 1760 1810 1860 1910 1960 2010

Source: The Escape from Hunger and Premature Death, 1700 - 2100; Robert William Fogel

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1762

Equitable Life Assurance Society established as the first mutual life assurance company

1908Old Age Pensions Act –introduced first general old age pension paying a non-contributory amount of between 10p and 25p a week, from age 70.


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1710 1760 1810 1860 1910 1960 2010


1908

Old Age Pension Act

Introduced first general old age pension

Sir William Beveridge, father of the welfare state, was an adviser

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1986First Critical Illness policy introduced in the UK.


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70

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1710 1760 1810 1860 1910 1960 2010


1986

First Critical Illness product launched

Screening programmes introduced

Catalysts of change

Medicine

Science

Demography

Social trends

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Today’s Catalysts

Today’s Catalysts

Medicine

Science

Demography

Social trends

Improvements in screening

Breast Cancer Incidence 1971-2003

Source: Exploring the Critical Path

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Improvements in screening

Prostate Cancer Incidence 1971-2003

Source: Exploring the Critical Path

Age groups 15-49TCR stage 1 84.9TCR stage 2 74.2TCR stage 3 64.6TCR stage 4 29.8

Five Year Relative Survival (%)

for females, by stage and broad age group, diagnosed in 1988-1992, South East England

Source: Cancer in South East England 1997

Earlier Diagnoses Improvements in treatment

Cancer drugs currently in use:

Avastin

Cetuximab

Tarceva

Bortezomib

Herceptin

Lapatinib

Panitumab

Pertuzumab

With different uses for existing drugs in the pipeline …

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Source: Cancer Research UK website http://info.cancerresearchuk.org/cancerstats/survival/siteandsex/

Survival Rate for Breast Cancer

81%

52%

0%

20%

40%

60%

80%

100%

1971 (5-year survival) 2003 (5-year survival)

Prob

ablit

y of

sur

viva

l (%

)

Improved outcomes Today's Catalysts

Medicine

Science

Demography

Social trends

Longevity is increasing

Life

exp

ecta

ncy

at

birth

(m

ale)

LIFE EXPECTANCY AND HEALTHY LIFE EXPECTANCY AT BIRTH (GREAT BRITAIN)

58.0060.0062.0064.0066.0068.0070.0072.0074.0076.0078.00

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

Life Expectancy Healthy Life Expectancy

Source: Office for National Statistics

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6.0

6.5

7.0

7.5

8.0

8.5

9.0

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001

Life

exp

ecta

ncy

at

birt

h (m

ale)

Source: National Statistics Website Release, 22 July 2004

Living longer but spending more time unhealthy

Gap between life expectancy andhealthy life expectancy at birth (Great Britain)

Today's Catalysts

Medicine

Science

Demography

Social trends

Scientific Evidence Becoming Undeniable

Foresight – Tackling Obesities: Future Choices

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Cost of Obesity – Foresight Projections

But in best case, annual cost of obesity will at least triple over next thirty years

Source: “Tackling Obesity – future choices” Foresight (Oct 2007) Fig 7.1

Sim 3 –Population approach

Sim 1 – Childhood obesity focus

Sim 2 – Targeted approach

Sim 0 – No

intervention

Obesity and Serious Illnesses

As well as heart disease and cancer, many other chronic diseases have strong links with increasing obesity

0

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30

40

50

60

70

18.5-24.9 25.0-26.9 27.0-29.9 30.0-34.9 35+

BMI (kg/m2)

% A

dults Type 2 Diabetes

HypertensionHypercholesterolemia

Source: http://www.xenical.com/hcp/2_hrod.asp (Nov 2007)

Scientific Evidence Becoming Undeniable

Foresight – Tackling Obesities: Future Choices

World Cancer Research Fund – Food, Nutrition, Physical Activity and the Prevention of Cancer

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World Cancer Research Fund - 10 Commandments

First three all aimed at reducing obesity – very strong link with cancer as well as heart disease

1.

Be as lean as possible

2.

Be physically active

7.

Limit consumption of

salt

6.

Limit alcoholic drinks

4.

Eat foods predominantly of plant origin

9.

Breastfeed up to 6 months old

3.

Avoid energy-dense foods/sugary

drinks

5.

Limit intake of red and

processed meat

8.

Meet nutritional needs as part of

everyday diet

10.

Cancer survivors to

receive nutritional

advice

WCRF/AICR Expert Report, Food, Nutrition, Physical Activity and the Prevention of Cancer: a Global Perspective. (Nov 2007)

Avoid Smoking

Lifestyle Factors

Pursue Physical Activity

Avoid being overweight

Dietary Factors Consume healthy types of fat

Eat plenty of fruits & veg

Replace refined grains with whole grains

Limit sugar intake

Limit excessive calories

Limit sodium intake

Decrease in risk Increase in risk

The Impact of Lifestyle Factors

CVD

Type 2 D

iabetes

Cancer

Dental

Disease

Fracture

Metabolic

Syndrome

Cataract

Birth

Defects

Obesity

Depression

Sexual D

ysfunction

Today's Catalysts

Medicine

Science

Demography

Social trends

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Obesity Problem – 4th in Europe

Source: International Association for the Study of Obesity (June 2007)

Overweight and Obesity in 27 EU states80% 60% 40% 20% 0% 20% 40% 60% 80% 100%

GermanyCzech

Cyprus England

MaltaSlovakia

GreeceAustria Ireland

Hungary Slovenia

Spain Luxembourg

Portugal Poland Latvia

Lithuania Finland

Sweden Netherlands

BulgariaDenmark

Estonia Belgium

Italy Romania

FranceMalesFemales

Levels of Obesity are Increasing

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24

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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Males Females

Source: Health Survey for England 2005 - updating of trend tables to include 2005 data. The Information Centre

Obesity in Perspective

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1

2

3

4

5

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7

8

9

10

Own an MP3 player Obese

Source: NatCen/DOH – Forecasting Obesity to 2010

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Source: Hansard (House of Commons Daily Debates)

Health and Wellness

0 100 200 300 400 500 600

Obesity

Weather

Number of mentions in Parliament

PARLIAMENTARY REFERENCES IN 1996

Health and Wellness

Source: Hansard (House of Commons Daily Debates)

0 500 1000 1500 2000

Obesity

Weather

Number of mentions in Parliament

PARLIAMENTARY REFERENCES IN 2006

Source: BBC News (Aug 2007) http://news.bbc.co.uk/1/hi/health/6944591.stm

Health Issues Becoming Mainstream

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Sales of Health Devices

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40

60

80

100

120

140

160

180

1997 2002 2007 prediction 2007 actual 2012 prediction

£m

Spend on self-diagnosis items

Source: Mintel Self-Diagnostics - UK - September 2007

Today's Catalysts

Medicine

Science

Demography

Social trends

Earlier Diagnosis and improved survival ratesEarlier Diagnosis and

improved survival rates

More years of illnessMore years of illness

Hard links between lifestyle and health


Obesity obsessionObesity obsession

The Future of Traditional CI

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The Future of Traditional Critical Illness







Higher incidence rates

Pressure on prices

Tighter underwriting

Problematic claims adjudication

Changes in definitions

The Mirror, 28th Feb 2007

The Mail on Sunday, 26th, March 2006

The Sunday Times, 28th Jan 2007

Woman with 'wrong' tumour fights insurerThe Observer, 18th Nov 2007

Declining sales

Source: ABI

Number of new CI policies issued

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2000 2001 2002 2003 2004 2005 2006

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Some Alternatives

Match the customer need

Sev

erity

Pay

men

ts 75%

50%

25%

15%

10%

100%

Low severity

Severity Level

Higher severity

Medium severity

Serious Illness cover

Matches the customer need better

Less exposed to less severe conditions

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A high proportion of cancers are breast and prostate cancers

Incidence of major cancers, 2004, England

Source: Office of National Statistics www.statistics.gov.uk

A large proportion of these cancers diagnosed as localised

Cancer of the breast

Source: Cancer in South East England 2000

Serious Illness cover

Matches the customer need better

Less exposed to less severe conditions

Greater coverage

Multiple claims

Whole of Life Cover

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Severity-based CI in the rest of the world

South Africa: Well developed severity-based market

Some tiered benefits in:

USA

Israel

East Asia

Australia

Canada

How should lifestyle factors be treated?

High blood pressure

Sedentary but hasn’t visited a

doctor in 8 years POORLY WELL

How well do you manage your health?

HEALTHY

UNHEALTHYCur

rent

sta

te o

f hea

lth


X ?

PRUHM17298

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Greater focus on health and wellness:

Reduces protection gap by making the product more attractive forhealthy consumers

Helps all customers to get healthier, which has benefits for everyone

Creates more ongoing value, improving retention

Conclusions

Alternatives to Traditional Critical Illness







Payouts based on severity

Multiple claims

More dynamic pricing and underwriting

Benefits for getting healthy

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Health is top of mind for consumers

Health is top of mind

Good fit between health and wealth

Natural place for product development

Opportunity to grow the market

Opportunity for appropriate financial services

The Future of Critical Illness

Documents

The Future of Critical Illness Where we’ve come from...World Cancer Research Fund - 10 Commandments First three all aimed at reducing obesity – very strong link with cancer as