No one is better at understanding critical illness (CI) than the physicians, actuaries, and analysts charged with defining it for critical illness policies. And, arguably, no job in insurance today is tougher.
Advances in genomics and medical technologies have proceeded at a pace few could have imagined just a few years ago. With lump sum benefits linked closely to disease diagnoses, CI product lines constantly risk becoming out-of-date as treatments and technologies evolve.
Insurers are now reimagining this staple of the supplemental product portfolio. Five areas of rapid change are attracting the greatest interest: dementia, disability, pre-early CI, comprehensive care, and catch-all coverage.
The human brain is a complex web of connections – and a frustrating knot scientists and clinicians have yet to fully untangle. This is especially true when treating neurodegenerative diseases such as dementia. Despite progress in diagnosis, no cure for this complex and progressive disease has emerged – a reality with important implications for critical illness product design.
Dementia results from damage that disrupts nerve signals, resulting in multiple symptoms that progress at varying speeds specific to the individual. Notably, the severest and most debilitating cases not only incapacitate sufferers, but they also impose a tremendous burden on loved ones and society at large. Today, physicians can measure damage far more precisely and at earlier stages through genetic testing, imaging, and biomarkers – and yet no breakthroughs in treatment have appeared on the horizon. Early detection and evolving diagnostic criteria continue to challenge CI definitions. Better testing also presents insurers with a growing anti-selection risk.
Against this backdrop, insurers have begun reassessing product design both by improving the clarity and precision of definitions and by addressing the caregiving concerns of a growing population of older adults. In Korea, product design and benefit definitions are highly standardized, with diagnosis payments varying by severity and limited by maximum issue age and expiry age. Riders have emerged that expand cover to include in-home care, facility admission, and caregiver support. Insurers throughout east Asia are also offering new benefits that cover services for prevention and early detection, and are linked to coverage for milder (earlier) cognitive impairment. These include testing, wellness programs, and drug and non-drug-based treatments.
Against this backdrop, insurers have begun reassessing product design both by improving the clarity and precision of definitions and by addressing the caregiving concerns of a growing population of older adults.
When it comes to disability, insurers may be breaking free from an unhelpful binary decision. For years, supplemental offers for serious illness have included either disability coverage or critical illness benefits. But what if one product could do both?
Insurers are blending these product lines, offering up lump-sum payouts in the event of a defined disability or functional impairment. These CI disability offerings target underserved markets such as self-employed (freelance) or “gig” economy workers who are temporarily unable to work for medical reasons but would prefer the freedom of a typical CI lump sum payout over a classic short- or long-term disability income replacement structure.
Cover is designed to be easily understood and underwritten. Sum assured is set as a daily amount payable and a fixed number of days of coverage is paid upfront according to the particular event definition that has been met. A comprehensive list of defined events covers illness, injury, and major medical procedures. This product is to be sold primarily through digital platforms, particularly by platforms already providing services to freelancers.
More of us are living longer – but not better. Non-communicable, yet debilitating, chronic conditions such as cancers, diabetes, and heart disease are on the rise. Yet, these increasingly common diagnoses often do not meet traditional critical illness categorizations.
Insurers are now introducing a new family of Pre-Early CI additions designed to help policyholders “catch,” manage, and even prevent such impairments when they first manifest. Examples include pre-cancer CI benefits offered in South Africa; CI products in Singapore for hyperthyroidism, gout, and diabetes; and homecare CI designs emerging in Asia that offer teleconsultation, wellness, and treatment management services.
Insurers are now introducing a new family of Pre-Early CI additions designed to help policyholders “catch,” manage, and even prevent such impairments when they first manifest.
The goal? Expand traditional benefits to cover less critical, but still impactful, disease with the expectation that policyholders who can treat these conditions earlier might reduce the risk of more severe late-stage conditions. Benefits still require a certain severity to justify a lump-sum payment but to a lesser degree than is usually required by typical CI definitions. Thoughtful impairment selection and definition construction is required to ensure sustainable product development and avoid creating unmanageable lists of unrelated impairments.
Insurance can sometimes be perceived as abstract and impersonal – and yet when it comes to some new CI products, nothing could be further from the truth. A severe diagnosis can disrupt an individual’s future plans in a sudden and often traumatic way. Insurers have adapted CI plans to provide elements of comprehensive care that anticipate these challenges and help policyholders and their families adapt.
For example, some cancer treatments can damage reproductive organs, leading to temporary or permanent infertility or other impacts to reproductive health. As a result, one South African insurer added a CI feature that provides policyholders with additional cancer coverage to assist in fertility treatments due to a cancer diagnosis.
As much as critical illness plans offer very comprehensive benefits, they can never include an exhaustive list of all severe and consequential medical impairments or outcomes. Furthermore, maintaining – and explaining – a list of impairments can prove especially difficult as prognoses and procedures evolve amid rapid medical advances. Emerging “catch-all” or back-on-your-feet benefits seek to close this gap and future-proof definitions, while mitigating risks.
Initially dubbed “One Definition CI” due to open-ended proxy definitions for existing critical impairments, these disease-agnostic definitions pay benefits upon any intensive care length of stay when invasive life support is required, upon surgery on major organs, or when a diagnosis requires a post-operative ICU stay. They are intended to absorb risks that may not fall within traditional CI definitions and are presented as an additional “safety net” in policies from Hong Kong to Singapore to Malaysia.
For as long as critical illness exists, insurers with CI product portfolios will be faced with the challenge of providing adequate and affordable coverage for health events that have a severe impact on lives and livelihoods. But opportunities abound to expand and iterate new product offerings to continue to meet the diverse needs of policy holders through innovation in an ever-evolving medical environment.
At RGA, we are eager to speak with clients about any support needed. Contact us to learn more about the resources, solutions, and services available.