Medicine & Its Impact on Protection Insurance Unum Michael O’Donnell Chief Medical Officer
X Rays Radiotherapy Electrocardiograph Plastic surgery Antibiotics Antidepressants Drugs for hypertension Drugs for heart failure Open heart surgery Cervical cytology Chemotherapy Drugs for arthritis Joint Replacements Heart bypass surgery Endoscopy CT & MRI imaging Cure for peptic ulcers Microsurgery Human Genome project Medical Innovations of the 20th Century
What Has This Meant for Critical Illness? • Many illnesses are less critical • Declined claims • T&P an even more difficult definition • Does it do what people expect and what is it for? • New ABI definitions
Is Treatment Getting More Expensive? • Hysterectomy £4,500 • Cataract & lens implant £2,500 • Hip Replacement £8,500 • But all much cheaper abroad • Herceptin £21,000 • Avastin (bowel cancer) £2,400 pcm • ß-interferon (MS) £10,000 per year • NHS Lists falling and new doctors being recruited from overseas - downward pressure on doctors’ pricing
Genetics / cancer Screening Gene therapy Stem Cells Surgery Microsurgery Transplants Therapeutics Pharmacology Stem cell therapy Investigations Laboratory Radiography Fields Of Research
Is Screening Always Good For You? • Blood Pressure • Blood sugar • Cervical cytology • Mammography • PSA • X-rays • Whole body scanning (CT/MRI)
What Makes a Good Screening Test? • Simple • Safe • High sensitivity (no false reassurance) • High Specificity (no false positives) • Early detection of problem leads to prevention or effective treatment • Medical tests for underwriting need to follow these rules
Gene Therapy • Still in its infancy • Very few success stories • Difficult to insert genes (use a virus) • Problems with immune reactions • Problems with degradation of inserted genes
What Are Stem Cells? • Immature or undifferentiated cells. • Ability to become a number of different types of mature cells. • The fertilized egg is the most immature and least differentiated cell with the greatest potential. • Bone marrow cells are intermediate. • It is possible to persuade mature cells to revert to being stem cells – but this needs caution (cancer).
Microsurgery • Most eye surgery uses microscopes • Restoration of severed limbs since 1980’s • Laparoscopic surgery / arthroscopy • Use of remotely controlled mini-robots is just starting • In May last year a heart valve was repaired using a remotely controlled micro-robot • Microsurgery has fewer complications • Smaller incisions • Shorter stays • Less time off work
Problems With Microsurgery • Equipment expensive • Great skill needed to operate • Slow and expensive to train staff • Recruitment difficulties • Complications can be difficult to put right • All technologies get cheaper and easier with time (except, perhaps medical ones for some reason)
Transplants • Cyclopsorin and tacrolimus have reduced rejection rates • Kidney, heart, liver well established – islet cell transplants may be a way forward for diabetes • Main problem is shortage of donors • Mechanical assist devices appear to let heart recover from insults such as damage from viruses • Best hope for future may be to regenerate new organs using stem cell technology
Pharmacology • Designer drugs • Improved molecular biology • More rapid development of new drugs • Better prediction of side effects • Less need for animal experimentation • HIV as an example • MRSA as a warning
Problems Ahead! • Obesity • Alcohol • Antibiotic resistance • Changes in disease pattern with climate change
What’s on the Horizon? • Stricter test for incapacity benefit • Better training for GP’s • Emphasis on occupational rehabilitation • More onus on employers to rehabilitate • Fewer long term claimants • More opportunities for IP • Development of more short term products • Cheaper • Simpler claims assessment • Good if combined with serious illness cover
The Challenge for Protection Insurers • Develop products that people need • Listen to customers • Group • Individual • Brokers • Is the Gold Standard product always the best?
Protection Review ConferenceInnovation – what innovation? Roger Edwards , Product Director, Bright Grey
So how innovative are we at the moment? So how innovative are we at the moment?
Spiral of price competition Industry infra-structure geared to price only Ambitious plans to grow market share Short term need to meet targets beats long term desire to innovate and be different Prices fall further
Protection markets Critical Illness Term Income Protection
Life cover for less than 26p per day When it comes to protection are retailers behaving like retailers?
Better mortality Psuedo - preferred lives Tele-underwriting Reassurance deals 3% 20% Online transactions Offshore admin Persistency initiatives 12% 65% Commission Expenses Risk Profit Will price continue to fall?
Difficult to break out • Prudential Flexible Protection Plan • Same market • Alternative to CI • Virgin Cancer Plan • New market? • Alternative to CI
What advisers recommend? Given regulation, advice justification, reasons why, threat of legal action • Existing CI • Cheap rates • Comfortable with cover • Proven concept • Millions paid in claims • Impact based CI • Higher rates • New definitions • Unproven concept • No claims history
Is innovation taking too big a risk? • Long term • Strategy • R&D • Innovation • New product lines • Short term • Sales • Profit/share price • Tactics • Safety in similarity
Difficult to break out • Can you launch something new into the adviser channel and expect instant success? • How many companies will take a long term view? • More than one company launching something new might work – but what about the Competition Act?
To summarise the current environment • Doing the same things • To the same people • With the same products • Using the same processes
So is it really possible to innovate? So how innovative are we at the moment?
How to change the current environment • Doing the same things • To the same people • With the same products • Using the same processes • Do different things • To people who are NOT currently customers • With different products • Using different processes
Innovation We couldn’t do that because…… That’s a daft idea….. The Reassurers won’t let us do that…. My only concern is that…..
Innovation • Are we designing products for consumers or our distribution channels? • Bells and whistles that let our consultants get one up on the competition or benefits of real value to the consumer? • Recent examples • silent heart attacks
What is a protection product? a piece of paper to file away and forget about? a promise to pay money when something horrible happens? peace of mind? compensation for life changing events? debt repayment?
The traditional protection product • Piece of paper • Promise to pay after a horrible event • Just money product
The problem • Exciting • Status - you can polish it • Material goods • It’s an experience! product
the customer product experience Reality comms apply product claim • piece of paper • promise to pay after a horrible event • just money • experience • perception • experience
comms apply product claim Where to innovate Innovation needn’t be confined to the product – think about all the proposition touch points
Communication • Create a better perception • Engage with the Government • Education: on school syllabus, free consumer guides • Cultural influences
Information overload • Innovation on advice • Navigate through the massive maze
Don’t understand it TPD PHI LTA SACIC MER GPR PMI PTD IP ACIC
Perception “Buy one get one free” “In the event that you procure one item, as defined by the appropriate boxed quantity and confirmed by the electronic point of sale supervisor, we will assist you in the procurement of a second item, as defined by the appropriate boxed quantity, for no charge, that is, no monetary transaction, as defined by an exchange of currency, would be needed”
Communication innovation • What about 24 hour protection channel? • What about advertising on DVDs? • What about the flavour of the month boy/girl band promoting protection? • Include a protection podcast on each new iPod?