Demystifying CI definitions

Last year, an industry initiative led by Munich Re brought together a group of CI insurers to discuss the possibility of developing benchmark definitions for the Canadian market. The members of this committee represented over 80% of the Canadian CI market in terms of new business premiums and brought a wealth of expertise from underwriting, medical, actuarial and marketing fields.

Next week: Benchmark definitions and 26 critical illness conditions explained.

Advisors told us the differences in CI definitions add complexity to the product and act as a barrier to entry when it comes to selling CI insurance. The initiative to standardize definitions was undertaken in an effort to reduce this barrier and grow the CI market.

One committee objective was to update definitions that no longer accurately reflected covered conditions, current practices or diagnosis processes. For example, the clinical definition of a heart attack has changed substantially in the past 10 years. The committee’s second objective was to establish consistent wording for the industry.

This review of definitions led to the creation of updated, clear and consistent wording for advisors and businesses across the industry to use. It should be noted that, overall, the definitions have not been liberalized or reduced. Instead, we think they define the intent of the covered conditions more precisely.

To explain a few of the changes, I spoke with Munich Re’s medical director, Dr. Tim Meagher:

Heart attack | Dr. Meagher, how is the new benchmark heart attack definition different from the previous one?

The new benchmark definition brings the CI definition into line with the definition currently used in the clinical world. It may seem surprising, but the clinical definition of a heart attack has changed substantially over the past decade. New blood tests now allow smaller heart attacks to be detected. In the past, the label “unstable angina” was used to describe these smaller attacks. The result is that we now diagnose more heart attacks than we did before. This created an imbalance between the old critical illness definition and the one currently used by cardiologists. It became increasingly important to avoid ambiguity and make sure that the insurance definition and the clinical definition were similar in as many respects as possible. The committee, which included cardiologists, internists and veteran medical directors worked diligently to streamline the 26 definitions. The end result should avoid future confusion about the CI definition and simplify the claims process.

Is the new definition more liberal than the old one?

The new definition will now cover heart attacks that were previously called “unstable angina.” However, it should not be concluded that these heart attacks are any less “critical” because of their size. Indeed, morbidity and mortality from these smaller attacks are just as elevated as those covered in the older CI definition.

Coma | The new benchmark definition introduces a required Glasgow coma score of 4 or less. What does this mean?

The Glasgow coma score (which ranges from 3 to 15) is a widely accepted way of quantifying a patient’s level of consciousness. Adding this score to the coma definition will help to reduce subjectivity in assessing states of unconsciousness and will facilitate and expedite the way claims are handled.

Cancer | What are the main changes that were made to the cancer definition?

Actually, no substantive changes were made. Consensus was reached pretty quickly on the minor differences between various company definitions. The wording was simplified and the definition was shortened so it would be simpler for both advisors and their clients to understand. The end result is a shorter, clearer definition that will serve everyone well, without changing the scope of coverage.

Are lymphoma and Hodgkin’s disease covered under the cancer condition?

Yes, lymphoma and Hodgkin’s disease (which is a type of lymphoma) and leukemias are all covered. This has given rise to some confusion among non-medical people because these diseases are not seen as “tumours” in the same way as breast cancer or lung cancer. However, they are characterized by uncontrolled growth and spread of malignant cells and by the invasion of tissue. They clearly fulfill the criteria for cancer.

Multiple sclerosis | You have added a new criterion to the diagnosis of MS; why?

Similar to heart attacks, the diagnosis and the treatment of multiple sclerosis has evolved a great deal over the past 10 years. The diagnosis is now made earlier than before, which permits earlier treatment. We have, therefore, adjusted the diagnostic criteria for MS to bring them into line with the criteria being used by neurologists. This is unlikely to have a major impact on the number of claims, as most of these earlier types of MS would eventually fit the older criteria for the diagnosis. But it will avoid squabbles between insurers and clinicians about how the diagnosis is established, which is good for the insured.

Standard definitions: The U.K. experience

Nick Kirwan is the assistant director of health and protection at the Association of British Insurers (ABI) Protection Committee, which produced standard CI definitions in the U.K. back in 1999.

Nick, definitions have been standardized in the U.K. for several years now. Can you give us the main reasons this happened?

The U.K. developed CI in 1986, soon after it first appeared in South Africa. Initially, it sold quite well through tied sales forces but not through independent advisors. Having no specialist medical knowledge, they found it impossible to select the most appropriate CI product for their clients and were wary of litigation. So in 1991 the National Federation of Independent Financial Advisers (NFIFA) called for minimum standards. This resulted in an informal arrangement where insurers would self-certify that their definitions met certain standards set by NFIFA — but this arrangement fell a long way short of standard definitions and did not apply to insurers with tied distribution.

Formal standardization came in 1999 following an enquiry into health insurance by the Office of Fair Trading, the U.K. government body that ensures markets work competitively in the interests of consumers. OFT found that choosing the most appropriate CI product was a task beyond both consumers and advisors — if they couldn’t identify the best product, the normal competitive forces that drive markets in the interests of consumers break down. In response, ABI produced the Statement of Best Practice for Critical Illness Cover (SoBP), which introduced standard CI definitions and a standard layout for marketing material so advisors and consumers could compare products across all sectors.

What was the impact of standardized definitions on the market, advisors, consumers and CI sales?

The move was well received by just about everyone. Minimum standards helped to give more confidence to advisors and consumers. Importantly, the national media were interested — as they are with all health issues — and this helped to raise awareness of the product in the mind of consumers.

We used the process of developing the standard definitions to engage stakeholders. Whenever we make changes to CI definitions in the U.K. or take medical advice, we always involve groups that represent consumers. These have included the Prostate Cancer Charity, Macmillan Cancer Support and Cancer Backup. These organizations have shared the platform with us to provide a more compelling message and generate wider interest. Of course, these organizations are usually reluctant to support individual commercial firms, so having an independent body owning the standard definitions helps. The market reacted very positively, and sales went through the roof.

Next week: Benchmark definitions and 26 critical illness conditions explained.

The authors: Hélène Michaud is assistant vice-president, marketing, at Munich Reinsurance Company; Dr. Tim Meagher, Munich Re medical director and director of clinical development at the McGill University Health Centre, was an active participant in the CI Benchmark Definition committee; Nick Kirwan is a former chairman of the Association of British Insurers (ABI) Protection Committee, which produced the standard CI definitions in the U.K. He is currently ABI’s assistant director of health and protection.

Is this information useful to you? Let us know what you think. Send your comments and feedback to feedback@advisor.ca.

(03/18/09)