Protection

078 | A medical perspective on critical illness advice

Watching this video is worth 50 CPD minutes. In order to consider the viewing of this video as structured learning, you must complete the reflective statement to demonstrate what you have learned and its relevance to you.

View My CPD

Tutor on the panel:

  • John Schoonbee, Chief Medical Officer, Swiss Re

Learning outcomes:

  1. The impact of medical advances on critical illness cover
  2. Factors to consider when advising on critical illness
  3. How you can improve client outcomes from critical illness advice

Channel

Protection
In this learning module on Akademia we’re going to be looking at the evolution of Critical Illness Insurance in the light of recent research. Our tutor is John Schoonbee Chief Medical Officer of Swiss Re. Let’s run through what they’re going to be covering. First of all we’ll be discussing The origins of Critical Illness Cover Cancer survival rates Mortality trends Heart attack incidence and long term survival rates. What has changed Bringing us up to date we’ll look at the need for cover today and How many times clients might have that need. Scales of severity Breast cancer and the effectiveness of screening Secondary cancer incidence Other conditions We shall then look at what do we expect from medical technology. Increasing costs of treatment Healthcare expenditure versus life expectancy Obesity Behavioural change risk factors and wealth And finally how you can help clients. PRESENTER: John, begin by telling us about the origins of critical illness cover in the ‘80s I believe. JOHN SCHOONBEE: Tony, in the ‘80s Marius Barnard was a cardiothoracic surgeon, brother of Chris Barnard who did the first heart transplant, and he noticed that many of his patients would come in and they would have had a serious illness and they would have to keep working because somebody had to pay the mortgage, somebody had to pay the bills. And they kept working almost until the day they died. And in the ‘80s medical science wasn’t as good as it is today, and so when you had a critical illness it was pretty severe, things were very different then. PRESENTER: And critical illness cover was just straight that. It was one payout for any illness, was that it? JOHN SCHOONBEE: So it was all accelerated. It was always part of life cover. It would pay part of the life cover out when you were diagnosed with a serious illness. And the idea then was you would be able to afford bills until the illness led to your demise; in which case there would be a portion of your death cover left for your beneficiaries. PRESENTER: And we’re talking about 1983 here, I believe. JOHN SCHOONBEE: 1983 and that’s a very long time ago. PRESENTER: It is, and I suspect some of those policies are still around. JOHN SCHOONBEE: So that’s interesting. I don’t think at that stage they offered whole of life critical illness. These days in some markets they do. But certainly some of the products out there are still very similar to the original product design. PRESENTER: So even though medical science has developed, the insurance industry still has some of those policies knocking around from what we can regard as a different era now. JOHN SCHOONBEE: Yes absolutely. PRESENTER: Have things changed for the better? JOHN SCHOONBEE: Things have changed hugely. So if I can use heart attack as an example. When you look at the heart cells, myocardial cells, and from the time when somebody has a heart attack, after about one hour the heart cells start to die in that portion of the heart that doesn’t get blood. However, before that hour is up, the first hour, the heart cells manage to survive, they do pretty well. So if you can get somebody treatment and you can open up the coronary artery within the first hour, you salvage almost the whole heart. So there’s very little permanent damage left. So of course in the 1980s we didn’t manage to do that very well. We didn’t have streptokinase to be able to dissolve a clot. We didn’t get people to hospital very quickly. These days things are quite different of course. PRESENTER: Indeed, and the incidence of the use of aspirin in that first hour I understand is really quite important, which seems to be quite fashionable if I can put that to you. JOHN SCHOONBEE: Yes, so aspirin certainly is one of the drugs that they use to try and prevent coronary artery disease, or heart attacks. But in terms of streptokinase, TPA, those are kind of technical terms for the drugs that they give you in the ambulance even these days on the way to hospital. So by the time you get to hospital the clot’s gone. So the survival of the heart is very different. PRESENTER: Obviously the one illness that people think about or the one condition that people think about when they’re thinking about critical illness is cancer. So what has happened to cancer survival rates over this last period? JOHN SCHOONBEE: So, Tony, that’s really interesting. If you look at the slide on cancer survival you can get many studies looking at survival over different periods, and what this graph shows is what percentage of people are alive after the treatment is completed for a specific cancer. And you can see in this slide there are four different time periods. The oldest time period, 1974 to 1979, interestingly is kind of the data that somebody like Marius Barnard would have used. So when he came up with the idea that’s kind of the data he would have seen. He would have seen so many people that had a very poor survival outcome, so he designed this product. But then you can see as time progressed, 1995 to the early 2000s, the survival has massively improved. And of course 16 years or 14 years later, 2016, it would be even better. So again we have a product designed around that bottom survival curve, does it make sense to have that same product today? PRESENTER: What about mortality trends? Looking at it from a populous point of view, people are living longer. Is that borne out by the statistics? JOHN SCHOONBEE: So there’s quite a big discussion around longevity and whether people are going to keep living. They found somebody the other day that was 148 years old in South East Asia. So of course that’s going to get a lot of people going oh you see, we’re all going to live for a lot more than we have in the past. We’re still finding by far the majority of people, even though you have a lot of people over 100, a number of people are still, there seems to be a limit as to how long we are going to live. In terms of cancer though, because we have better diagnostic techniques and we are screening, we are picking up a lot more cancer. So the incidence rate is certainly going up. But the mortality rate due to cancer is falling. One of the reasons is because we’re picking it up earlier, so the outcome is better. The other of course is that there are better treatments for some cancers today compared to in the past. PRESENTER: Let’s have a look at that on a slide, and just talk us through that slide. JOHN SCHOONBEE: So what you can see, so this is showing 1975 to 2005, so a 30-year period, and you can see for, so this is all cancers in Europe excluding what they call non-melanoma skin cancers. And you can see the broken line, the dotted line, that is incidence which is trending upwards, and I think will continue to trend upwards as we have better diagnostic techniques. And the mortality is trending downwards, and that I think will continue too. PRESENTER: Let’s go back to heart attacks, the scourge of a wealthy society as it were, and talk a little bit about long-term survival after acute heart attacks. JOHN SCHOONBEE: So if you have a look at the slide, looking at long-term survival after acute myocardial infarction, and you look at the mortality due to cardiovascular disease, you can see one in five people in the early ‘80s would die within a certain time period. Here 12 years; whereas you go just less than 10 years on, 1991 to 1993, you have 13%, 13.6% of people dying in a 12-year period. So absolutely the chances of surviving a heart attack these days is extremely good, particularly if you live in a country with a good medical support system, a good emergency service where the paramedics will give you drugs right away to dilute that clot. And so also related to insurance, in the past if somebody had a heart attack we’d be worried to offer them life cover. These days if somebody’s had a heart attack a year or two ago we’d very happily offer them life cover, usually with a loading but very comfortably doing so. PRESENTER: Interesting, is that true, demographically all over the world are we looking at major differences in major countries, major areas in the world? Are there really major changes in the way that heart attacks are treated? JOHN SCHOONBEE: Absolutely, so again speaking about developed countries the incidence of course of cardiovascular disease is increasing, because the diet and the obesity epidemic and the diabetic epidemic is relentless in the Western world, but certainly the treatments are pretty standardised and extremely good. PRESENTER: Talk me through one or two of the major advances in the dealing of heart attacks or heart disease. JOHN SCHOONBEE: So one of the things that has revolutionised the treatment of heart attacks is angiography. So the ability for somebody to come in with chest pain, you get put on a table and within 15 minutes they have a catheter right at the heart. They can see where the blockage is, they can open it up. And then if they don’t, they can’t open it up using angioplasty, they would do surgery literally almost immediately, so massive advances. And of course when you talk about surgery, cardiovascular surgery and particularly if you take the Marius Barnard era, he would have a saw and saw people’s chests open. PRESENTER: Literally. JOHN SCHOONBEE: Literally. PRESENTER: We can see the pictures should we need to on one of the slides. JOHN SCHOONBEE: Absolutely, and they would have had to do a full thoracotomy in the past when they wanted to do coronary artery bypass grafts for example; whereas these days they are managing, depending on which arteries they want to bypass they’re managing to do it between the ribs. So they make minimally invasive incisions between the ribs. And then there’s even endoscopic surgery, so when they take out somebody’s appendix or gall bladder and they do it with cameras and little tools and tiny incisions. They’re managing to do that with coronary artery bypass these days. And of course the recovery is far better, the pain is far better. The psychological trauma of not having your chest cut open is a whole lot better. PRESENTER: Sure, and people go on to live reasonably normal lives from then on. JOHN SCHOONBEE: Absolutely. PRESENTER: So it’s not just one medical activity that’s advanced; it’s a whole plethora of medical activities that have advanced to enable people to live longer and with, and having had a condition sorted as it were. JOHN SCHOONBEE: Absolutely, and of course the conditions we’ve been talking about are the primary ones that make up 80 or 90% of the claims that one has in a critical illness product. Cancer, heart attack, CABG, those and stroke, those are the big claims causes. And it’s not just the treatment of somebody that’s had the event or the surgery; it’s also how well we control the risk factors afterwards. And we’ve become really good at reducing blood pressure, at changing the risk factors, and that makes the survival completely, it’s a game changer in terms of the survival. PRESENTER: So bring us up to date today, what is the need today? JOHN SCHOONBEE: So the thing about insurance of course is that insurance is there to cover a loss. That’s why we have life cover, because I’m going to earn, I’m expected to earn until the day I retire, and my beneficiaries if I were to die are required to have that income. So the whole idea in terms of insurance if you take disability income or income protection cover, if you take death cover, it’s all about here’s the need and let’s try and match it. When it comes to critical illness in the 1980s we matched the need I think with a product that we had then. Today I’ve seen many examples where we haven’t quite managed to match the need, or we’ve matched far more than the need. And an example I have is I was giving a presentation to brokers in the South African market, and one of them came up to me afterwards and he said to me that he had chest pain, he had angina. So he went to a cardiologist and they found that there was a narrowing in one of his arteries, and he had angiography. They put a stent in so his symptoms were gone and he was fine, he was back at gym a week later pumping iron, doing what he did at gym. And then he was telling a mate of his that he had this procedure. And his mate said well have you claimed? And he said what do you mean? So he said but you’ve got this product right, from that company. And he said yes but they don’t cover this condition. And he said oh no they do, they do, go and have a look. And at that point it was 100% payout for that condition. So it was the same as somebody having had a heart attack or having been diagnosed with cancer. And he went to find out and he got a very big payout. And he told me that he literally bought himself this very fancy sports car. So in terms of matching the need, you have to question that right. PRESENTER: What you’re talking about here is different from a one-off event. You’re talking about as it were the severity of the different events that happen to a human being, is that so? JOHN SCHOONBEE: Yes absolutely. So you can have somebody who has a heart attack, and gets streptokinase in the ambulance, gets to hospital. They can’t even see an occlusion anymore. They recover fully and within two weeks they’re back at work. And then you could have somebody who’s less fortunate. Has a heart attack, it’s in a major artery, the streptokinase possibly doesn’t work, they go to hospital, there’s a delay, and a big chunk of the heart muscle dies. And that heart then can’t pump properly, and within a few months that person could be suffering from heart failure, might find it hard to get up and walk around, and will remain like that for the rest of their lives. And certainly their life expectancy will be reduced. So again to consider those two people equivalent, and to consider the need for those two people to be equivalent, doesn’t make sense. So absolutely, severity is clearly what I believe one should be looking at. PRESENTER: Also it’s the fact that it’s not just a one-off event. Presumably if critical illness payments used to be made on a one-off basis, if something happened, some different condition happened two or three years later, that was it, it was too late, you’d already had your payout as it were. The modern lifestyle, the modern approach with this sort of medical advance means that there’s a need for cover as it were to be continued even after single major events. JOHN SCHOONBEE: Yes, and again if you go back to the Marius Barnard timeframe, somebody got diagnosed with cancer, the assumption was, and in fact interestingly I read a definition in the early ‘90s in a medical dictionary, cancer is considered to be a terminal illness. So certainly in the 1980s when somebody got diagnosed it was considered they were going to die because of this disease. So clearly giving them a big lump sum to help them take some time off work, to settle their affairs, made a whole lot of sense. And they were unlikely to have another claim because they would die. Whereas of course today people are surviving heart attacks for decades, they’re surviving cancer and being cured of their cancer, and that means during that period that they’re still going to be alive. They’re going to have further events happen to them. And if you believe that somebody who has a heart attack today needs a payout to pay for various expenses, various changes in lifestyle etc., then surely if that same person has an event in five years’ time that need will arise again, and so it makes sense to let them have another payout. And I’m really interested in behavioural economics and how people behave and how they see the future value of things, and I think we have a real problem when we give somebody a big lump sum now in the hope that that’s going to be OK for a very long time, because people tend not to look after what they have; they tend to squander it right – which of course is the whole issue with pensions. So by kind of controlling that payout and by making it available in future I think is a huge benefit. PRESENTER: In the insurance industry we spend quite a lot of time on the definition of things. As we’ve moved on to the idea of severity, you have a view of something called the scales of severity, and three important words tiered, scaled and staged. Talk us through that. JOHN SCHOONBEE: So really what that’s all about is companies have different amounts that they pay out depending on the severity, and staged is a good word to use, because often cancer societies use staging to talk about different stages of cancer, and then of course the worse the stage is the worse the long-term outcome is going to be and then it makes sense to pay that person more. So tiered, scaled, staged are words used in different markets around the world for products that try and match the need with the payout or the severity of the condition. PRESENTER: Let’s talk about breast screening, because certainly in my recent lifetime it appears that the incidence of death from breast cancer has been reduced greatly because of the wonderful National Health Service being able to introduce breast screening for people at risk through the years as it were. Am I right to believe that it’s a good thing? JOHN SCHOONBEE: Yes and no. So screening is quite a controversial topic. Certainly where it saves lives it makes a whole lot of sense. There are examples of screening where the benefit does not outweigh the harms. So the problem with screening is that every person that gets deemed to have a positive screening test doesn’t necessarily have cancer. They potentially have a cancer, and they have to go through a whole process of determining that, which might include surgery, it includes the diagnosis etc. But that’s a whole different topic. Currently breast screening certainly in the UK is deemed to have saved lives. So it’s a useful thing to have. But that does of course mean that you’re going to have more people diagnosed, particularly with very early cancers. And an example is ductal carcinoma in situ, which is a pre-malignant variation of breast cancer. PRESENTER: A lump? JOHN SCHOONBEE: Could be a lump, you might not even be able to feel it. So there’s a lot of research going into ductal carcinoma in situ, DCIS at the moment, in terms of what to do if somebody has it. Because we’re not sure what the natural progression is of that disease, because whenever we’ve found it we’ve removed it. So currently they are now beginning to think perhaps we should leave it and watch, which is of course stressful for the person and may include many hospital visits. At some point they might do a biopsy, they might do more than one biopsy. So it’s a progressive thing. It’s not a case of you’re screened, you’re diagnosed and it’s necessarily over. PRESENTER: Where does critical illness cover come into play in that? JOHN SCHOONBEE: So that’s a really great question, because I can give you an example of a really troublesome claim that I had probably close to 10 years ago. A woman had a cancer product, so it’s a subset of critical illness, it only pays for cancer; doesn’t pay for all the other conditions. And she had DCIS – ductal carcinoma in situ – diagnosed. And she and her surgeon decided together that she was going to go for conservative treatment or, well not conservative, a conservative approach which was radical treatment, and she had a double mastectomy to reduce her risk. She then claimed under her cancer claim, and the cancer definition was invasive stage one cancer, which she didn’t have. So we couldn’t pay her, which was awful because you could get somebody with a stage one cancer that doesn’t have a mastectomy, just has local surgery. So it really opened my mind to the fact that we have to relook at critical illness, at how we pay. And so certainly a product that has DCIS as one of the, it’s of course a lower severity than a stage four breast cancer, but at least we should be paying something out. And certainly the person has a mastectomy to me it should be a no-brainer. PRESENTER: There’s a slide here which says would you rather have cancer diagnosed or have a heart attack or stroke in 1983 or 33 years later in 2016? I would think it’s a no-brainer in a sense, lord forbid that I should have any of them, but 2016 seems to me to be the place when I should have one or other of those particular conditions. JOHN SCHOONBEE: Absolutely, Tony, and the reason that I ask the question is really to get people to think about, as you say it’s a no-brainer and why is it a no-brainer? It’s because the outcome is going to be so much better. And if the outcome is so much better, should we still have the same product that was designed around the 1983 outcome? PRESENTER: Right, that’s a really important question for financial advisers to actually think about with their clients. What about the cancer diagnosis, which you’ve indicated today may be sometimes sit and wait and watch. I’m thinking particularly of prostate cancer, which affects many men in my generation and beyond, and whether to bother to do anything about it or not. And if I don’t bother to do anything about it would that trigger my critical illness claim anyway, or negate it? There’s a conundrum for you John. JOHN SCHOONBEE: So prostate cancer is a really interesting one. You asked earlier about screening. So the United States Preventative Services Task Force, which is this entity that deems whether screening is useful or not, has now officially said that we should not be screening for prostate cancer. So the PSA testing should not be done in the general population, possibly some high risk groups. So certainly for them the idea that you should screen everybody, that the lives you may save, it’s not worth all the stress and all the side effects that you cause when you do the biopsies, because of course you can have life altering side effects with a biopsy for prostate cancer. That said though of course a number of people are going to possibly have symptoms, they’re going to have another reason to be tested, and they’re going to be diagnosed with a potential prostate cancer. And particularly in older men it’s very high incidence of prostate cancer. But a lot of them don’t progress; however… PRESENTER: People die with it of other causes. JOHN SCHOONBEE: Not because of it, quite right. So clearly on the one hand it makes sense to pay a lot less to meet the need of a cancer that isn’t going to kill you, and that you may not even know about; however, most cancer products, in fact the ABI definition excludes very early prostate cancer. And one of the reasons they do that is because it’s not considered to have any impact on mortality. The downside of that though is that, as you mentioned earlier, you’re going to get some people with this very early diagnosis, very early staging. Either they have a biopsy and they have side effects because of it, they should probably get a payout. Or they get told that they do have cancer but we’re just going to watch and see. That’s not great news. So again the idea of paying them something also makes sense because they have to reassess their life, decide what they’re going to do, because ultimately a cancer diagnosis is a cancer diagnosis. PRESENTER: And it’s at the point I can imagine where you would turn to your financial adviser. You would actually look to say what’s happening here, what should I do? There’s an element of trusted advisor coming into play here in a very important time in people’s lives. I’m going to move us on to the business of progressive claims. The idea, you mentioned it earlier, that we should have one big payout and that we save some of that payout just in case the worst doesn’t happen for five, 10, 15 years down the line. Seems to me to be bonkers, people are not going to do that, they’re going to spend the money now, particularly if they’ve been diagnosed with a – so what’s the concept of progressive claims, define that for me? JOHN SCHOONBEE: So progressive claims are when you have a heart attack or a stroke or cancer, as I’ve mentioned before you may well get an additional event occurring in the future. There is also a very good chance that that additional event will be more serious than your first one. And if you have a product that pays on severity you could then get paid either the difference between that severity and the earlier lower severity, or depending on the variation of the product possibly a higher payout. So progressive claims really is about the fact that we’re going to live a lot longer, but that opens us up to exposed time when we may have another event, which more than likely will be more serious. PRESENTER: Such as secondary incident of cancer. JOHN SCHOONBEE: Absolutely, so you could have cancer, it could be treated, and then the cancer could recur. And when it recurs more than likely it will be an advanced stage so called, or it may well have spread throughout the body, in which case clearly it’s more serious than the first one and the need is there to have another payout. PRESENTER: So lightening can actually strike twice sadly in these circumstances. What about other conditions? You talked about a condition such as cancer exposing you to other conditions, how does that tally with scales of severity and incidence of recurrence? JOHN SCHOONBEE: So certainly when somebody has a primary cancer there is a chance in the future, an increased chance that they will have a second primary. So they’ll have another completely unrelated cancer. And then there’s an even higher chance that they’ll have a recurrence. So the cancer that they had will recur, and that recurrence often happens within the first five years. And then the treatment for the cancer may in fact cause other conditions. So certainly people with throat cancers, oesophageal cancers, get radiation to help treat the cancer. But that of course can damage the heart, so they’re at a higher risk for heart disease. So it really does make sense to let people claim more than once and to let people claim for progressive disease. PRESENTER: A couple of slides that I want you to take us through is this idea of a healthy 40-year-old maybe having an annual risk of dying of one in a thousand. Of those getting diagnosed with cancer, how many are likely to get a second different cancer? It looks as if it’s one in 20. JOHN SCHOONBEE: It is, which is quite astonishing. Because if you think that the chance of a 40-year-old dying is one in a thousand, and OK it’s remote but it’s not that remote, and then you ask somebody what’s the chance of getting a second primary, a second different cancer if you’ve had one? People would kind of go oh it must be less than the chance of a 40-year-old dying. But it’s one in 20, which is really high. PRESENTER: Even more important then to have the sort of payout that rolls as it were through the years. JOHN SCHOONBEE: Yes. PRESENTER: There’s a slide here on recurrence by year of cancer type. Talk me through that. JOHN SCHOONBEE: So certainly with some cancer types the chance of getting a recurrence, so you get treated, you’re considered to be in remission, and your risk of getting a recurrence of that cancer is not the same for all cancers. So some cancers are going to have a higher risk of recurrence than others. And of course insurance should try to make things fair. So somebody that has a cancer with a higher risk of recurrence, something like lymphoid cancer for example, with a recurrence in the first year following remission is over 5%. It makes sense that that person should be covered for a recurrence as opposed to somebody who also has a cancer with a very low risk of recurrence might not need that. But the product should be covering everybody. PRESENTER: That must make the actuarial decision really quite complex. JOHN SCHOONBEE: Well actuaries like to use averages, but yes. So the pricing of a product like that is really important. And of course it works on the fact that you have large numbers of people. But yeah, we’ve got really data that shows us what the recurrences are. PRESENTER: Second primary by year by cancer type, take us through that slide. JOHN SCHOONBEE: Indeed, so just like the ability or the likelihood of somebody getting a recurrence following a certain type of cancer, the likelihood of getting a second primary following a certain type of cancer is also varied by cancer. And people who have bladder cancer, ovarian cancer, tend to have a higher risk of getting second primaries, different primaries. But again our product has to cover people with all cancers. And of course those with lung cancer you’ll see the risks certainly after year two of getting another primary is quite low. Unfortunately the reason for that probably is because the mortality rate is very high. So those people tend not to survive. PRESENTER: Take us through the age bands as well then, because age is obviously significant from an actuarial point of view. JOHN SCHOONBEE: Absolutely, so when you look at incidence rates for cancer by age, it tends to be exponential. So the older you are the cancer numbers just completely sky rocket. But what’s interesting if you look at the likelihood of getting another primary once you’ve been diagnosed, or getting a recurrence of a cancer that’s been treated, the difference still increases with age but it’s hardly exponential. So in other words even younger people that get a cancer have a quite high risk of getting a second primary compared to the general people of that age group. PRESENTER: John, I believe we’ve established now that it’s not just a one-off event that we’re looking to insure these days. There’s a whole variety of events, some may be called critical, some may be called severe, the definitions come into play. The recurrence, the incidence of recurrence as people get older is going to be more and more prevalent, and so therefore a product needs to be able to cope with all those different facets of people’s lives, is that fair? JOHN SCHOONBEE: Absolutely. PRESENTER: Let’s turn now to the future then. What can you say with certainty is going to happen in the future? JOHN SCHOONBEE: I think what one can say is that our ability to diagnose things is going to improve; it’s going to get better. Our ability to treat things is going to get better. So survival will improve even beyond what it is today. And linked to those two things is the fact that the cost of a lot of that treatment, even for very early stage. So things that currently maybe wouldn’t even be covered under a critical illness product, so early stage prostate cancer for example, DCIS. I think you’re going to get more and more treatments available, and possibly expensive treatments that people are going to need funding for, because I’m not sure the NHS will be able to afford all of that. PRESENTER: So breast cancer treatment patterns by stage. JOHN SCHOONBEE: So this really highlights how early stage cancers are treated differently to late stage cancers. So you can see stage one and two cancers very much more conservative treatment compared to your late stage cancers. And linked with that, so you can see the graph on the right shows, that was a study in Scandinavia when they looked at the incidence of the stage one cancers absolutely sky rocketed. And that was after national screening got implemented. So screening certainly is going to increase your earlier stages, and decrease your late stages, which is good. But it does mean that you’re going to have more people with less of a need compared to people with more a need having late stage cancers. PRESENTER: I’ve heard about the genome revolution in healthcare certainly, and I am privileged to live in a society which is beginning to understand the basics of life, the basics of genome therapy coming into play now. It’s going to have an impact on the way that conditions are recognised. How is that going to affect this market? JOHN SCHOONBEE: So there are a couple of things there. It’s something we’re a little worried about. One of the tenets of insurance is that there’s information symmetry. So what the applicant knows and what the insurer knows is the same. Because the applicant knows stuff, the insurer doesn’t they can anti-select so they can have higher sums or they can take out cover at opportune times. And the whole idea is insurance works when it’s averaged right. Everybody is kind of in the pool. And certainly the concern with genetics is that people will do a genetic test, a personal private genetic test, suddenly know that they have a disease which has got a high mortality risk and take out cover without telling the insurer. And of course that means that if you have a lot of those people and a lot of claims, premiums have to go up and it becomes unaffordable for the average person. So you have that. However genetics at the moment is generally not single disease genes. There are very few of those. And what most of the genetic markers tell us is that you have an increased risk. What we already know if you sit and watch TV all day and don’t exercise you have an increased risk, if you smoke you have an increased risk. So people already know that they have increased risks, they have a family member, we take some of that into account. So in different markets, certainly the UK there’s a kind of a moratorium on the whole genetics things. But in terms of diagnostics, more and more they’re using it to diagnose things like cancers. So they’re looking at the genetic material of the cancer that’s flowing through the bloodstream, and they can track prognosis, they can track treatment, and I believe in the future possibly even diagnose people that way. PRESENTER: It is a double-edged sword then, because if you have had this genome evolution happen, and you’re able to diagnose it at an earlier stage, then it’s going to mean that you’re not going to get insurance. JOHN SCHOONBEE: I’m not sure about that. It’s about whether you disclose or not. PRESENTER: Right, so disclosure is the really important issue. And again that’s something for a financial adviser to be acutely aware of. It used to be that insurance companies penalised you if you had a diagnosis of high blood pressure for example, they penalised you. If you’ve got your blood pressure under control organisations like Vitality Life have a tendency now to reward you. Do you see that trend continuing? JOHN SCHOONBEE: So I’m originally from, I work in the South African market where that model exists and has existed for a number of years. And I think it’s fantastic. So I mentioned earlier the whole behavioural side of things I find really interesting. And we all know we shouldn’t smoke, we all know what’s healthy to eat. We all know that we should exercise but we don’t. So to me anything that can help people do that, improve their cardiovascular risk, make sure they go for their check-ups, make sure that the risk factors are controlled is good. It’s good for society and it’s good for the individuals, and of course it reduces their premiums. So I think it is a trend that will continue. There’s huge hype around the world about wearables. The problem of course with wearables is just giving it to somebody might not make them exercise or make them be more active; whereas a model that really engages somebody and gets somebody to consider their health constantly I think is really important. PRESENTER: Is there any real correlation between the amount of money that’s spent on what could be called healthcare and life expectancy? JOHN SCHOONBEE: So, up to a point. So up to a point, so the interesting graphs that look at life expectancy and the amount spent on an individual per year, and you can see that at about $1,000 the per person per year, the difference between a country that spends more than that and a country that spends up to $1,000 or more than $1,000 is very similar. So once you spent more than that you don’t shift things very much. And that to me really brings home the message that so much of it is behavioural. So once you have spent a lot of money on MRI machines and lots of drugs and lots of hospitals and lots of surgery and lots of ambulances, that’s it. You aren’t going to shift things very much. And that’s where it gets to the behavioural thing. And it’s about the smoking and it’s about the obesity and it’s about the diabetes. So the US spends more than anybody else but their life expectancy is not near the top. PRESENTER: So again looking at it from an insurance industry point of view, what are you hoping is going to be the trigger that makes people comply to the actual truth that smoking harms you, obesity harms you and your lifestyle can harm you? JOHN SCHOONBEE: So I don’t think there’s a silver bullet. I think it’s interesting, if you take smoking as an example. So currently in the UK more than 20% of adults smoke: one in five people. So we have adverts that tell us, so even if you take youth, in fact it’s highest in the 20 to 30-year-old age group. So that group has had no cigarette advertising in their lives because it was banned. They are told that it’s bad, they’re taught that at school. They have messages. Since they were born there were messages on cigarettes saying this product kills you. Yet one in five are still doing it. So what more can society do other than ban cigarettes? So when a company comes along with a really engaging programme to try and help people reduce their smoking, stop their smoking, they reward you if you manage to quit smoking, if you exercise, if you have a healthy lifestyle, I think it’s a fantastic addendum to what public health is trying to do, what society as a whole is trying to do. PRESENTER: Obesity? JOHN SCHOONBEE: Oh dear. So of course the UK has got quite an obesity epidemic, about 25% of the adults are now considered obese. They reckon by 2030 I think it’s going to be over a third, and so that’s a BMI over 30. So that’s significantly overweight. And linked to that is all the cardiovascular risks. What a lot of people don’t realise is also a lot of musculoskeletal risks, so carrying around an extra 20kg or 30kg all day long eventually weighs on your joints, weighs on your spine, on your hips, on your knees. So it’s probably one of the most important, it’s very strongly correlated to diabetes. So if we can get people somehow to be more active, to change their lifestyle, to eat better, we will massively reduce the overhead on society. NHS is drowning under the obesity diabetic costs. PRESENTER: How do you get people to comply? Hypertension is another potentially great killer, and yet even when people are diagnosed with hypertension a lot of them seem not to do something about it. JOHN SCHOONBEE: So compliance is a really big issue for us. One of the studies that was looked at mentions in fact the fact that three quarters of the people that are diagnosed with hypertension don’t manage to optimise their blood pressure. Something like half the people who get given anti-hypertensives, only about half of them are compliant, they actually take their medication. Which you think this is something which has a direct correlation on having a stroke and having a heart attack, but people just don’t do that. So it’s not just about jogging and about eating healthy food, it’s about simple things like making sure you take your medication, making sure you, and again I don’t want to get into a debate about it but you vaccinate your kids, that your kids get vaccinated because… PRESENTER: It works. JOHN SCHOONBEE: It works right, so you get these pockets of measles breaking out now where people are anti-vaccination. So I’m all for challenging the status quo, and for looking at data, looking at studies, but a programme that can help you and your family do the best is really useful. PRESENTER: So from an insurance industry’s point of view for advisers to be thinking about the lessons that we’ve been talking about, how would you sum those up John? JOHN SCHOONBEE: Change. I think the big thing is things have changed. Things have moved on. And they’re not stopping now, they’ll continue to move on and change. So what we need is we need a product that says most people are going to survive, they’ll have multiple events – we need to cover that. We should match the need with, the payout with the need. And certainly you get some people with severe needs and some people with far less severe needs, and you should match that. People are not going to take a lump sum of money, if I asked somebody what did you do with your bonus five years’ ago, no one knows right. It’s not sitting in some pot somewhere for when I need it one day. So if somebody gets a lump sum payout for CI and that’s it forever, they’re not going to be looking after that. So to have multiple payouts, to have progressive payouts, to match payment with need, and then in the future people are going to end up surviving even more of these things, and they’re going to require money to pay for expensive medical care. PRESENTER: And the financial adviser’s role in this should be to help people understand. JOHN SCHOONBEE: Make sure they pick the right product that kind of makes sense today. PRESENTER: On that note John Schoonbee, thank you very much indeed. JOHN SCHOONBEE: Tony, thank you. Do stay with us for a reminder of the learning outcomes. In order to consider the viewing of this video as structured learning you must complete a reflective statement to demonstrate what you have learned and its relevance to you. By the end of this session you will be able to understand and describe; The origins of Critical Illness Cover Cancer survival rates Mortality trends Heart attack incidence and long term survival rates. What has changed Bringing us up to date we’ll look at the need for cover today and How many times clients might have that need. Scales of severity Breast cancer and the effectiveness of screening Secondary cancer incidence Other conditions We shall then look at what do we expect from medical technology. Increasing costs of treatment Healthcare expenditure versus life expectancy Obesity Behavioural change risk factors and wealth And finally how you can help clients. Please now complete the reflective statement in order to validate you CPD. And don’t forget to watch out for the other Akademia learning modules