Cancer Mortality Patterns in Insured Lives Header Image
© Munich Re

Cancer Mortality Patterns in Insured Lives

For life insurers, a major source of mortality risk mitigation is prudent underwriting at the time of application, which should ultimately reduce future claim costs. One way to refine the underwriting process is through measuring the impact of underwriting using insurance claims experience. Hypotheses are tested with the data and then improvements are made to the underwriting process. This process is best described using a control cycle as illustrated here.

Munich Re Life US recently performed a deep dive into death claims stemming from its significant block of fully underwritten life insurance policies. Our focus was to better understand the drivers of mortality related to various causes of death.

In the following analysis we focused on the most common cause of death for our block1, cancer
(Table 1). Screening tools in the underwriting process are not very effective at identifying potential cancer mortality risk. It should be noted that the focus of our research was on cancer mortality risk and not the incidence of cancer.

Dataset

The study was based on individual life policies, reinsured with Munich Re, with face amounts $100,000 and higher, that were issued from 1995 to the end of the second quarter 2014 and with exposure from 2006 to the end of the second quarter 2014. In all, there were 43 million life-years and $21.6 trillion of death benefit exposure in the study.

Key findings

Cancer is the most common cause of death in Munich Re’s reinsured blocks of life insurance. This holds across decennial attained age groups except at the youngest (20-29) and oldest (80+) ages. A further break-down by face amounts ($100,000-$999,000, over $1 million) and duration (one to three, and four plus) also confirms this. For face amounts over $1 million and durations one to three, cancer is the most common cause of death for ages 50 to 79. For the same face amounts and durations, accidental deaths are most common for ages 20 to 49.

Early durations

The proportion of cancer claims occurring in durations one to five increases across all face amount bands $100,000-$249,000, $250,000-$499,000, $500,000-$999,000 and over $1 million (Figure 1). This may be partially driven by anti-selection at higher face amounts.

The majority of cancer claims (47%) occur in durations six to 10 while less than a fifth occur in the first five policy years. This trend is also seen for circulatory claims. Accidental and suicide claims tend to occur earlier, with 32% and 25% respectively in durations one to five. Figure 2 compares early duration to late duration mortality for accidents and cancer across face amount bands. 

Cancer subtypes and face amounts

In the Munich Re block, cancer subtypes with the highest claims2 are lung (15.7%), colon (8.4%), breast (7.5%), eye/brain/central nervous system (7.1%), pancreas (7.8%), leukemia (6.9%) and genital organs (7.0%). Of these, eye/brain/central nervous system cancer is the one subtype that does not appear in the top seven for the U.S. general population.

Cancer mortality for face amounts over $1 million is better than for face amounts $100,000-$999,000, likely reflecting the positive impact of underwriting and socio-economic factors. However, there are exceptions to this finding, notably for pancreatic and eye/brain/central nervous system (CNS) cancers (Figure 3).

Among male non-tobacco users, for face amounts $100,000-$999,000, lung and colon cancer have the highest subtype mortality in several issue age/duration cells.

The occurrence of lung cancer claims points to possible smoking history misrepresentation or a consequence of smoker definitions prevalent in the industry. For the same group, pancreatic and eye/brain/CNS cancers show some evidence of elevated mortality for face amounts over $1 million (Table 2). 

Non-tobacco females for issue ages 60-79 at face amount $100,000 and higher also show high lung cancer mortality at many durations, raising questions about past smoking/tobacco use (Table 3).

Excess mortality risk for smokers

Smoking or tobacco use increases cancer risk, particularly for lung cancer (Figure 4).

Implications for underwriters and the way forward

Smoking status

Our research demonstrates that smoking or tobacco use worsens mortality risk for all cancer subtypes. Verifying tobacco use is critical for accurate risk classification. Introduction of an accurate smoker prediction tool will be vital to combating anti-selection in the absence of a fluid-based nicotine screen.

Smoker definitions in a multi-class preferred, non-tobacco structure should be assessed for appropriateness. Adverse mortality impact of smoking may linger years after quitting smoking (Table 2, 3).

Value of other underwriting tools

In an accelerated underwriting environment, without the benefit of fluid testing like urine nicotine screen or blood, a well-constructed tele-app with drilldown questions to tease out smoking history and personal cancer history is a valuable underwriting tool.

Underwriters need to effectively use prescription drug databases, which are a valuable source of medication history, dosage, and physician specialty, to classify risk. Electronic health record (EHR) usage — now in a nascent stage — will become increasingly important in the absence of attending physician statements (APS).

Foreign nationals

Foreign nationals are becoming a bigger piece of a few insurers’ books of business. Early review of cause of death information has revealed cancer to be a sizable proportion of death claims in certain markets. Underwriters need to develop expertise in reviewing these cases based on information available from home countries, where medical records may not be as extensive as in the U.S.

Conclusions

With the trend towards automation, post-issue underwriting will be a cost-effective way for insurers to study the effectiveness of underwriting in the new paradigm. Pilot studies could be performed on samples to compare the effectiveness of new and traditional underwriting risk evaluation tools in screening for cancer risk. Business analytics should continuously monitor mortality trends in the automated underwriting space for differences with traditional underwriting.

Insurers should closely track their cancer claims experience by subtype, face amount band, and duration, to protect against the possibility of getting selected against, especially at the higher face amounts.

Cancer is an age-related disease and the aging population all but guarantees that we will see more applications from individuals who are adult cancer survivors and those who are at increasing risk for cancer because of aging itself. The use of markers such as PSA and CEA (carcinoembryonic antigen) in tandem with other underwriting tools will become important in the mature age population.

With regard to adult cancers, advances in immuno-therapy continue to show progress — for example, in advanced melanoma, non-small cell lung cancers, etc. — that will likely expand to other tumor types. These advances bring optimism that people may live longer (quality of life preserved) and that cancer will be treated as a chronic disease rather than a terminal one.

Contact the Author:
Murali Niverthi
Murali Niverthi
Associate Actuary
Biometric Research and Accelerated Underwriting Services

Rechtlicher Hinweis

Die gewünschte Information bezieht sich auf Finanzinstrumente, Wertpapiere oder diesbezügliche Angebote, die nicht in oder in die Vereinigten Staaten, Kanada, Australien oder Japan und von US-Bürgern (gemäß der Definition in der Regulation S des US Securities Act 1933) angeboten werden, noch in und von diesen Ländern bzw. US-Bürgern akzeptiert werden dürfen. Folglich wurden diese Finanzinstrumente oder Wertpapiere sowie diesbezügliche Angebote (i) weder nach dem Amerikanischen Wertpapiergesetz noch nach einem Gesetz eines US-Bundesstaates registriert; (ii) diese Finanzinstrumente oder Wertpapiere dürfen nicht direkt oder indirekt in oder in die Vereinigten Staaten angeboten, verkauft, wiederverkauft, verpfändet oder geliefert werden, es sei denn, es liegt eine Befreiung von den Registrierungsanforderungen des Amerikanischen Wertpapiergesetzes vor; und (iii) solche Finanzinstrumente oder Wertpapiere können dem US-Steuerrecht unterliegen. Keine der hierin enthaltenen Unterlagen begründet ein Verkaufsangebot oder eine Aufforderung eines Angebots zum Kauf von Finanzinstrumenten oder Wertpapieren in den Vereinigten Staaten, Kanada, Australien oder Japan bzw. an US-Bürger oder in eine andere Rechtsordnung, in der ein solches Angebot oder dessen Einholung rechtswidrig ist. Personen, die ein Angebot annehmen möchten, dürfen weder die Post der Vereinigten Staaten, Kanadas, Australiens oder Japans oder irgendein Mittel oder Instrument (wie z.B. Faxübertragung, Telex oder Telefon) des Zwischenstaatlichen- oder Außenhandels, noch irgendwelche Einrichtungen einer inländischen Wertpapierbörse der Vereinigten Staaten, Kanadas, Australiens oder Japans für irgendeinen Zweck benutzen, der direkt oder indirekt mit der Annahme eines Angebots zusammenhängt. Annahmen oder andere sich auf ein Angebot beziehende Unterlagen dürfen nicht postalisch in den Vereinigten Staaten, Kanada, Australien oder Japan frankiert oder abgestempelt werden. Alle Personen, die ein Angebot annehmen möchten, müssen eine Adresse außerhalb der USA, Kanada, Japan und Australien für den Erhalt jeglicher Finanzinstrumente oder Wertpapiere angeben. Darüber hinaus wird von jedem Inhaber der relevanten Finanzinstrumente oder Wertpapieren angenommen, dem Emittenten dargelegt zu haben, dass (i) er kein US-Bürger ist und (ii) dass er diese Finanzinstrumente oder Wertpapiere nicht auf Rechnung eines US-Bürgers erwirbt.

Weder die in diesen Seiten enthaltenen Informationen, noch irgendeine Meinungsäußerung begründen ein Angebot oder eine Aufforderung, Finanzinstrumente oder Wertpapiere in irgendeiner Rechtsordnung zu erwerben. Jegliches Angebot oder jegliche Aufforderung wird nur in Unterlagen gemacht, die dafür rechtzeitig veröffentlicht werden; und jegliches Angebot und jegliche Aufforderung ist beschränkt auf die in diesen Unterlagen bereitgestellten Informationen.

Please scroll and read to the very bottom, before you can confirm.