New Diagnostics and a Future for Critical Illness Insurance
Millions have benefitted from the cushion Critical Illness (CI) products provide to financial hardship linked to a cancer diagnosis, stroke or heart attack. CI has also been rewarding for providers, not just by helping them remain relevant but by also enabling them to play the social role of insurance - helping people when faced with adversity. However, CI is facing pressure due to advances in disease diagnostics and treatment.
In heart attack diagnosis, a shift occurred when the primary test for cardiac muscle damage (the enzyme CK-MB) was replaced by a much more sensitive marker (troponin) that allows even tiny amounts of cellular damage to be identified and treated. The debate over just what level of troponin was diagnostic of a heart attack was protracted and caused significant confusion within the industry.
Heart attack is just one example of diagnostic shift - advances in the methods used by clinicians to detect disease. The shift may progress dramatically in a stepwise fashion, as with troponin, or be consistently linear.
A linear diagnostic shift is underway for cancer. Liquid biopsy (CTC or ctDNA) technology will slowly replace tissue sampling by histopathology as the gold standard in cancer diagnostics. That means cancer will be detected more often and at a much earlier stage than today.
While advances in diagnostic shifts will lead to higher incidence rates as more people are diagnosed earlier and more often, therapeutic gains are also playing a role. Medical interventions are more effective. Genetic innovation is already transforming discoveries about DNA into life-saving treatments. Genetic data will soon be integral to clinical treatment as more people have cheap tests and their predictive power grows.
When sharper tools allow diagnoses of earlier and more minor disease, the definitions used in CI contracts are weakened. The product’s concept to provide financial support only when life is threatened by severe disease is reduced. This creates pricing uncertainty.
The rapid progress in diagnostic shifts and therapeutic gains make detailing the covered conditions definitions more challenging. Insurers risk being out of step with medicine as they are continually forced to repair gaps in policy wordings with subsidiary clauses. This undermines pricing, reserving and even the promise to pay.
The enduring concept of CI relies somewhat on the assumption a claimant has cheated death. Many more people are finding that modern techniques help them to recover sufficiently to challenge that assumption. That is good news. Tiered and reviewable CI products play to this scenario extremely well. Ultimately though, these medical advances can’t help but call into question the long-term viability of guaranteed CI products in their current form.
But new therapeutics and the increased role of genomics in day-to-day medicine allow insurers to tailor services much better to peoples’ needs. This could prompt a third generation of CI products that sees insurers shift from providing broad compensation for all to delivering life enabling support geared to individual health circumstances.