Kathryn (00:03):
Hi everyone. We have Tim Smith with us today from Hannover Re. Hi Tim.

Tim (00:07):
Hi Kathryn.

Kathryn (00:09):
Today, we’re going to be talking about the world of reinsurance and protection insurance and some key insights into why some underwriting decisions work in ways that the rest of us not always understand. This is the Practical Protection Podcast. So Tim, it’s a lovely Friday afternoon. When we’re recording, what have you got planned for the weekend? Something nice?

Tim (00:31):
Yeah, it’s looking like it’s going to be a good one. So maybe a barbecue or two. My daughter’s also doing a production of the Matilda musical tomorrow, so we’re going to go see that. So that’s so exciting.

Kathryn (00:42):
Oh, that sounds amazing. Oh, absolutely brilliant. I think barbecue. It is definitely it’s that thing, isn’t it, as soon as you can – barbecue, barbecue weather. I remember when I was pregnant with one of our children. I really wanted a barbecue, so we’ve got this wonderful picture of Alan outside when it was really pouring down with rain with an umbrella over a barbecue <laugh> bless him. And that always makes me think of barbecues whenever I think, right, Alan, umbrella. There we go. Okay then, so let’s get into things. So, Tim, I think it would be really good to start off with a bit of a background about you and how you got to where you are today as a Head of Protection at a Hannover Re.

Tim (01:18):
Yeah, sure. So I’m an actuary by profession. But that probably isn’t something that I’d sort of wanted to do since I was five. I sort of fell into it really. So I did a physics degree and, and coming out of that, it just seemed to kind of match my skillset, quite mathy. And so went for a few graduate jobs and ended up in one that was in the pensions sector. So doing pensions consulting, advising pension schemes, and companies on how to fund them properly. And then one of the really big risks that they face is people living longer than they expect, because then they’ll need to pay their pensions for longer. And that’s a risk that you can transfer to the insurance sector. So, from there I moved into insurance to a, to a reinsurer, Munich Re to work on what we called longevity risk. So taking, taking that risk from pension schemes basically and at Munich Re, I slowly moved across from the pension space into the protection one and then around four years ago, moved into my current role at Hannover Re another Germany reinsurer where yes, I’m Head of Protection. So basically responsible for business development going out and chatting to insurers and convincing them to reinsure their business with us and sort of pricing that business.

Kathryn (02:31):
Brilliant. It, it sounds like you’ve definitely gone through a few different areas and roots to sort of get to where you are. And I think it’s pretty much the same for all of us, isn’t it? We all said, well, it wasn’t what I was expecting to end up in the insurance world, but just kind of fell into it. I, I mean, I certainly didn’t expect that at all. And again, just ended up coming into after Uni and I’ve just stayed. It’s just one of those things, I think isn’t it. So, in terms of things like reinsurers, because I know as an adviser, obviously I’ve been working in the insurance world since 2010 and it’s only really, probably in the last four years or so, that I’ve even started to really, I mean, I was aware of reinsurers, but like really be aware of reinsurers. And I think like as a, as a frontline adviser, you kind of generally, you see the insurers and you don’t really think about the reinsurers that are behind them. So how do reinsurers kind of fit into the insurance sector?

Tim (03:24):
Yeah, so I mean, fundamentally what we are is an insurer for the insurance companies. So we, they pay us a premium and then we will pay them if there’re claims. And there’s various ways that that can be done. So the simplest is literally on a policy by policy basis. The insurer will pay us a premium in respect of each policy. And then if there’s a claim on that policy, then we’ll pay that claim or a proportion of it. But there’s other ways of doing that as well, where you look at things in aggregate and say, okay, if, if claims are 5% higher than we are expecting, then we’ll sort of pay an amount that, that compensates for  the insurer for that extra claim that they need to pay that is above what they were expecting. So there’s various ways of structuring it, but we are basically an, an insurer for the insurance company.

Tim (04:10):
And, and I guess that means that fundamentally we are taking the risk of a lot of those policies or most of the risk most, most policies are actually transferred to the reinsurance market. And that means that we are also very involved in setting a lot of the rules around what we will take and won’t take in terms of risks. So you know, a lot of those underwriting rules are set either by or in consultation with the reinsurer. And, and also the rules around, you know, those that we believe we can’t cover for insurance are often set by the reinsurer. So, so yeah, sometimes underwriting rules are literally our own underwriting rules and sometimes it’s the insurers, but we’d always need to sort of sign off on them if you like and any changes that are happening, because that obviously impacts the sorts of risks that we see.

Kathryn (04:59):
Yeah. So the reinsurers kind of like you set the, and it’s almost like the core manual in some ways. And then the insurers come in and have a look at that and go, oh, we like that. And we like, that way they’re set up or they may turn on and say, well, we like that, but we might actually want to tweak it a little bit this way. They then ask you, to try and customise it a little bit for themselves. Is that right?

Tim (05:16):
Yeah, exactly. And they might, you know, perfectly reasonable for an insurer to want to take a slightly different approach on certain things, but then fundamentally that might have pricing implications for us. So, if they’re, if they’re wanting to significantly reduce the loadings that they’re giving to people with higher BMIs, for example, then you know, there might be good reasons to do that, but it might mean that actually the sort of base premium that we’d want to charge them might be a bit more because we are going to ultimately get less premium in for that risk.

Kathryn (05:45):
Yeah. Yeah, of course. And I think as well though, I think what can be quite interesting is that, you know, with an insurer, it’s not necessarily a case. If you look at one insurer, they’re not necessarily potentially fully reinsured by say Hannover Re, it could be that like their life insurance would maybe be reinsured by you, but then maybe the income protection would be reinsured by someone else. And I think sometimes it can even be a case of sometimes there can be like maybe two reinsurers that can be used maybe for like one kind of product type. So sometimes it be a case of, well, I know sometimes when we do underwriting and that with insurers it because they’ll say to us, right, well, we tried with one we show and now we’ve tried with the other and that in itself, as well as an adviser, kind of like this sounds so complex, you know, just, it looks like this, this, you can imagine just networks and patterns everywhere between all it must be incredibly logistical making it all work.

Tim (06:31):
Yeah, that’s definitely true. And it is quite complicated and you do particularly for very large, sum assured, like large policies they do get sort of passed around the market to see amongst different reinsurers where they might get the best rates or a sort of favourable approach, I guess, to, to that particular risk if, if they’ve got a particular underwriting outcome. So yeah, and then even just on standard policies, they can be split between two reinsurers. Yeah. That’s quite common actually.

Kathryn (07:01):
No, it’s, it’s fascinating. I think it’s one of those things I kind of feel like I’d love to be able to deep dive into it and see, you know, really see how it all works. But then I think obviously just completely boggle my mind if I actually got into it. But I think something that, you know, a lot of people might wonder as well is in a sense, why do we need reinsurers in the industry? You know, we’ve got insurers and it, I mean, obviously I know our entire, the reinsurers role is all about transfer of risk, so, so what is it that’s, you know, why are you guys there?

Tim (07:28):
Yeah, sure. So yeah, I, I mean, I totally sort of understand that, that I actually, my when I was working for Munich Re I used to get a discount on car insurance because I think we had some we owned part of a particular car insurer or something. But you had to ring up to get that discount. And my wife was ringing up say, you know, talking to this adviser and he clearly doesn’t get that sort of call very often. While he was trying to find in his system, how he applied that discount, they were talking about what, what it meant, what were Munich Re, and she described, you know, what Munich Re did that they were an insurer of our insurers. And he just sort of paused for a minute and said, oh, it’s funny what you can find to do these days, isn’t it?

Tim (08:08):
And I, I think that is a sort of natural reaction. It feels like an over complication, you know, you’ve got the insurer there to deal with the risk. Why do you need somebody to insure them? And, and I think particularly, probably since 2008 and everything everybody’s, you know, wary of over complication in the financial markets and in the financial sector, rightly clearly. So it, yeah, it’s an important question. I think, I think fundamentally it comes down to how you spread the risk. So if you imagine that you wanted to become a life insurer and so you sell me a policy for say a hundred thousand pounds, okay. So that’s great. I’ll pay you some premiums over time. And then if I die, then you would need to pay my family a hundred thousand pounds. Now in that situation, that’s pretty risky.

Tim (08:55):
Most times you will just receive those premiums and that will be fine, but, but you might need to pay a hundred thousand pounds. So in order to, to be able to do that, you’ll need to have a hundred thousand pounds sitting there in the bank so that if you do need to pay that you, you can. So I guess one way around that is to ensure lots of people. And so then say you’ve got a thousand people that you’re covering, then you can be pretty sure that you’re not going to get a thousand claims in, that would be particularly unlucky. But so you, you’ve probably got an expect to say, you might expect to get 10 claims in out of that. So, you probably need to hold a hundred thousand pounds, 10 times, so hold a million pounds to pay those expected claims.

Tim (09:42):
And then you probably need to pay a bit more. You hold a bit more as well in case claims happen to be a bit, you know, more than expected, but an extreme scenario might be that you get 20 claims there. So actually you hold, you expect to pay out a million, you hold another million in the bank, but compared to the thousand policies you’ve got, that’s a lot more efficient. You’ve got less money in the bank per policy. And then reinsurance really works because we’re sort of aggregating that over all sorts of different risks. So with that scenario, I just described to you, yes, that’s more efficient than just having one policy, but there are still risks that occur that might really badly affect you. So for example, a pandemic. If, if there’s a pandemic, then that affects all the lives that you’re reinsuring and suddenly your claims costs go through the roof.

Tim (10:29):
So what’s better is if you can cover lots of different types of risks. So maybe you are in, you are covering these life insurance policies, and then you’re also covering the risk that there’s an earthquake in Tokyo and the risk that the healthcare costs go higher in Australia and the risks that machinery and various factories in Brazil breaks down or something like that. And then the chances that they all have a bad year in the same year are much, much lower. And so the amount of money that you have to sort of hold in reserve in case claims are worse than you expect is, is a lot lower per policy. So, it’s just a sort of much more efficient and, and that money that you have to hold back in case claims are worse than expected is money that you’re getting from investors.

Tim (11:13):
So that’s, that’s the way insurers work. They have the shareholders and those shareholders put this money up and that money is at risk. And, and if claims are highly than expected, then they’ll lose that money. And in order to put that money at risk, they expect a return on that. So, so the more money that you have to hold there in case claims are worse than expected the more of a return that you are needing to pay to these investors. And so the more you can aggregate up these risks the more efficient it is, the less, the less money per, per policy you are having to hold. And therefore ultimately the cheaper it is. And that’s, that’s basically what we do. So, we as Hannover Re we are active in all sorts of different markets in all sorts of different countries. And we aggregate up all of those risks so that we get that real benefit from being very, very diversified.

Kathryn (12:02):
Yeah, I was going to say, I mean, it’s all about just, I suppose, as with anything, isn’t, it as individuals, we are doing everything that we can to offset financial risk to ourselves. And then obviously we’re putting that into another company who’s then putting it into another company. And it’s, it’s obviously, as he says, it’s obviously incredibly complex as well, because, you know, if you look at the, sort of the base kind of like the figures that you’re saying, they, you know, someone’s insured themselves, you know, for life insurance. I mean, life insurance in itself for a lot of people is incredibly cheap. You know, it’s, it’s, you know, potentially, you know, five pound a month or something you’re really, really cheap. And actually if someone’s ensuring themself like a hundred thousand pounds, that’s a lot, you know, if someone does pass away that they’ve not really paid much into that policy to then offset potentially that.

Kathryn (12:41):
So you can understand why there needs to be so much of an interconnection with so many different insurances, just to make sure that, that bank of money there as a, as a potential, because of the fact that with each policy, you know, we’ve all made a promise to that person that we will help them. And you need to make sure that those promises can be fulfilled. When we talk about protection insurance we often mean obviously personal business and group protection. So I obviously work in that space, but not everybody, advisers knows exactly what’s going on with those. So, and obviously I certainly don’t know everything and the be all and end all, especially from a reinsurer’s point of view. But, how do all things differ in terms of underwriting?

Tim (13:21):
Yeah, sure. So you’ve got group protection. So that’s the sort of life insurance or, or other insurances that you get through your employer. And for those, the underwriting is very limited often sort of no real underwriting. So you, you sign up with your employer and you automatically get enrolled typically into a group scheme. And then you’ve got this life insurance sitting in the background and, and you or the employer pays the premiums for that. And you haven’t had to ask any questions about your health or anything like that. And that differs quite significantly I guess, to individual protection where you need to be fully underwritten. So you need to, in, in most cases answer lots of questions about your health. I say lots, maybe sort of 15 questions, something of that order, but then it might be that if you answer yes to some of those questions, then it triggers sort of additional information that’s needed. And so it’s a lot more of an in-depth look at your health and, and situation generally actually, do you do sort of any dangerous sports or things like that to, to assess you as an individual so that the insurance company can decide, okay, how much do we need to charge which is sort of related to how risky they view you are as a risk.

Kathryn (14:44):
So that’s really interesting. And I know sort of thinking a bit as well in the group space. So with group insurance, obviously it can be a really wonderful way improve access to insurance with things like the risk pooling that we’ve been talking about. Obviously, people are not usually individually assessed and are covered by the insurer, but it can be quite surprising how much this can alter what people can access especially things like, I know one of the things that you have interest in, as well as things like genetic testing. So what’s kind of the logic behind it?

Tim (15:15):
Yeah. So, I mean, I think the beauty of group insurance really is that everybody’s enrolled into it. So you join an employer and then you generally, you get automatically enrolled and you can probably opt out if you want to, but most people don’t through either valuing the benefit or, or just inertia. So as an insurer, what that means is that you can pretty much guarantee that you’ve got a real mix of different risks, and there are some people will have prior health conditions that might mean that they’re more likely to claim. Some people might be extremely healthy and they’re less likely to claim. And, and you can therefore price those policies based on what you think the average of all of that is. And you, because you’ve, you’ve got this idea that everybody’s going to, to come into this pool, you can be quite confident in what that average is.

Tim (16:05):
So you’re not too worried about, okay, well, the next person joining might be less healthy. They might pose more of a risk, but then the person after that might be more healthy is all going to balance. These cross subsidies are going to balance. And so that premium you’re charging actually is kind of a bit too much for some of the people that are in it. It would sort of on an individual basis, you’re kind of overcharging and for some people it’s sort of relatively cheap. So that’s sort of the beauty of group, because you can guarantee that you’ll have those cross subsidies. The problem that you have is when you have individual insurance, then if you were to charge the same price to everybody, then it would be you know, say that average price. Some people would come and, and look at that and say, oh, well, that looks, you know, I know that I’m very healthy and, you know, do this, that and the other.

Tim (16:55):
And I don’t have any prior conditions. So that looks quite expensive to me. And some people would have significant health problems and they’d come and they’d look at it and they’d think, oh yeah, that looks a really good deal. And you’d, you know, at the very extreme, you’d have people say with very, very serious illnesses who have a very, very shortened life expectancy thinking, well, this is great. You know, I can pay this premium for the next year or so. And then my family are going to get this million pound payout or whatever. And so, you get a real incentive for the people that are less healthy to buy the product and no real incentive for the people that are more healthy. And so that cross subsidy that you were relying on in the group space completely breaks down. So, you need to ensure that you are sort of charging the, the right price, if that’s the correct word to each individual, to make sure it reflects the risk that they pose.

Tim (17:48):
Now, that’s not say that we, we do charge the right price to every individual. There’s still a huge amount of sort of cross subsidy and pooling that goes on because it would be impossible to really, you know, assess in huge detail every single individual, but we have these underwriting rules to, to sort of categorise different risks and ensure that broadly we’re comfortable that we’re charging about the right price. And I think you can, you know, you can have different attitudes to that in terms of what what’s fair. Some people feel like it’s more fair to pay the right price based on the risk that you pose. And, you know, with that view, you can sort of have a lot of sympathy with it, where people are you know, doing deep sea diving or something like that every weekend. And then maybe, you know, that’s a choice that they’ve made fine.

Tim (18:33):
You know, they’re happy with that risk and, and good luck to them, but it does pose more of a risk therefore to the insurer. And so people think, okay, reasonable that they, they have to pay more. But there’s a lot of things that we underwrite for where, you know, it’s not the individual’s fault that they’ve got a particular medical condition, but the fact is they do pose a higher risk to the insurer. And so we have to charge more for them. But you know, I guess that’s where some people might be, well, the group, the group situation is a bit fairer because everybody gets to pay the, you know, pay the same premium for, for the same cover.

Kathryn (19:09):
So group can be an absolutely wonderful, wonderful option. And obviously in terms of like obviously I work in, in both the personal and the group space, you know, you might get somebody who maybe can’t get insurance in the personal space, but actually can be insured through the group space. And I think, you know, a big thing with that as well is that sometimes, you know, for the individual who’s applying, you know, it can then seem quite unfair, you know, not, not in saying it’s unfair because of the insurers, but just generally life feeling unfair in a sense, because, you know, if they just so happen to work with an employer who happened to have that mindset of offering that kind of insurance, then there’d be in a really good position, but, you know, not everybody unfortunately has that kind of an access.

Kathryn (19:48):
So see, I personally, as most people be aware from the podcasts I do work with people who are considered generally to be high risk by insurers you know, especially with health conditions. And I do go into occupations, past times, but the majority of people that I help do have a, something that the insurers will consider a higher risk. And I think, you know, obviously we’re talking about, you know, potentially the personal space to group space and fair access to insurance. And I think sometimes what people find can find a bit hard is obviously two people might have the same genetic history. I say one’s fortunate enough to work for an employer who offers group protection, the other one doesn’t, and so obviously they’ve set up a personal policy, which can seem quite pricey. And I think, you know, that obviously it, it does come down to circumstance, but, you know, I think sometimes people can find it hard because you can feel like it’s a really tough balance between being fair to people, predicting the risk based upon their circumstances. And then also fitting in with the insurer stipulations, because no matter what those two people are this in a sense, the same risk for the insurers, but one of them just so happens to have gone down a career path and, and happen to be with an employer. So, in a sense, the insurer, no matter which way the insurer is still taking on in some ways the same risk. So it’s tough. I, I think it’s really tough for everybody involved in that. I can’t imagine it’s nice for anyone.

Tim (21:02):
No, no, I think that is fair. Yeah. So you know, I guess it does, it raises questions about the consistency, doesn’t it of underwriting decisions. And, and certainly for the individual that’s in that situation I can imagine that does seem quite unfair. And it does, it basically comes back to this fact that with the group insurance, you can rely on the cross subsidy. So yes, this person might not be able to get individual insurance because they do pose a significant risk. That risk is going to be offset by all the people that don’t have those risk factors in the group market. Whereas in the individual market, you just, you don’t have that same cross subsidy to help to, you know, bluntly to help pay for it. So, so yeah, it is tough. I mean, I think there’s various areas where the insurance industry has sort of worked to question this and one, you mentioned genetics and one of them is around genetics and, and through the ABI the, the insurance industry has decided that sort of risk pooling if you like with genetics is, is something that we should do, is reasonable.

Tim (22:07):
So, so I suppose what I’m saying is we don’t differentiate prices of insurance based on if somebody’s had a genetic test or not, what the outcome of that genetic test is, what that genetic test showed. They might be more or less susceptible to. So, I know you did a, a podcast a few weeks back on this and yeah, and there’s obviously one exception to that, which is Huntington’s. And, and there’s a lot of discussion in the industry about what this means and is this, is this sustainable going forwards with more and more people doing these genetic tests, but that’s very much a, yeah, that’s an example of an area where kind of the insurance industry has decided, well, nobody can do anything about their genetics and we should have an approach where we’re not, we’re not charging people differently based on this sort of the outcome of these tests, which, which in most cases are, you know, somewhat predictive, but it, they’re not one to one, it’s not saying you will get this in the future. It’s saying you’ll have a slightly higher risk of this, that or the other.

Kathryn (23:04):
Yeah, absolutely. It’s, it’s a really tricky one as well. I say, cause yeah, we did do a podcast not long ago about Huntington’s and it’s really hard as well going between the predictive and the diagnostic tests and trying to, you know, as an adviser as well, trying to make sure that we get the right understanding of that from somebody going forward. But as you say, you know, it’s one of those things that generally for people who did miss that podcast previously, you know, for genetic testing insurers, don’t ask about that, unless it’s Huntington’s disease a predictive test for that. And it has to be over a certain, sum assured for life insurance and critical illness cover. And that’s quite, that’s very clearly stated at the very beginning of any insurance application, well, most insurance applications. So, you know, people, who’ve like a big question that we get is obviously from people, the things like BRCA gene.

Kathryn (23:47):
So that’s the, the gene potential risk for people obviously enhanced risk of breast cancer. And whether or not that needs to be included and again, a predictive test, no diagnostic test is, is obviously different. So as advisers, obviously we often think in terms of, you know, we look at the applications in many ways and obviously the rules we’re always told are, you know, basically if the insurer asks the question, we must answer it. If the question’s not in there or the there’s certain scenarios aren’t in there at being asked. And in a sense we don’t need to, we don’t volunteer information in the sense that isn’t in the question set. So we know that really the things that we need to be looking for when we’re speaking to people, health things, lifestyle. So health includes their own health, immediate family members’ health as well, their lifestyle. So that can be things like alcohol you know, other things like BMI, things like that, occupations and hobbies and also travel. They are the key areas that insurers are looking for risks. Are there any other areas that insurers are kind of watching statistically to see if there are kind of like new emerging areas for higher risks of claims or anything like that?

Tim (24:55):
Yeah, so I think it’s, it’s fair to say that across the insurance industry, there’s, it is a very competitive industry both for insurers and for reinsurers actually, and there’s always the sort of race to try and see where you might be able to cut prices, see where you might be able to take them on your own to approach. And I guess where I say on nuance, I mean, probably differentiate between people where you weren’t previously, so differentiate what sort of risk they’re posing to you where that hasn’t been done in the past and in a very competitive environment, what that does is allows then an insurer to write a load of policies, maybe slightly more cheaply for that subset that they now view as lower risk and sort of help them sort of gain market share.

Tim (25:43):
So there’s always that competitive pressure but it can lead to quite sort of controversial if you like topics being considered. So, so an obvious one I think is socioeconomic group. So when you delve into the statistics and, you know, we do a lot of analysis on the claims that we have coming in across the industry and, and what’s really driving those claims. And if you look at the distribution of different claims by people’s socioeconomic group, then there’s a very clear link there you do get lower socioeconomic groups will claim more. And the higher socioeconomic groups will claim less. This is specifically for life insurance, I’m talking. So you know, so I guess there’s an argument to say, okay, well, if we’re following this sort of risk based approach, then it’s logical to charge people that are going to claim more a higher premium, but effectively what you’re saying there is, okay, well, we’ll charge poorer people more richer people less, which is obviously you know, fairly controversial.

Kathryn (26:44):
I was going to say, that’s not going to be a popular opinion, is it, at all?

Tim (26:47):
Exactly. Yeah. And, but it’s something that’s done on the flip side in the pensions world. So if you have a pot of money and you come to retire and you go to a pensions provider and say, I’ve got this pot of money, and I want to, you know, buy a pension, they buy income that will pay out for the rest of my life. They absolutely do take socioeconomic group into account. So they will, they will look at your post code and they will base the amount they pay you on where you live and what that says about your socioeconomic group. But it’s a lot less controversial because there, because of that life expectancy and the fact that you are paying until somebody dies in that situation, and then you stop paying, it’s cheaper to provide a pension for somebody in a lower socioeconomic group than it is for somebody in a higher socioeconomic group.

Kathryn (27:30):
Right. I had no idea about that actually. Obviously I don’t do pensions, so I, no idea about that’s fascinating. I mean, I’m now really wondering about like what my area would be considered. Like actually it’s a seaside resort.

Tim (27:44):
Yeah. You could do quite well out of moving maybe just before you retire.

Tim (27:48):
Off down a hill area and maybe get a much better pension, but so is an example of where some of these risk factors, you know, you can absolutely prove with, with the data that we have, that they are present, but whether or not you should use them is a lot more of a, a sort of nuance discussion, I suppose, across the industry and, and things like this because of that, that competitive pressure that I was talking about is very important that we take, or that we discuss these at sort of industrywide level. Because as soon as somebody in the industry starts using socioeconomic group to differentiate price, then they’re suddenly able to offer people in higher socioeconomic groups, cheaper life insurance price, then the rest of the market who aren’t differentiating. And so, they then start to attract all of those lives. And so they see their claim statistics getting much better. Yeah. And then other insurers who aren’t following suit, then see their claim statistics getting a lot worse. And so, they’re sort of almost forced into a position where as soon as somebody does it, everybody else kind of has to do it or suddenly the business becomes, you know, loss making. So, it’s an example of an area bit like with genetics, where actually it’s important to have industry wide discussion and, and come up with some agreement.

Kathryn (29:06):
No, absolutely. And I’m assuming I’m just obviously sort of very brief kind of sort like analysis in my head about this. So I’m assuming then gives, someone’s like a, a higher, obviously if they’ve got higher earnings and obviously they’ve got more access to money, then what I’m guessing from that is that probably a good part of the, the sort, the reduction of the risk is the fact that they’d have access to things like private medical insurance. They might be, you know, sort of getting treatment a lot quicker. So things are more preventative rather than reactive. And it’s a really tough one because from an insurance point of view, and from a statistics point of view, you can see the logic behind it. But then there is that have to say, there’s that human element. Isn’t there though. I’ve sort of like, does that feel right? And I, obviously I won’t do too controversial to say my thoughts specifically, but you know, it, it does really, it is very, very questionable.

Kathryn (29:58):
Isn’t it the idea of doing that, but I appreciate exactly what you’re saying though, that the market in itself needs to be consistent about what they’re doing. Obviously each insurer and reinsurer has their own thing, their own quirks as to what they do and don’t do, but in terms of something like that, that could be a, a huge change of dynamic within the industry as a whole. And it’s absolutely fascinating. And I really intrigued now is that I’m going to have to start looking into like my pension. I have to, I’m a good way off, hopefully for my pensions. But yeah, it’s, I’m intrigued now about whether or not I, I should be moving or not. I don’t think I would. I’m in my forever home.

Tim (30:34):
Definitely an interesting one because it is, you know, from a personal point of view, it doesn’t sort of sit right with me that you have charged poor people more and rich people, less for something. And it, you know, the whole concept of insurance is about pooling everyone together and then, you know, sharing everybody’s risk together. But, but yeah, it is one of those things that in, in a competitive industry, you can be forced into doing these sorts of things because even just because you are worried, everyone else is, you know, it’s the, as soon as somebody moves and everyone else has to, and then you don’t want to be the last to move. So then somebody moves it’s yeah, it’s a challenge. Definitely.

Kathryn (31:12):
Absolutely. Well I would to say soon as you’ve been up with yours, I have to say I’m, I’m firmly in the camp of hoping that it doesn’t go down that kind of a route fingers crossed. Because I kind of feel like access to insurance is tough enough as it is. Let’s not make it any harder. But as we’re getting towards the end of the podcast is there anything else that you would like to share with us, Tim, anything that’s like going on, anything that you are feeling excited about?

Tim (31:36):
Yeah. So there’s a few things on the horizon. I think we talked about genetics and, and that’s a really interesting space and we talked about it, I suppose in the, almost like a bit of a negative spin on it in that, you know, it, it poses additional risks and we’re trying to sort of pull those risks across the, or across the industry. But with more and more people having genetic tests than it does pose extra risk, because basically it means that individuals have much more insight into what they might get than, than the insurer does. So it makes it very difficult to price that business. But there are definitely positives on the genetics side as well. So, there’s various new treatments coming online now particularly in, in the cancer area that that you can sort of, you can do a genetic test on the, on the cancer cells.

Tim (32:27):
So not on somebody’s normal cells, but on the cancer cells specifically and use that to design treatment. That’s going to be much more effective for them. And, and there’s a lot of development work going on in healthcare at the moment on this. And, and the way that healthcare works in this country I guess it takes some time for that to come through. So obviously it takes time to get these treatments to get approved. But then even once they’re approved, it takes some time for the NHS to offer them because they have to go through quite a complicated process with NICE, that’s the body that decides what the NHS will and won’t fund, and they have to sort of assess it and decide, is there benefit here is they do a sort of cost benefit analysis.

Tim (33:12):
Is it worth providing this treatment? And what that means is that there’s sort of actually quite a growing gap at the moment between what the NHS provides and what’s available in terms of some of these new treatments. And so we are looking at potential products sort of maybe in the CI wellness space, something like that, that might help to maybe fund some of these genetic tests, maybe fund some of these treatments if they’re not available on the NHS. And they can be actually relatively cheap add-ons to a life insurance policy or to a critical illness policy that, you know, for some individuals could have a really significant benefit if they’re able to access treatment. And we’re also working, you know, with various healthcare providers looking at, could we even go one step further and, and give policy holders access to maybe experimental treatments that are coming online and, and then therefore take part in, in clinical trials and things like that.

Tim (34:08):
So that’s very much in its infancy, those discussions, but it’s sort of, I guess it’s part of a wider movement that I feel is happening where insurers are maybe a bit more interested in the health of their policy holders. So it very much used to be, you know, okay, you’ve bought your policy, we won’t talk to you again. And then if, if you need to claim, then we’ll pay the claim and, and there’d be no interaction. And I think there’s much more collaboration going on now between insurers and their policy holders around health and wellness. And you know, just doing simple things, like making sure that people are getting checked out for things, if they’ve got early symptoms, because, you know, it’s an area, I guess, where insurers and their policy holders, their interests are really well aligned because you know, the individuals want to be healthier and want to, to live longer. And actually the insurers really want that as well. So, these sorts of products that we’re, we’re looking at the moment, I think could be quite interesting and, and could really make some changes in this space.

Kathryn (35:13):
That sounds brilliant. It sounds like it’s a really good mix of trying to obviously do, right. Get the right insights to sort of really understand insurance, but also kind of giving back as well and saying, you know, let’s, let’s try and see and like, get this going forward for people. And I mean, obviously the access as well to potentially clinical trials would be phenomenal for so many people. So really interesting. Well, thank you. Thank you so much for all those insights, Tim.

Tim (35:37):
No worries.

Kathryn (35:38):
So obviously thank you everybody for listening. Next time we’re going to be back with Matt Rann and we’re going to be talking about insurance options for people that are living with schizophrenia. If you’d like in mind of the next episode, please drop me a message on social media or visit the website, practical-protection.co.uk. And don’t forget that if you’ve listened to this as part of your work, you can claim a CPD certificate on the website, too. Thanks to our sponsors, the Octo Members. Thank you, Tim.

Tim (36:03):
Thank you very much.