CPBI Workshop: Benefiting in the Platform Economy

The following notes were taken at Forum 2017, the annual convention of CPBI (Canadian Pension and Benefits Institute) held June 5-7 at the Delta Hotel in Winnipeg with the theme: “Thriving In a Climate of Change”.

Presenter: Lisa Callaghan, Manulife

Key Points

Disruption is coming to the group benefits landscape in the form of platform-based exchanges offered by technology companies rather than insurance companies.

Insurers are typically well-established, stable, and low in volatility. Insure-techs (tech companies offering insurance platforms) are none of these things, which gives them a potential opening to be nimble and innovative.

Insurers offer a risk pool and price their products via underwriting. Insure-techs look to offer choice to market places and are comfortable with upsetting the risk model.

The Canadian healthcare market sees healthcare as a right and the insurers govern themselves accordingly. Insure-techs see only consumers and seek to disrupt the current paradigms.

Consumers are beginning to warm to platforms and are starting to have e-commerce expectations. Insure-techs are looking for ways to offer choices.

Investment in Insure-techs by VCs has grown 7-fold over the past two years. Big changes are coming.

Insure-techs look to enter the market in the following ways:

  • micro-insurance / on-demand insurance (e.g., insure your camera for the ten days you go to Thailand for a vacation)
  • peer to peer products
  • leverage data to unlock efficiencies. EG use AI for underwriting and risk profiles.
  • low-margin / high-volume
  • automatic administration
  • digital platforms to reach consumers
  • B2B P&C packages
  • corporate platforms (instant quotes / no need for advisors / automatic enrollment / HR integration / member payments / member inquiries and communications via Smartphone)

One drawback of platform products is that more choice is not always better, and informed choice is more difficult to attain as people often choose based on price not value.

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CPBI Workshop: DB Pension Plans – Is Sustainability a Myth?

The following notes were taken at Forum 2017, the annual convention of CPBI (Canadian Pension and Benefits Institute) held June 5-7 at the Delta Hotel in Winnipeg with the theme: “Thriving In a Climate of Change”.

Presenter: Paul Lai Fatt, Partner, Morneau Shepell

Key Points

Sustainability is simply about making adjustments.
-change the money coming in,
-change future benefits (e.g., water down benefits for future cohorts)
-change past benefits

If you do all of these, almost any DB plan can be sustainable. However, that does not mean the stakeholders will all be happy!

The fact is, pension plan members all have different expectations about what payments they will be required to make and what benefits they will receive, but in the real world, nothing is carved in stone.

Therefore, the key is “right process”, where you adequately explain the risks and changes to stakeholders. It is not about measuring risk, but planning for it.

There are still a few new DB plans coming online from time to time, but most plan sponsors are moving to Target Benefit Plans.

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CPBI Panel: Rethinking Drug Plan Strategies

The following notes were taken at “Rethinking Drug Plan Strategies” panel at Forum 2017, the annual convention of CPBI (Canadian Pension and Benefits Institute) held June 5-7 at the Delta Hotel in Winnipeg with the theme: “Thriving In a Climate of Change”.

Panelists: Stephen Frank (Canadian Life and Health Insurance Association) / Barb Martinez (The Great-West Life Assurance Company) / Tanya Potashnik (Canadian Competition Bureau) / Moderator: Kim Siddall (Aon Hewitt)

Key Points
In the good old days, drugs were released at a cost of $20/pill. Those days are mostly gone, as new medications can cost over $50,000 per pill with annual prescriptions costing over $1 million per person.

Doctors are now comfortable with generic drugs and have no problem to prescribe them, which helps keep costs down. But doctors are not yet comfortable prescribing “bio-similars”, drugs which are nearly identical but are not generic duplicates. While bio-similars are usually cheaper, there is actually very little penetration in the drug market yet, but we expect to see more of these drugs in the years to come.

Plan designs are changing from 100 percent coverage to more like 80 percent. The goal is to get patients to put some skin in the game, so that they will be more conscious about seeking the lowest cost treatments available. Many union plans remain at 100 percent coverage. Fully insured plans are under stress and may not be sustainable due to the rising costs of drugs.

Carriers (i.e., insurance companies) are moving towards common definitions. For example, what defines a “critical illness”. This standardization will enable clients to more easily pick and choose the benefits that are right for them.

Canada is one of the only advanced economies that does not have national negotiations on drug prices. As a result, Canadian drug prices are amongst the highest in the world. The UK has twice the population of Canada and spends the same amount on drugs.

Drug companies are introducing patient assistance programs to ensure that patients fill and continue their prescriptions/treatments as per the doctor’s orders.

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CPBI Keynote: The Great ReWrite

The following notes were taken at a Keynote Session at Forum 2017, the annual convention of CPBI (Canadian Pension and Benefits Institute) with the theme: “Thriving In a Climate of Change”.

Speaker: Leonard Brody
Mr. Brody is an entrepreneur and business visionary involved with tech start-ups and concert promotion.

Key Points
We are rewriting the planet from the ground up. Every human activity and endeavour is being assessed, evaluated, and transformed. Even the new pope is rewriting a 1,700 year old institution, the Catholic Church.

We live in a time of unprecedented change, as we see institutions, governments, financial systems, and power structures melting down around us. As an example, for the first time in history, a single individual can now reach millions or even billions of people instantly via online technologies, without any form of mediation.

We have gone from being receivers of media to being nodes of media, and in doing so, we have each bifurcated into two separate identities, physical and virtual.

Amazingly, people are 4X more trusting of someone’s virtual identity than their actual physical self. To amplify this, 66 percent of marriages originate online, on a medium that didn’t even exist 25 years ago. And more amazingly, these marriages are 20 percent more successful than marriages that originate the old-fashioned way (eg bar, work, gym, blind date).

In this world of change, it is now possible to finance new ideas from a crowd rather than crossing a moat into the realm of venture capitalists.

There is a rising “entrepreneurial class”. People say they desire control, but in reality many are starting their own business out of necessity rather than accepting low paying jobs.

A suggestion for business people is to engage in “parallelism”, where you build a new business alongside your current business with the goal of destroying your current business and replacing it with the new one. Invest 10-25 percent of your time and resources into the parallel venture with the goal of bringing in at least 10 percent of your revenue from new products every year.

 

Leonard Brody

 

 

 

 

 

 

 

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