Management Tools within the MedNet concept Wolfgang Hlzle, Munich - - PowerPoint PPT Presentation

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Management Tools within the MedNet concept Wolfgang Hlzle, Munich - - PowerPoint PPT Presentation

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Management Tools within the MedNet concept Wolfgang Hlzle, Munich Re IAAHS Colloquium, 27-29 April 2004 Mnchener Rck Munich Re Group Management Tools within the MedNet concept Munich Re Content Health insurance value chain 3 Risks

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Management Tools within the MedNet concept

Wolfgang Hölzle, Munich Re IAAHS Colloquium, 27-29 April 2004

Münchener Rück Munich Re Group

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2 Management Tools within the MedNet concept Munich Re

Health insurance value chain 3 Risks of insurance 6 MedNet concept 10 Management Tools 20 Examples 45 Content

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Health insurance value chain…

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4 Management Tools within the MedNet concept Munich Re

Reinsurer Primary Insurer

Risk selection Risk control- ling Product develop- ment Prepa- ration Quality assur- ance Market- ing & Sales

Health insurance value chain

Risk- carrying

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5 Management Tools within the MedNet concept Munich Re

Reinsurer‘s cosmos

Insurer Provider Insured Member

Reinsurer

Insurer Provider Insured Member Insurer Provider Insured Member

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Risks of insurance

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7 Management Tools within the MedNet concept Munich Re

Generic risks of insurance

Risk of error

  • Inappropriate products for market environment
  • Wrong assumptions in calculation (insufficient premium level)

Risk of change

  • Change of medical trend
  • Significant change in portfolio composition
  • Change in behaviour patterns of the insured population

Risk of fluctuation

  • Catastrophic claims
  • Cumulative claims
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8 Management Tools within the MedNet concept Munich Re

Additional risks of insurance

Risk of business management

  • Inadequate operational set up and processes
  • Inadequate IT-infrastructure
  • Inappropriate underwriting, hence adverse selection
  • Supplier induced demand

Risk of distance (especially for the reinsurer)

  • Lack and lag of information
  • Lack of transparency of performance
  • Limited potential to control and influence business

management

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9 Management Tools within the MedNet concept Munich Re

Risks of insurance Generic risks

  • Error
  • Change
  • Fluctuation

Additional risks

  • Business

management

  • Distance

Generic risks cannot be eliminated, but every risk carrier should aim to minimize them. Within the MedNet concept, Munich Re strives for the reduction of the additional risks and thereby also minimizes the generic risks.

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MedNet concept

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11 Management Tools within the MedNet concept Munich Re

Business models of Munich Re Munich Re participates in health insurance risks under the condition of full transparency

  • In saturated markets

by offering traditional and non-traditional reinsurance products

  • In emerging markets

by offering turn-key solutions for

  • business management
  • risk carrying
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12 Management Tools within the MedNet concept Munich Re

A reinsurance business model working with specialised service organisations (MedNet) providing the primary insurer a full range of services to manage their health insurance risks

What is MedNet?

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13 Management Tools within the MedNet concept Munich Re

MedNet’s core functions (1)

Product development

  • Execution of market/competition analysis
  • Packaging of benefits specifically for the market

Underwriting

  • System supported risk assessment and selection for

individuals (Normrisk)

  • Experience-based group renewal

Production

  • Issuing of policies for individual and group business
  • Management of additions and deletions
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14 Management Tools within the MedNet concept Munich Re

MedNet’s core functions (2)

Network management

  • Set-up and maintenance of a provider network

Medical management

  • Pre-approvals
  • Medical guidelines

Data management

  • Information technology
  • Reporting & statistics
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15 Management Tools within the MedNet concept Munich Re

Insurer Provider Insured Member

Münchener Rück Munich Re Group

MedNet‘s position

Business Management effe ctive

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16 Management Tools within the MedNet concept Munich Re

Insurer Provider Insured Member

Münchener Rück Munich Re Group

Contractual relationships

Insurance policy Service agreement Service agreement Reinsurance contract

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17 Management Tools within the MedNet concept Munich Re

Existing MedNet markets

Münchener Rück Munich Re Group

Saudi Arabia

  • Unit. Arab

Emirates Italy Greece Jordan Cyprus Turkey India

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18 Management Tools within the MedNet concept Munich Re

Munich Re through MedNet Interactive co-operation in value chain

Munich Re participates in various areas of the value chain within the MedNet business model and hence adds value to the risk carriers

Risk selection Risk control- ling Product develop- ment Prepa- ration Quality assur- ance Market- ing & Sales Risk- carrying

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19 Management Tools within the MedNet concept Munich Re

Data management

based on proper IT-infrastrucure The integration of professional data management together with tailor-made management tools are preconditions for the overall success

Management by data

Risk selection Risk control- ling Product develop- ment Prepa- ration Quality assur- ance Market- ing & Sales Risk- carrying

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Management Tools

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21 Management Tools within the MedNet concept Munich Re

Management objectives

Key objectives of management:

  • Planning
  • Monitoring
  • Controlling

“Know where you are today to ensure correct planning for tomorrow and success in the long run”

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22 Management Tools within the MedNet concept Munich Re

Data flow Operational system Oracle database

MedNeXt Powerplay

Data warehouse

Internet

Management Tools

Excel tools

Internet

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23 Management Tools within the MedNet concept Munich Re

Planning Controlling Monitoring

Management Tools - overview

Management Information System (MIS) Group Tool Group Renewal Tool Product Tool Forecasting Tool

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24 Management Tools within the MedNet concept Munich Re

Management Tools – main objectives (1) IBNR algorithm Proper estimation of completion factors (is equally applied for all Management Tools) MIS Tool Monitoring of key performance indicators for the technical-,

  • perational- and combined account on a market level

Group Tool Monitoring of key performance measures on a group level

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25 Management Tools within the MedNet concept Munich Re

Management Tools – main objectives (2) Group Renewal Tool Controlling and steering of renewal group portfolio Product Tool Controlling of key performance indicators on a product level and option for automated premium adjustment Forecasting Tool Planning and controlling of business on a insurance company level based on key assumptions (membership, average premium, target LR)

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26 Management Tools within the MedNet concept Munich Re

IBNR algorithm Purpose:

Determination of IBNR’s Main features of the algorithm:

  • Calculation of completion factors

supported by several variants of Chain Ladder based on loss triangles

  • Bernhuetter-Ferguson

for smaller completion factors

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27 Management Tools within the MedNet concept Munich Re

MIS Tool (1) Purpose:

Management information system on a market level providing 1. Combined account Sum of operational and technical performance Operational result + Technical result Combined account 2. Operational performance

  • Revenues for MSO services
  • Expenses for business management
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28 Management Tools within the MedNet concept Munich Re

MIS Tool (2) Purpose:

Management information system on a market level providing 3. Technical performance

  • Production
  • Premium written
  • Enrolled members
  • Average premium
  • Key performance measures

per underwriting - and calendar year

  • Exposed at risk population
  • Premium earned, claims incurred
  • Utilization, average cost
  • Burning cost and loss ratio
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29 Management Tools within the MedNet concept Munich Re

MIS Tool

Claims Development (100% of Business, i.e. PIC and MR)

100% of the business administered by MedNet and reinsured by Munich Re Currency: CUR ; Extraction Date: 05.04.2004 Month ERP Premium Earned Invoice Count Claims Paid Compl. Factor Claims Incurred2 Utilization Rate Average Cost Burning Cost Loss Ratio Premium Earned Claims Paid Claims Incurred Loss Ratio Jan 02 1.074 1.136.392 9.923 1.209.756 1,0000 1.209.756 9,24 121,9 1.126,8 106,5% 1.748.535 1.859.173 1.859.173 106,3% Feb 02 993 1.082.449 9.728 1.121.197 1,0000 1.121.197 9,80 115,3 1.129,5 103,6% 1.656.145 1.633.431 1.633.431 98,6% Mar 02 1.101 1.223.694 11.238 1.317.545 1,0000 1.317.545 10,21 117,2 1.196,8 107,7% 1.861.602 1.935.865 1.935.865 104,0% Apr 02 1.077 1.235.627 10.790 1.298.691 1,0000 1.298.691 10,02 120,4 1.206,3 105,1% 1.863.086 1.974.352 1.974.352 106,0% May 02 1.144 1.330.733 11.062 1.290.809 1,0000 1.290.809 9,67 116,7 1.127,9 97,0% 2.017.980 2.020.462 2.020.462 100,1% Jun 02 1.102 1.309.515 11.073 1.278.977 0,9999 1.279.116 10,05 115,5 1.160,8 97,7% 1.975.230 1.911.724 1.911.863 96,8% Jul 02 1.135 1.361.169 9.283 1.091.052 0,9999 1.091.206 8,18 117,5 961,3 80,2% 2.051.266 1.633.760 1.633.914 79,7% Aug 02 1.140 1.382.329 8.298 944.224 0,9999 944.362 7,28 113,8 828,1 68,3% 2.074.150 1.444.828 1.444.966 69,7% Sep 02 1.104 1.347.374 10.783 1.227.643 0,9992 1.228.644 9,77 113,8 1.112,7 91,2% 2.019.123 1.762.273 1.763.274 87,3% Oct 02 1.146 1.410.968 11.828 1.271.193 0,9989 1.272.567 10,33 107,5 1.110,2 90,2% 2.115.347 1.997.896 1.999.270 94,5% Nov 02 1.130 1.403.771 10.952 1.180.853 0,9983 1.182.915 9,71 107,8 1.046,4 84,3% 2.109.311 1.545.951 1.550.098 73,5% Dec 02 1.193 1.478.012 11.995 1.286.567 0,9978 1.289.422 10,08 107,3 1.080,8 87,2% 2.222.178 1.785.744 1.945.599 87,6% Jan 03 1.207 1.493.957 11.790 1.294.228 0,9973 1.297.740 9,80 109,8 1.075,5 86,9% 2.255.695 2.126.424 2.129.936 94,4% Feb 03 1.120 1.379.649 10.470 1.151.371 0,9967 1.155.163 9,38 110,0 1.031,6 83,7% 2.093.781 1.759.556 1.774.348 84,7% Mar 03 1.252 1.546.755 12.801 1.422.343 0,9954 1.428.938 10,27 111,1 1.140,9 92,4% 2.351.802 1.926.874 1.940.469 82,5% Apr 03 1.255 1.562.449 12.922 1.455.863 0,9943 1.464.239 10,36 112,7 1.166,9 93,7% 2.380.914 2.020.248 2.057.624 86,4% May 03 1.358 1.676.967 13.187 1.524.880 0,9930 1.535.620 9,78 115,6 1.130,6 91,6% 2.573.528 2.218.677 2.229.417 86,6% Jun 03 1.340 1.650.199 12.522 1.476.350 0,9905 1.490.480 9,44 117,9 1.112,5 90,3% 2.530.439 2.239.028 2.253.158 89,0% Jul 03 1.420 1.743.137 10.747 1.242.316 0,9882 1.257.167 7,66 115,6 885,5 72,1% 2.682.051 2.122.694 2.142.617 79,9% Aug 03 1.413 1.733.706 10.183 1.204.569 0,9809 1.228.024 7,35 118,3 868,9 70,8% 2.682.673 1.767.021 1.790.476 66,7% Sep 03 1.396 1.720.534 12.103 1.373.755 0,9782 1.404.438 8,86 113,5 1.005,8 81,6% 2.664.647 2.054.833 2.098.516 78,8% Oct 03 1.462 1.783.881 13.817 1.593.787 0,9741 1.636.156 9,70 115,3 1.118,9 91,7% 2.774.184 2.164.021 2.228.640 80,3% Nov 03 1.438 1.759.529 12.260 1.371.695 0,9684 1.416.495 8,80 111,9 984,9 80,5% 2.733.201 1.847.309 1.916.499 70,1% Dec 03 1.513 1.850.551 13.278 1.467.582 0,9545 1.537.541 9,20 110,5 1.016,5 83,1% 2.869.722 2.174.578 2.299.181 80,1% Jan 04 1.533 1.887.671 12.005 1.404.544 0,8963 1.567.092 8,74 117,0 1.022,4 83,0% 2.921.461 1.811.269 2.505.896 85,8% Feb 04 1.443 1.804.709 4.874 557.399 0,4975 1.299.900 7,88 114,4 900,7 72,0% 2.791.818 719.946 2.118.225 75,9% Mar 04 1.551 1.933.536 116 10.334 0,0143 1.570.794 11,37 89,1 1.013,0 81,2% 2.994.853 11.040 2.487.194 83,0% Apr 04

  • C/Y 01

14.491 14.763.685 128.164 15.190.664 1,0000 15.190.664 8,84 118,5 1.048,3 102,9% 22.988.966 23.573.567 23.573.567 102,5% C/Y 02 13.340 15.702.033 126.953 14.518.507 0,9995 14.526.344 9,52 114,4 1.088,9 92,5% 23.713.952 21.505.459 21.672.381 91,4% C/Y 03 16.174 19.901.314 146.080 16.578.739 0,9834 16.858.653 9,18 113,5 1.042,3 84,7% 30.592.638 24.421.263 24.867.533 81,3% C/Y 04 4.527 5.625.916 16.995 1.972.277 0,4670 4.437.786 8,45 116,1 980,4 78,9% 8.708.132 2.542.255 7.111.315 81,7%

Out-of-Hospital Total

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30 Management Tools within the MedNet concept Munich Re

Utilization Rate - Out-of-Hospital

6 7 8 9 10 11 12 Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04

MIS Tool – sample of charts

Average Cost - Out-of-Hospital

20 40 60 80 100 120 140 160 Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04

Burning Cost - Out-of-Hospital

200 400 600 800 1.000 1.200 1.400 Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04

Loss Ratio - Out-of-Hospital

60% 70% 80% 90% 100% 110% 120% 130% Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04

Loss Ratio - In- and Out-Hospital

50% 60% 70% 80% 90% 100% 110% 120% Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04

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31 Management Tools within the MedNet concept Munich Re

Utilization Rate - In-Hospital

MIS Tool – sample of charts

Average Cost - In-Hospital Burning Cost - In-Hospital Loss Ratio - In-Hospital Utilization Rate - Out-Hospital Average Cost - Out-Hospital Burning Cost - Out-Hospital Loss Ratio - Out-Hospital Membership Combined Account Total Loss Ratio per UY Total Loss Ratio

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32 Management Tools within the MedNet concept Munich Re

Group Tool Purpose:

Performance assessment on client and single group level providing the following key performance indicators:

  • Members, exposed at risk population
  • Premium earned, average NRP
  • Insurer part, claims incurred
  • Burning cost and loss ratio
  • f last three underwriting years
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33 Management Tools within the MedNet concept Munich Re

Group Tool – performance assessment

Performance of Companies and Groups

Status of Data : 03/2004

U/Y02 U/Y03 U/Y04 U/Y02 U/Y03 U/Y04 Eff.Mon Mem L/R Eff.Mon Mem L/R Eff.Mon Mem L/R Cluster 1

  • Cluster 2
  • Cluster 3
  • Cluster 4
  • Cluster 5
  • Policy.Total

83% 76% 69% 87% 84% 81%

01 14.557

85%

01 19.532 81% 01 5.118

77%

Individual 91% 51% 39% 78% 71% 74% 01 1.641 82% 01 1.553 63% 01 384 60% Group 81% 79% 72% 88% 85% 82% 01 12.916 86% 01 17.979 83% 01 4.735 78%

AL OTAIBI INSURANCE CO.

170% 73% 168% 92% 78% 93% 01 198 113% 01 66 77% 01 55 109% Individual 144% 17%

  • 33%

32%

  • 02

9 67% 07 11 25%

  • Group

172% 93% 168% 96% 81% 93% 01 189 115% 01 55 84% 01 55 109% AL OTAIBI INSURANCE CO. 135% 93% 168% 98% 81% 93% 01 61 108% 01 55 84% 01 55 109% SMITH INTERNATIONAL INC. 188%

  • 94%
  • 04

129 119%

  • NATIONAL WISSAM INSURANCE

55% 102% 18% 129% 92% 78% 01 70 108% 01 499 95% 01 155 64% Individual 112% 127% 0% 120% 65% 67% 01 25 117% 01 28 90% 01 6 42% Group 8% 99% 19% 135% 94% 79% 04 45 102% 01 471 95% 01 149 64% ABU DHABI MARKET

  • 74%
  • 78%
  • 06

175 77%

  • AL HAMOUS GROUP
  • 40%

0%

  • 64%

67%

  • 02

99 59% 02 97 54% AL WISSAM NATIONAL INS. CO.

  • 19%
  • 124%
  • 01

49 93%

  • AL WISSAM INSURANCE CO.
  • 37%
  • 103%
  • 01

53 82% AUSTRALIAN CUSTOMERS

  • 0%
  • 72%
  • 05

37 57%

  • GEOSERVICES INC.
  • 0%
  • 18%
  • 07

12 12%

  • GULF CONCRETE

8% 89%

  • 135%

174%

  • 04

45 102% 04 40 151%

  • READY MIX BETON
  • 402%
  • 177%
  • 04

59 239%

  • ARAB MUSHAWAR INSURANCE

87% 74% 76% 90% 85% 76% 01 7.974 89% 01 9.460 80% 01 2.449 76%

Loss Ratio U/Y 2004 In-Hospital Loss Ratio Out-Hospital U/Y 2002 U/Y 2003 In-Hospital + Out-Hospital

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34 Management Tools within the MedNet concept Munich Re

Group Tool – performance assessment

Performance of Companies and Groups

Status of Data : 03/2004

U/Y02 U/Y03 U/Y04 U/Y02 U/Y03 U/Y04 U/Y02 U/Y03 U/Y04 U/Y02 U/Y03 U/Y04 Cluster 1

  • Cluster 2
  • Cluster 3
  • Cluster 4
  • Cluster 5
  • Policy.Total

13.847 17.821 5.558 17.290.330 21.906.180 7.292.230 15.021.840 14.566.014 993.845 1.085 1.029 1.067

Individual 1.610 1.541 424 2.335.226 2.190.319 601.820 1.820.538 1.194.143 47.954 1.131 1.019 1.047 Group 12.238 16.281 5.134 14.955.104 19.715.861 6.690.410 13.201.320 13.371.627 946.248 1.079 1.029 1.069

AL OTAIBI INSURANCE CO.

198 66 55 231.677 88.463 75.563 213.900 64.789 17.021 1.078 1.058 1.285 Individual 9 11 12.199 13.127 3.977 2.607 442 392

  • Group

189 55 55 219.479 75.337 75.563 209.879 61.195 17.021 1.108 1.121 1.285 AL OTAIBI INSURANCE CO. 61 55 55 69.279 75.337 75.563 68.232 61.195 17.021 1.126 1.121 1.285 SMITH INTERNATIONAL INC. 129 150.200 141.646 1.100

  • NATIONAL WISSAM INSURANCE

70 584 155 84.528 719.332 265.147 109.293 609.908 39.141 1.563 1.128 1.299 Individual 25 28 6 32.781 37.342 7.387 39.237 22.923 624 1.596 854 835 Group 45 556 149 51.747 681.990 257.760 70.056 586.767 38.474 1.545 1.142 1.309 ABU DHABI MARKET 175 230.991 149.330

  • 1.028
  • AL HAMOUS GROUP

184 97 203.619 187.589 130.605 20.797

  • 711

1.299 AL WISSAM NATIONAL INS. CO. 49 67.986 84.403

  • 1.725
  • AL WISSAM INSURANCE CO.

53 70.170 18.461

  • 1.379

AUSTRALIAN CUSTOMERS 37 43.575 28.442

  • 857
  • GEOSERVICES INC.

12 18.484 2.333

  • 284
  • GULF CONCRETE

45 40 51.747 43.908 70.056 70.398 1.545 1.926

  • READY MIX BETON

59 73.428 127.485

  • 2.190
  • ARAB MUSHAWAR INSURANCE

7.231 7.608 2.616 8.665.425 9.053.408 3.216.875 7.773.317 5.805.840 363.953 1.075 1.013 922

Out-Hospital Members Earned Final NRP (Total) Claims Incurred (estimated) Burning Cost

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35 Management Tools within the MedNet concept Munich Re

Group Renewal Tool Purpose:

Experience based assistance for group renewals Considering an envisaged target LR and an expected medical trend, the tool provides the following features:

  • Adjustment recommendation for groups to be renewed
  • In case the final renewal decision deviates from

recommended adjustment, an overall deviation from target LR will be calculated. This enables the underwriter to deviate in single cases from the technical necessary adjustment, but still to maintain the holistic view on the portfolio.

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36 Management Tools within the MedNet concept Munich Re

Performance of Companies and Groups

Status of Data : 03/2004

Status: 9.04.04 Eff.Mon Mem L/R Eff.Mon Mem L/R Eff.Mon Mem L/R Cluster 1

  • Cluster 2
  • Cluster 3
  • Cluster 4
  • GAP: 3,3%

Cluster 5

  • (Deviation from Target LR)

Policy.Total

01 14.557

85%

01 19.532

81%

01 5.118

77%

LR Adjust. Demand 2004 New Plan (% of Cover) New Plan Adjm. Demand Adjustm. material. 2004 LR material. Seg ment Individual 01 1.641 82% 01 1.553 63% 01 384 60%

  • Group

01 12.916 86% 01 17.979 83% 01 4.735 78%

  • AL OTAIBI INSURANCE CO.

01 198 113% 01 66 77% 01 55 109%

  • Individual

02 9 67% 07 11 25%

  • Group

01 189 115% 01 55 84% 01 55 109%

  • AL OTAIBI INSURANCE CO.

01 61 108% 01 55 84% 01 55 109%

  • 4%

0,14% 84% 1 SMITH INTERNATIONAL INC. 04 129 119%

  • NATIONAL WISSAM INSURANCE

01 70 108% 01 499 95% 01 155 64%

  • Individual

01 25 117% 01 28 90% 01 6 42%

  • Group

04 45 102% 01 471 95% 01 149 64%

  • ABU DHABI MARKET
  • 06

175 77%

  • 12%

88% 1 AL HAMOUS GROUP

  • 02

99 59% 02 97 54%

  • 32%
  • 5,33%

63% 1 AL WISSAM NATIONAL INS. CO.

  • 01

49 93%

  • 6%

0,83% 92% 2 AL WISSAM INSURANCE CO.

  • 01

53 82%

  • AUSTRALIAN CUSTOMERS
  • 05

37 57%

  • 34%

88% 1 GEOSERVICES INC.

  • 07

12 12%

  • 87%

88% 1 GULF CONCRETE 04 45 102% 04 40 151%

  • 72%

36,52% 111% 3 READY MIX BETON

  • 04

59 239%

  • 173%

28,74% 186% 3

ARAB MUSHAWAR INSURANCE

01 7.974 89% 01 9.460 80% 01 2.449 76%

  • 88%

(based on U/Y 2003 )

In-Hospital + Out-Hospital

Renewal

U/Y 2002 U/Y 2003 U/Y 2004

for UY 2004

Group Renewal Tool

expiring loss ratio recommended adjustment materialized adjustment

  • verall gap
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37 Management Tools within the MedNet concept Munich Re

Product Tool Purpose:

Product monitoring and premium adjustment 1. A multi-year performance analysis on a product level

calculating the basic burning costs (BBC) for each calendar year with help of age profiles 2. If technically indicated, the tool provides the following: – Projection of BBC based on trend assumption – Automated net risk premium (NRP) calculation – Support for a documented and standardized premium adjustment process

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38 Management Tools within the MedNet concept Munich Re

Product Tool – performance assessment

Product Tool

C/Y02 C/Y03 C/Y04 C/Y02 C/Y03 C/Y04 C/Y02 C/Y03 C/Y04 C/Y02 C/Y03 C/Y04 TOTAL 65.516 101.976 30.736 35.986.878 50.811.204 15.095.705 96% 92% 104% 445 389 432 NW1/2 IN 22.542 30.671 8.946 10.800.623 15.170.549 4.458.235 86% 88% 103% 318 334 393 NW3 IN 8.666 13.954 4.454 2.581.477 4.181.969 1.305.871 65% 83% 93% 146 187 205 NW1/2 OUT 22.461 30.120 8.454 16.761.542 21.751.339 6.102.306 111% 100% 111% 770 662 733 NW3 OUT 8.118 12.973 4.043 4.717.771 6.988.642 2.154.467 85% 88% 105% 441 418 491 Cluster 5

  • Cluster 6
  • Exclusive, NW 1.X

152 155 38 312.818 296.838 74.546 36% 14% 63% 506 181 800 Exclusive, NW 1.A 444 443 108 432.621 537.959 134.111 29% 81% 33% 190 662 268 Quality, NW 1.X 714 1.807 608 774.399 1.583.843 511.482 88% 93% 128% 639 572 735 Quality, NW 1.A 8.689 11.671 3.473 4.704.436 6.342.975 1.889.330 85% 87% 114% 353 364 477 Quality, NW 1.B 11.473 13.901 3.472 4.279.414 5.460.438 1.401.678 90% 92% 89% 265 281 277 Quality, NW 1.C 829 895 204 202.098 228.578 44.797 169% 108% 261% 337 222 461 Quality, NW 3.A 12 159 119 55.540 44.881

  • 128%

25% 345 74 Quality, NW 3.B 3.413 6.812 1.931 1.021.348 2.001.590 559.718 60% 94% 98% 133 208 218 Quality, NW 3.C 5.111 6.876 2.373 1.435.961 2.036.096 676.011 66% 75% 92% 142 164 192 NW 1, Deduct. PC: 0 SAR.P 12.687 6.747 1.709 10.282.163 5.766.773 1.472.588 117% 114% 135% 887 890 1.054 NW 1, Deduct. PC: 15 SAR.P 2.145 3.029 353 1.227.034 1.724.334 198.707 117% 114% 92% 644 624 478 NW 1, Deduct. PC: 20 SAR.P 3.398 10.130 3.120 2.369.631 6.926.459 2.083.759 100% 94% 101% 635 585 612 NW 1, Deduct. PC: 25 SAR.P 1.508 2.920 1.092 996.075 2.071.661 782.519 104% 95% 113% 653 639 759 NW 1, Deduct. PC: 30 SAR.P 940 3.307 884 671.977 2.644.468 717.779 112% 89% 105% 702 646 779 NW 1, Deduct. PC: 35 SAR.P 465 552 138 333.971 376.873 89.346 88% 75% 87% 642 530 573 NW 1, Deduct. PC: 40 SAR.P 433 1.093 269 278.815 594.633 148.102 90% 82% 97% 494 393 476 NW 1, Deduct. PC: 50 SAR.P 867 905 315 587.457 574.715 190.210 72% 79% 122% 420 420 575 NW 3, Deduct. PC: 0 SAR.P 2.333 3.011 828 1.560.013 1.588.988 461.698 99% 97% 118% 550 438 574 NW 3, Deduct. PC: 10 SAR.P 1.778 2.047 475 1.039.597 1.245.072 289.315 85% 91% 126% 439 474 621

Performance

Status of Data: 03/2004 ERP Earned Final NRP Loss Ratio BasicBurningCost

slide-39
SLIDE 39

39 Management Tools within the MedNet concept Munich Re

Product Tool

Adjust BNRP Profile

C/Y02 C/Y03 C/Y04 C/Y02 C/Y03 C/Y04 tech. set ment Type C/Y02 C/Y03 C/Y04 TOTAL 65.516 101.976 30.736 445 389 432 more 6% 5%

  • 9%

NW1/2 IN 22.542 30.671 8.946 318 334 393

  • ne

12% 7%

  • 9%

NW3 IN 8.666 13.954 4.454 146 187 205

  • ne

44% 13% 2% NW1/2 OUT 22.461 30.120 8.454 770 662 733

  • ne

1% 4%

  • 7%

NW3 OUT 8.118 12.973 4.043 441 418 491

  • ne

3% 4%

  • 12%

Cluster 5

  • Cluster 6
  • Exclusive, NW 1.X

152 155 38 506 181 800 622 1.214 0% 1.518 1 140% 569% 52% Exclusive, NW 1.A 444 443 108 190 662 268 551 760 0% 950 1 299% 15% 183% Quality, NW 1.X 714 1.807 608 639 572 735 723 606 0% 757 1

  • 5%

6%

  • 18%

Quality, NW 1.A 8.689 11.671 3.473 353 364 477 454 385 22% 481 1 9% 6%

  • 19%

Quality, NW 1.B 11.473 13.901 3.472 265 281 277 265 300 20% 375 1 13% 7% 8% Quality, NW 1.C 829 895 204 337 222 461 496 420

  • 525

1 24% 89%

  • 9%

Quality, NW 3.A 12 159 119 345 74 295 223 0% 279 1

  • 35%

200% Quality, NW 3.B 3.413 6.812 1.931 133 208 218 254 233 38% 291 1 75% 12% 7% Quality, NW 3.C 5.111 6.876 2.373 142 164 192 198 180 20% 225 1 27% 10%

  • 6%

NW 1, Deduct. PC: 0 SAR.P 12.687 6.747 1.709 887 890 1.054 1.060 900 31% 1.125 2 2% 1%

  • 15%

NW 1, Deduct. PC: 15 SAR.P 2.145 3.029 353 644 624 478 588 670 26% 838 2 4% 7% 40% NW 1, Deduct. PC: 20 SAR.P 3.398 10.130 3.120 635 585 612 543 620 20% 775 2

  • 2%

6% 1% NW 1, Deduct. PC: 25 SAR.P 1.508 2.920 1.092 653 639 759 781 640 25% 800 2

  • 2%

0%

  • 16%

NW 1, Deduct. PC: 30 SAR.P 940 3.307 884 702 646 779 779 630 28% 788 2

  • 10%
  • 2%
  • 19%

NW 1, Deduct. PC: 35 SAR.P 465 552 138 642 530 573 559 615 43% 769 2

  • 4%

16% 7% NW 1, Deduct. PC: 40 SAR.P 433 1.093 269 494 393 476 435 510 23% 638 2 3% 30% 7% NW 1, Deduct. PC: 50 SAR.P 867 905 315 420 420 575 590 450 22% 563 2 7% 7%

  • 22%

NW 3, Deduct. PC: 0 SAR.P 2.333 3.011 828 550 438 574 496 540 11% 675 2

  • 2%

23%

  • 6%

NW 3, Deduct. PC: 10 SAR.P 1.778 2.047 475 439 474 621 575 460 10% 575 2 5%

  • 3%
  • 26%

NRP Calculation

Performance

Status of Data: 03/2004 BasicBurningCost FBBC Technical Cover ERP

Product Tool – NRP calculation

manually set technically derived

slide-40
SLIDE 40

40 Management Tools within the MedNet concept Munich Re

Forecasting Tool (1) Purpose: Planning and forecasting on insurance company level

  • Multilevel planning (enrolled membership, average

NRP, target LR, reinsurance-share, mode of payment)

  • n an underwriting year basis
  • Inclusion of existing business, which has still future

impact

  • A regular update by merging actual with planned data

during the year allows a close controlling and a precise gap-analysis

slide-41
SLIDE 41

41 Management Tools within the MedNet concept Munich Re

Forecasting Tool (2) Purpose: Planning and forecasting on insurance company level

  • Options for simulation based on plan data

(in case of campaigns or premium adjustments)

  • Reflects Munich Re’s demands on accounting standards

(i.e. premium written due, premium reserves, claims paid, loss reserves, technical result)

  • Ensures an exact premium and loss reservation
slide-42
SLIDE 42

42 Management Tools within the MedNet concept Munich Re

Actual Forecast Plan Actual Forecast Plan Actual Forecast Plan Actual Forecast Plan Month 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2003.01 2.023 2.023 2.023 469 469 469 53 53 53 579 579 579 2003.02 1.991 1.991 1.991 948 948 948 50 50 50 548 548 548 2003.03 1.406 1.406 1.406 507 507 507 69 69 69 483 483 483 2003.04 2.785 2.785 2.785 954 954 954 52 52 52 1.405 1.405 1.405 2003.05 2.494 2.494 2.494 1.324 1.324 1.324 71 71 71 745 745 745 2003.06 1.110 1.110 1.110 447 447 447 57 57 57 275 275 275 2003.07 1.761 1.761 1.761 908 908 908 45 45 45 532 532 532 2003.08 1.086 1.086 1.084 869 869 869 65 65 63 96 96 96 2003.09 2.106 2.106 2.106 1.728 1.728 1.728 34 34 34 276 276 276 2003.10 1.289 1.289 1.254 634 634 634 52 52 48 278 278 258 2003.11 1.244 1.244 1.094 612 612 309 46 46 44 387 387 543 2003.12 604 604 619 156 156 190 29 29 20 330 330 335 2004.01 2.208 2.208 2.332 665 665 607 46 46 52 779 779 560 2004.02 2.244 2.244 2.299 1.235 1.235 1.000 44 44 18 411 411 613 2004.03 846 846 1.725 420 420 650 52 52 70 242 242 601 2004.04 2.779 2.779 764 764 62 62 1.550 1.550 2004.05 1.852 1.852 300 300 59 59 960 960 2004.06 1.157 1.157 251 251 52 52 516 516 2004.07 2.539 2.539 1.450 1.450 47 47 713 713 2004.08 1.405 1.405 1.048 1.048 58 58 182 182 2004.09 2.780 2.780 2.200 2.200 45 45 420 420 2004.10 1.576 1.576 649 649 151 151 353 353 2004.11 1.252 1.252 572 572 27 27 531 531 2004.12 676 676 197 197 21 21 377 377 C/Y 2002 15.048 15.048 15.048 8.401 8.401 8.401 751 751 751 3.351 3.351 3.351 C/Y 2003 19.899 19.899 19.727 9.556 9.556 9.287 623 623 606 5.934 5.934 6.075 C/Y 2004 5.298 21.314 22.372 2.320 9.751 9.687 142 663 660 1.432 7.034 7.376 AL WISSAM CO. - Group Initial Members TOTAL ARAB OTAIBI INS. - Group ARAB OTAIBI INS. - Indiv

Forecasting Tool – Initial members

beginning of planned period last data extraction

slide-43
SLIDE 43

43 Management Tools within the MedNet concept Munich Re

Forecasting Tool – Average NRP

Actual Av NRP Plan Target LR Plan Av NRP Actual Av NRP Plan Target LR Plan Av NRP Actual Av NRP Plan Target LR Plan Av NRP Actual Av NRP Plan Target LR Plan Av NRP Month 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2003.01 1.756 88% 1.859 1.779 88% 1.779 2.380 88% 2.380 1.746 88% 1.746 2003.02 2.019 88% 2.100 1.757 88% 1.757 2.521 88% 2.521 2.520 88% 2.520 2003.03 1.750 88% 1.772 1.508 88% 1.508 2.307 88% 2.307 1.896 88% 1.896 2003.04 1.742 88% 1.798 1.766 88% 1.766 2.155 88% 2.155 1.660 88% 1.660 2003.05 1.287 88% 1.326 686 88% 686 2.700 88% 2.700 1.803 88% 1.803 2003.06 1.538 88% 1.713 983 88% 983 2.266 88% 2.266 1.958 88% 1.958 2003.07 1.584 88% 1.726 1.242 88% 1.242 2.309 88% 2.309 2.013 88% 2.013 2003.08 1.350 88% 1.488 1.203 88% 1.203 2.314 88% 2.284 1.576 88% 1.576 2003.09 1.243 88% 1.323 1.035 88% 1.035 2.945 88% 2.945 2.070 88% 2.070 2003.10 1.619 88% 1.733 1.321 88% 1.321 2.572 88% 2.570 1.634 88% 1.572 2003.11 2.095 88% 2.448 2.105 88% 1.547 2.111 88% 2.250 2.218 88% 2.000 2003.12 1.904 88% 1.921 1.670 88% 1.547 2.456 88% 2.250 1.914 88% 2.000 2004.01 1.930 85% 1.814 1.746 85% 1.570 2.358 85% 2.250 1.707 85% 1.950 2004.02 2.145 85% 1.755 1.898 85% 1.570 2.412 85% 2.250 2.846 85% 1.950 2004.03 1.775 85% 1.764 1.567 85% 1.570 2.479 85% 2.250 1.806 85% 1.950 2004.04

  • 85%

1.836

  • 85%

1.570

  • 85%

2.250

  • 85%

1.950 2004.05

  • 85%

1.967

  • 85%

1.570

  • 85%

2.250

  • 85%

1.950 2004.06

  • 85%

1.860

  • 85%

1.570

  • 85%

2.250

  • 85%

1.950 2004.07

  • 85%

1.723

  • 85%

1.570

  • 85%

2.250

  • 85%

1.950 2004.08

  • 85%

1.678

  • 85%

1.570

  • 85%

2.250

  • 85%

1.950 2004.09

  • 85%

1.660

  • 85%

1.570

  • 85%

2.250

  • 85%

1.950 2004.10

  • 85%

1.791

  • 85%

1.570

  • 85%

2.250

  • 85%

1.950 2004.11

  • 85%

1.792

  • 85%

1.570

  • 85%

2.250

  • 85%

1.950 2004.12

  • 85%

1.840

  • 85%

1.570

  • 85%

2.250

  • 85%

1.950 C/Y 2002 1.626 82% 1.626 1.315 80% 1.315 2.268 86% 2.268 2.029 84% 2.029 C/Y 2003 1.634 88% 1.730 1.323 88% 1.278 2.409 88% 2.408 1.898 88% 1.889 C/Y 2004 1.996 85% 1.782 1.794 85% 1.570 2.419 85% 2.250 2.051 85% 1.950 AL WISSAM CO. - Group Average NRP

  • Target LR

TOTAL ARAB OTAIBI INS. - Group ARAB OTAIBI INS. - Indiv.

slide-44
SLIDE 44

44 Management Tools within the MedNet concept Munich Re

Forecasting Tool – Prognosis sheet

Prognosis dialog C/Y 2003 - gross

Premiums written due 33.425.801

AED

12.232.115

AED

1.437.573

AED

12.312.469

AED

1.373.971

AED

1.088.425

AED

BÜ - income 6.615.258

AED

2.340.750

AED

526.324

AED

2.576.412

AED

451.885

AED

76.623

AED

BÜ - outcome

  • 8.730.723

AED

  • 2.641.353

AED

  • 481.480

AED

  • 3.862.697

AED

  • 485.178

AED

  • 192.628

AED

Brokerage 0% 0% 0% 0% 0% MNI - Fee 1,48% 1,48% 1,48% 1,48% 1,48% 1,48% Commission 20% 20% 20% 20% 20% 20% Total Commission

  • 7.179.862

AED

  • 2.627.458

AED

  • 308.791

AED

  • 2.644.718

AED

  • 295.129

AED

  • 233.794

AED

Claims paid CY

  • 16.505.954

AED

  • 6.858.701

AED

  • 710.695

AED

  • 5.163.995

AED

  • 700.905

AED

  • 735.231

AED

Claims paid PY

  • 2.284.638

AED

  • 1.025.253

AED

  • 138.071

AED

  • 656.408

AED

  • 106.889

AED

  • 50.136

AED

Loss reserves income 2.143.984

AED

1.144.972

AED AED

685.711

AED AED

50.268

AED

Loss reserves CY outcome

  • 3.509.924

AED

  • 1.405.739

AED

  • 105.886

AED

  • 1.270.248

AED

  • 103.011

AED

  • 121.812

AED

Loss reserves PY outcome

  • 165.539
  • 133.786

AED AED

  • 26.694

AED

  • 1.169

AED

  • 270

AED

Technical result 3.808.404

AED

1.025.547

AED

218.973

AED

1.949.831

AED

133.574

AED

  • 118.555

AED

11,4% 8,4% 15,2% 15,8% 9,7%

  • 10,9%

C/Y 2004 - gross

Premiums written due 39.000.130

AED

15.363.168

AED

1.518.197

AED

13.948.160

AED

1.481.166

AED

1.661.909

AED

BÜ - income 8.716.450

AED

2.637.034

AED

480.693

AED

3.856.382

AED

484.385

AED

192.313

AED

BÜ - outcome

  • 9.745.764

AED

  • 3.052.338

AED

  • 519.154

AED

  • 4.383.688

AED

  • 506.861

AED

  • 217.759

AED

Brokerage 0% 0% 0% 0% 0% MNI - Fee 1,48% 1,48% 1,48% 1,48% 1,48% 1,48% Commission 20% 20% 20% 20% 20% 20% Total Commission

  • 8.377.228

AED

  • 3.300.009

AED

  • 326.109

AED

  • 2.996.065

AED

  • 318.154

AED

  • 356.978

AED

Claims paid CY

  • 20.367.857

AED

  • 7.962.982

AED

  • 719.942

AED

  • 7.168.616

AED

  • 746.268

AED

  • 899.513

AED

Claims paid PY

  • 3.498.538

AED

  • 1.475.147

AED

  • 100.226

AED

  • 1.229.131

AED

  • 98.484

AED

  • 115.031

AED

Loss reserves income 3.675.463

AED

1.539.525

AED

105.886

AED

1.296.942

AED

104.181

AED

122.082

AED

Loss reserves CY outcome

  • 4.794.165

AED

  • 1.948.803

AED

  • 183.089

AED

  • 1.677.087

AED

  • 178.323

AED

  • 206.824

AED

Loss reserves PY outcome

  • 178.439

AED

  • 64.378

AED

  • 7.130

AED

  • 67.810

AED

  • 5.709

AED

  • 7.056

AED

Technical result 4.430.051

AED

1.736.071

AED

249.126

AED

1.579.087

AED

215.932

AED

173.142

AED

11,4% 11,3% 16,4% 11,3% 14,6% 10,4%

279326 Ceded currency 259160 218673 259160 218673 164065 164013 Ceded currency

DUBAI INS.CO.

  • Group

TOTAL

ARAB OTAIBI INS.

  • Indiv.

AL WISSAM CO.

  • Group

AL WISSAM CO.

  • Indiv.

279326 164065 164013

ARAB OTAIBI INS.

  • Group
slide-45
SLIDE 45

Examples

slide-46
SLIDE 46

46 Management Tools within the MedNet concept Munich Re

Management Tools – examples In the last few months the MIS shows a significant increase of the loss ratio in a certain market…

Loss Ratio - In- and Out-Hospital

50% 60% 70% 80% 90% 100% 110% 120% Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04

slide-47
SLIDE 47

47 Management Tools within the MedNet concept Munich Re

Loss Ratio - Out-of-Hospital

60% 70% 80% 90% 100% 110% 120% 130% Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04

Management Tools – examples We identify an increase of the loss ratios in in- and

  • utpatient…

Loss Ratio - In-Hospital

40% 50% 60% 70% 80% 90% 100% 110% 120% 130% 140% Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Apr 02 Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04

slide-48
SLIDE 48

48 Management Tools within the MedNet concept Munich Re

Management Tools – examples Searching in the Group Tool we can find a group with the following performance The bad development of the loss ratio is mainly driven by the poor performance of the highlighted group

Performance of Companies and Groups

U/Y01 U/Y02 U/Y03 U/Y01 U/Y02 U/Y03 U/Y01 U/Y02 U/Y03

Policy.Total 81% 84% 94% 13.251 15.102 17.645 89% 85% 95%

AL WARABI INSURANCE CO.

73% 78% 90% 2.980 3.156 4.051 87% 88% 105% Individual 79% 58% 39% 1.095

  • 81%

79% 66% Group 68% 81% 163% 1.885 1 1 96% 93% 67% AL OTAIBI INSURANCE CO. 126% 0%

  • 6

10 156% 67%

  • ALKALI INTERNATIONAL

56% 61% 0% 24 12 13 93% 85% 61% INTERNATIONAL ACTUARIES ASS.

  • 73%

116% 754 1.658

  • 90%

128% GULF CONCRETE 188%

  • 56
  • 94%
  • Loss Ratio

In-Hospital Loss Ratio Members Out-Hospital

slide-49
SLIDE 49

49 Management Tools within the MedNet concept Munich Re

By having a deeper look we discover, that the respective group was renewed with a discount of about 20% but the burning cost increased by more than 10% ! Possible reactions: Utilization control during the year by approaching the HR department of the end user to reduce the burning cost Proper renewal in the following year …

Management Tools – examples

Performance of Companies and Groups

U/Y01 U/Y02 U/Y03 U/Y01 U/Y02 U/Y03 INTERNATIONAL ACTUARIES ASS.

  • 88

70

  • 80

89

Burning Cost Out-Hospital Average NRP

slide-50
SLIDE 50

50 Management Tools within the MedNet concept Munich Re

In another country, the in-hospital loss ratio increases

  • significantly. With help of the Product Tool, we find that the

products in network1 are responsible for that. After analyzing network 1 providers we identified the cost- driver: Hospital xy! Our network manager will visit it soon!

Product Tool

C/Y02 C/Y03 C/Y04 C/Y02 C/Y03 C/Y04 C/Y02 C/Y03 C/Y04 Quality, NW 1.X 714 1.807 391 88% 91% 179% 639 559 1.023 Quality, NW 1.A 8.689 11.671 2.229 85% 88% 103% 353 367 458 Quality, NW 1.B 11.473 13.901 2.275 90% 92% 99% 265 280 323 Quality, NW 1.C 829 895 135 112% 89% 96% 337 224 267 Quality, NW 2.A 12 159 76

  • 67%

55% 331 289 Quality, NW 2.B 3.413 12.816 2.246 60% 87% 88% 133 209 220 Quality, NW 2.C 5.111 6.876 1.580 66% 90% 89% 142 165 182

Performance

Status of Data: 02/2004 ERP Loss Ratio BasicBurningCost

Management Tools – examples

slide-51
SLIDE 51

51 Management Tools within the MedNet concept Munich Re

Conclusion

Key success factors for tomorrow:

  • Management by data

based on

  • Full transparency

and

  • Effective business management
slide-52
SLIDE 52

Thank you for your attention!

Wolfgang Hölzle

Münchener Rück Munich Re Group