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Daniela Duque Estrada
CBSG, Rio de Janeiro
According to a study by the Brazilian Institute of Geography and Statistics (IBGE), Brazil is undergoing one of the fastest changes in the aging processes in world history. A Brazilian born in 1940 had an average life expectancy of 45.5 years, while in 1970 this had risen to 57.6 years and in 2006 to 72.3 years. The projections are that by 2050, more than 30 per cent of the country’s population will be elderly (over the age of 60), the same as Japan today, amounting to approximately 64 million people. This increase in longevity has a direct impact on three types of insurance: health insurance, life insurance and private pension plans.
The effect of longevity on life insurance is positive, since payment of the benefit takes longer on average.
For private pension plans, in case of payment of lifetime monthly income, longevity directly jeopardises the solvency of the insurer, with regards to the existence of plans that were sold many years ago and legally must be maintained with the same technical bases as originally contracted, according to outdated mortality tables. This requires the plan operators to manage their assets cautiously, by making investments in funds with good yields and acceptable risks while setting aside provisions to honour their commitments to the beneficiaries.
Health cover is one of the forms of insurance that will change the most in the coming years, in the way healthcare providers are remunerated and in the relationship with consumers.
In Brazil, the high cost of health services and the precarious situation of the public system prompt a large portion of the population to contract health insurance or a health plan. At present, private health insurance or plans serve about one-third of the Brazilian population and the country has one of the world’s largest private healthcare systems.
This healthcare system is regulated by the Agência Nacional de Saúde Suplementar (ANS), associated with the Ministry of Health, through oversight actions and the issuance of rules. The ANS faces constant opposing pressure from operators and consumer groups, and tries to conciliate interests by allowing operators to raise rates or charge added fees for specific services while not outraging beneficiaries. This enables a balance between costs and revenue, in particular the higher costs due to increased longevity.
However, the greatest challenge faced by health plan and insurance operators is the judicialisation of questions related to coverage. The courts tend to favour consumers, considering them to be the more vulnerable party, which leads to what some could consider excessive protection. An example of this is the decision rendered on 16 July 2018 by the Federal Supreme Court; this suspended a resolution issued by the ANS permitting health plan operators to charge users 40 per cent of the cost of office visits and exams (known as a co-payment and franchise model).
Greater longevity is a new component in the equation that is not being properly considered in actuarial calculations. However, it is important to bear in mind, specifically regarding health insurance (which is most affected by the longer life expectancy), that the target of this insurance is to guarantee health treatment to the beneficiary, not to guarantee longevity. Therefore, thought should be given to the possibility of creating a new product in the insurance market, aimed exclusively at treatments that prolong life instead of fighting diseases.
 The benefits of private pension plans can consist of lifetime monthly income or payouts for a determined period, or a lump sum payment, independent of the general public pension system or those of certain categories (military personnel, civil servants).
 The main difference between health insurance and health plans is the reimbursement of outpatient and hospital expenses. Under health insurance, reimbursement is the rule, enabling the insured to choose the doctors and hospitals. In turn, with health plans, reimbursement is the exception, with the plan operator generally offering health care through its own network or a system of accredited healthcare professionals and hospitals, at no cost to the beneficiary.