Cross-border conundrum

Once upon a time the only geographical information an international private medical insurance (IPMI) intermediary required was whether or not their client was going to be based in North America. Today, changes in legislation mean you\'ll need a much more thorough understanding of where your client will be based before you can recommend the most appropriate scheme.

Money, or lack of it, is driving the change. As more and more countries run up against cost pressures relating to their healthcare systems, they are forced to cut back access to them.

“It is getting harder for governments to fund their own healthcare systems, so they are restricting access. This could mean the introduction of a compulsory health insurance, such as in The Netherlands, or restrictions on who can sell insurance, which is the case in Abu Dhabi,” explains Karen Teasdale, international marketing manager at Axa PPP healthcare.

These changes mean that insurers can no longer simply offer a one-size-fits-all policy. “Time and again we’re coming across these country-specific issues and these have to be incorporated into our products. Often we need to create a bolt-on to run alongside our global product,” says Tim Slee, global sales director at Bupa International.

As in most sectors of the economy, this increased complexity benefits consultants. “We do need to be much more knowledgeable of the healthcare requirements in each country,” says Sarah Dennis, international business consultant at Jelf Employee Benefits. “In some countries you can only sell a product that’s licensed; in others you might be better off recommending the local product with some additional IPMI as back-up. Although it is more work, it’s good as it shows the value of independent advice.”

Additionally, to sell policies in some countries such as Abu Dhabi and Dubai it’s necessary to be licensed. For many this means working with a local insurance company. For example Bupa International has been working with the Oman Insurance Company for several years to provide cover for its clients living in the area and William Russell has a partnership with Dubai Insurance Company to enable it to capture a share of the market.

As well as affecting the insurer, changes in legislation also affect the intermediary. Dennis explains: “As well as making sure we sell a compliant product in Abu Dhabi we have to go down the same route as the insurers and be regulated and registered there or find an introducer to do it on our behalf. Without this we’re unable to take commission for the sales of a product to someone visiting the country.”

It’s not all bad news though. Some of these changes have been very positive for the IPMI market. For example James Cooper, sales director at William Russell, says that Dubai has been one of the hot spots for sales this year. “Dubai is making IPMI compulsory for expatriates in 2009 and already requires local licensing. We expect it to continue as a strong growth market next year.”

Given all the changes in legislation around the world, it’s vital that insurers can provide the latest information on what’s happening in different countries. “Most of the insurers are on the ball,” says Dennis. “For instance, Axa PPP healthcare and Cigna International have good legal departments assessing changes around the world.”

Product flexibility is important too. It can help structure plans for different countries and, as clients can remove benefits they don’t need, it will help control costs. “We are seeing clients looking to cut costs as a result of the credit crunch. Usually they will look to reduce the cover rather than get rid of it altogether though,” says Matt Gale, regional sales consultant at Expacare.

Once an employer has 50 or more employees that will be based overseas, or is likely to reach that number, most insurers can accommodate any benefits structure that’s required. Below that, the degree to which an insurer will tailor benefits varies.

Some insurers are looking at introducing flexibility for smaller numbers though. For instance, at Expacare, groups of 30 or more employees can benefit from a feature called design and build. “This enables you to tailor benefits to the group’s requirements. As an example, if you have a group of male employees you can remove the maternity cover,” says Gale.

But while some areas are becoming tougher from a sales perspective, others are showing strong potential. “Indonesia is a strong growth market for us,” says Cooper. “Increased demand for commodities creates opportunities for expatriate mining specialists.”

He has also seen demand for protection products such as expatriate life insurance grow as the economic downturn makes people switch their focus from investment to protection.

Oil and commodities feature on Slee’s list for growth potential too. “There’s a lot of fluctuation in demand for cover. While we’re seeing expansions in the oil, gas and maritime sectors, there are cutbacks in areas such as financial services. However, even where a company is facing cost pressures, they’re more likely to lay off a few locals than bring back their senior experts who can make a greater difference to the business,” he explains.

The former Soviet Union is also looking good. Gale explains: “We think this will be a good market next year. There are massive reserves of oil and natural resources in places such as Kazakhstan and Azerbijan and we’ve seen an increase in requests for quotations from people going to the area.”

Dennis has also seen an increase in demand for cover for this region, recently taking on a large corporate client that was relocating to the area. “On top of mineral reserves, running costs are lower in this area. US companies in particular are being attracted to this area, and Europe in general, as it can be more cost-effective than locating within the US,” she explains.

Insurers are responding to the increased demand for cover in Eastern Europe with new products. In July Bupa International launched its European Health Plan, covering people living in 10 Eastern European countries including Bulgaria, Estonia, Lithuania and Poland. The plan gives them access to medical treatment anywhere in Europe, with prices starting from Euro507 a year. “This plan is designed for people resident in these countries who would like a less costly option than full IPMI,” adds Slee. “We expect to see growth in this market: once people have some spare cash they do think about their healthcare.”

Further ahead, the future global powers of Russia and China are likely to be large markets for IPMI sales as higher disposable incomes allow people to consider private treatment. However, breaking into these markets won’t be easy. “We’re going to see all sorts of regulation introduced in these countries: they won’t just let us in to make money,” says Dennis.

But wherever in the world the business comes from and whatever the legislative hurdles put in its place, many feel that IPMI has the credentials to weather the economic downturn. “Even when times are hard we find that companies are loathe to let their IPMI go,” says Teasdale. “It’s one of the first things employees ask for if they’re posted overseas and, because employers are likely to pick up the cost of their employees’ healthcare while abroad anyway, it’s regarded as a true insurance product.”

legislation hotspots

Abu Dhabi – compulsory insurance was introduced in April 2007, requiring employees to hold a licensed product before they could obtain a working visa. Rules were tightened further recently. “The health authority has sent a list of international insurers to the healthcare providers saying that they can’t accept their policies. Insurers either have to have a compliant product or need to partner with a local provider,” explains Tim Slee, global sales director at Bupa International. Other countries within the United Arab Emirates are also likely to take the same steps with Dubai expected to introduce similar rules soon.

Malaysia – one of the conditions for entering the Malaysia My Second Home (MM2H) programme is IPMI. Without it a visa will not be granted.

Spain – in Spain the country specific rules have been taken a step further with one region of the country, Valencia, introducing its own healthcare requirements in 2009. Under these, anyone wishing to access state-run healthcare will be required to pay a monthly fee. Karen Teasdale, international marketing manager at Axa PPP healthcare, adds: “This is only for part of Spain at the moment but, given the cost pressures on the Spanish healthcare system, I expect the rest of Spain will introduce similar requirements too.”

The Netherlands – compulsory health insurance was introduced in 2006. From an IPMI perspective this means anyone paying Dutch tax must have a local product rather than just an international plan. Germany is expected to introduce a similar system too.Different rules and regulations are being introduced around the world. These are some examples of the changes and how they affect intermediaries and the sale of international medical insurance.