International rescue

Arranging international medical insurance is no longer a question of taking an off-the-peg solution. Sam Barrett finds a rapidly changing world has made the process altogether more technical

The days of the one-size-fits-all international medical insurance policy have gone. Changes to healthcare legislation around the world mean that policies need to adapt to ensure cover remains compliant.

“When organisations want to give their employees the same level of healthcare cover wherever they are in the world, insurers and advisers must be aware of the changes that are occurring so these can be blended into international medical insurance policies,” explains Tim Slee, global sales director at Bupa International.

A variety of changes have occurred in the last few years as countries look to protect their healthcare systems from outsiders. The Middle East is a prime example of this. With oil revenues running short, several of the countries in this region have made it compulsory for expatriates to have medical insurance if they want to work there.

These compulsory policies will often have benefits that aren’t commonly found on international medical insurance policies. For example, in Abu Dhabi insurance must include a full refund for maternity cover. More importantly, the insurer, and increasingly the broker, must be licensed in the country for the policy to be compliant.

Changes in the Netherlands also have ramifications for international medical insurance. In 2006 it introduced compulsory medical insurance for residents. Stephen Ryan, international marketing manager at Axa PPP healthcare, says the change has caused problems. “It’s a common misconception that when a product becomes compulsory it means that an employer can’t take a product from us. This isn’t the case at all. In fact the Dutch system works in a very similar way to that in the UK where people pay national insurance towards their healthcare costs.”

Even when this misconception is removed, insurers need a license to sell this form of policy, and must provide cover for areas such as chronic and pre-existing conditions and maternity to anyone who requires it. Consequently, provision of this mandatory product is limited to a handful of domestic insurers.

China also presents challenges. Although it does not require compulsory insurance, insurers need to have an arrangement with a local company to sell their policies.

The rapid development of western culture in the country is also putting pressure on international medical insurers, as David Pryor, managing director at Medicare International explains: “The market is still in its infancy and there are a lot of middle men trying to make money as the expatriate market grows. This has pushed up costs.”

In some countries complications arise due to the way regulations are set. This is the case in Switzerland where medical insurance requirements are determined independently by each of the 26 cantons. Andrew Wilson, sales and business development director at Medibroker, explains: “We do recommend that someone travelling to Switzerland checks what the local requirements are before they go. In some cantons, any form of insurance is fine, in others they require specific cover and some insist on cover from particular insurers.”

As an example, in the western canton of Vaud international medical insurance is permitted providing it includes certain benefits and this is certified by the insurer.

Similar problems occur in the USA, where each of the states determines its own requirements.

Intent on maintaining policies that can be used around the world, insurers are being forced to adopt a number of strategies to address these challenges, with some more advanced than others.

For some countries, most notably the Middle East and the Netherlands, an insurer needs to be licensed to be able to sell its product. However, obtaining the necessary paperwork isn’t easy, especially as governments are looking to protect their domestic insurers as well as their healthcare systems.

This has resulted in many of the insurers working with a partner that is licensed. For example, in the Netherlands Cigna International works with domestic insurer CZ. Mark Coleman, director of international sales at Cigna International says: “We were fortunate to set this up before the compulsory insurance was introduced. Employees can now take out the compulsory insurance and the price and cover on their international medical insurance will be adjusted to sit alongside it.”

For the Middle East it has a fronting arrangement with the Saudi Arabia Insurance Company (SAICO) which it uses to provide cover in Saudi Arabia and Abu Dhabi. “When other countries in that region insist on compulsory insurance we should be able to roll out compliant cover there too,” adds Coleman.

Other insurers have similar arrangements. For instance Bupa International and Axa PPP healthcare have partnerships with local companies in the Middle East to ensure they can continue to offer cover to employees based in the area.

Not every change has been accommodated by every insurer though and some will look at demand before they make specific arrangements. For example, while the large number of expatriates in the Middle East has pushed insurers to develop solutions, those with only small amounts of business in Holland haven’t addressed the changes there.

The same is true for the USA, where Wilson says only one international medical insurance provider, HTH Worldwide, has plans that are ‘admitted’ in all of the 50 US states. “Many insurers focus on where expatriates go, so you do need to be careful if a company plans to send employees to somewhere unusual,” he adds.

Likewise, while it is cost effective to provide bespoke solutions for the large corporate market, the economics of designing an off-the-peg product can mean that smaller companies are overlooked. This can leave them with gaps in their cover.

This is beginning to change as the legislation beds in. For example, Bupa International is looking to launch a Middle East product for SMEs later this year.

Advisers also need to take these requirements into consideration, and it is even more important that they conduct a thorough fact find before recommending a suitable medical insurance product. “Advisers need to know exactly where employees will be based and their tax status when working abroad,” says Slee.

On top of this Wilson says advisers need to know which insurers have the necessary licensing arrangements for each country. “If an employee is in certain parts of the world such as the Middle East then it’s vital the insurance is compliant,” he adds.

The situation is likely to worsen as more countries introduce legislation affecting the expatriate community. “The insurers do need to get together to tackle this problem and ensure that brokers and customers are fully informed on licensing requirements in those countries where compliance is required,” says Wilson. “As healthcare costs rise and stresses grow on domestic healthcare systems, more countries are likely to introduce similar forms of legislation.”

Certainly other countries in the Middle East are expected to follow the example of Saudi Arabia. Dubai is set to introduce similar legislation and it’s expected that the remaining five countries in the United Arab Emirates as well as neighbouring countries Bahrain, Kuwait and Qatar will follow suit.

Other countries are also considering legislation. Coleman says that the Czech Republic is currently on his radar. “It is our responsibility to keep a look out for any changes and make sure that policies are amended accordingly,” he adds. To ensure this happens, his company’s legal department is constantly reviewing legislation in other countries.

But while this additional complexity can make international medical insurance a more demanding area of the market, this does bring benefits to advisers. Slee adds: “There is a real opportunity for advisers who can deliver good quality advice in this area.”

Compulsory measures overseas

While the risk of contracting tropical diseases and the availability of quality healthcare used to be the main concerns when sending people on overseas assignments, healthcare legislation is forcing employers to examine whether their international medical insurance policies will even be compliant.

These are some of the key countries where problems can arise:

  • Saudi Arabia – health insurance became compulsory for expatriate employees at the beginning of 2006. Initially the rule only applied to companies with more than 500 expatriate employees but this has now been extended to smaller companies.
  • Abu Dhabi – compulsory insurance was introduced in April 2007. With both Saudi Arabia and Abu Dhabi, employees must have a licensed product before they can obtain a working visa.
  • The Netherlands – compulsory health insurance was introduced in 2006. This is available for a flat rate of around €1,300 and provides a level of healthcare that can be topped up with other policies, including international medical insurance.
  • Switzerland – The type of insurance required depends entirely on the rules set by the canton in which employees are based. While some have no rules on the type of insurance required, others stipulate the policy and insurer that must be used.
  • USA – International medical insurance is acceptable providing an employee isn’t considered a US resident. Although the issue normally doesn’t arise for a couple of years, what determines residency varies between the states. Some base it on tax status while others look for factors such as a US driving licence and registration with a doctor to determine whether someone is resident.