Providers are shaping their products to meet the needs of the fast-growing international PMI market, says Sam Barrett
“Companies are rehiring and sending more people on overseas assignments,” says Paul Weigall, head of sales and marketing at Interglobal. “In the second half of 2010 confidence returned to the market. This was seen especially in Asia, which came out of the recession faster than the rest of the world.”
The Middle East continues to be a popular destination, but other countries racing up the overseas assignment top 10 include China, India, the Far East and Eastern Europe. Additionally, any country with oil or gas is proving an attractive destination. “We’re seeing a lot of virgin business, especially in the SME sector where companies are looking overseas to expand their business, and also to take advantage of tax incentives,” says Sarah Dennis, international healthcare director at Jelf Employee Benefits. “The corporate end of the market is also active as companies look to harmonise their benefits package by combining their local policies.”
Companies are also waking up to the legal obligations surrounding healthcare. “Many of the enquiries come about as clients were previously unaware that they are legally bound in many countries to provide employees with international healthcare,” explains Patrick Woodhead, specialist consultant at Lorica.
The growth in the market is also attracting interest from insurers, with several new entrants to the market in the last couple of years. “This is good for clients as it has helped increase competition around terms and conditions as well as price,” says Nick Boyton, development director at Alexander Forbes Healthcare.
Many enquiries come about as clients were previously unaware that they are legally bound in many countries to provide employees with international healthcare
The most recent entrant to the market is Now Health International, headed up by Martin Garcia, previously managing director of Goodhealth Worldwide. He believes there is plenty of room for growth in the international medical insurance market. “The large corporate market is mature, but we are seeing a lot of opportunities in the SME sector. There has also been a blurring of expat and local business, as employers become more aware that they can’t offer different benefits to different employees,” he says.
To help capture this growth, insurers have been working hard at making their products more suitable for the market. “Insurers are now more flexible with their approach and plan design,” says Woodhead. “Many insurers have, or are launching, plans with a degree of modularity built in so benefits can be tailored. Others are trying to gain an advantage in a particular area of the market.”
A good example of this is Expacare’s scheme for companies with fewer than five employees, the Corporate Advantage Plan. It enables them enjoy medical history disregarded underwriting, which is typically only available to groups with 10 or more members.
Wellness is also becoming a more common benefit on international schemes, with insurers adding in options for vaccinations and check-ups. Although the certainty of claim does push the premium up, these can be particularly important where an employee is being posted overseas with his or her family.
Cost containment remains an important part of the equation. Worldwide medical inflation runs at around 15 to 20 per cent and claims costs are on the up. Weigall comments: “We’ve seen an increase in the frequency of claims. This is partly to do with the recession as employees will often look to get niggling health problems sorted while they can if they’re worried about losing their jobs.”
Because of this, excesses, deductibles and coinsurance are becoming more commonplace and can help to reduce the cost of cover. As an example on Aviva’s SME product, International Solutions, the standard excess is £25. This applies per claim per person, although it’s not applied on in-patient and day-patient treatment or on benefits that include a co-payment. Increase the excess to £100, for a 5 per cent discount, £250 for a 10 per cent discount and £500 for a 15 per cent discount.
An additional cost containment benefit of an excess is the way it can influence policyholder behaviour. Dennis explains: “We can get good management information on our schemes, which enables us to see where claims come from. If a large number are small, out-patient claims, an excess can help to deter these claims and keep costs down.”
Other advisers find their clients tend to steer clear of excesses though. “We don’t tend to see excesses come into the policies. Expats are well paid and expect full cover. Adding in an excess can send out the wrong signals,” says Chris Beardshall, global account executive at the PMI Health Group.
The way insurers operate can also help. Fraud can be a major problem, with some healthcare practitioners seeing a medical insurance policy as a licence to up their bills. “There is some fraud out there,” says Andrew Apps, director at ALC Health. “It tends to be the kind where a patient is asked whether they’re paying cash or insurance and if the answer’s insurance, an extra 15 per cent is added to their bill. Healthcare providers think we can’t be bothered to follow it up because of the cost of calls and so on but we will.”
To keep fraud to a minimum, insurers have checks in place to make sure invoices are accurate and prices reasonable. Information about fraud is also shared through the Association of International Medical Insurance Providers.
Direct settlement is another useful strategy, helping to stamp out fraud but also to keep the cost of treatment down, leading to more sustainable premiums. Teresa Rogers, international business development manager at Aviva UK Health, says that she’d always look to set up direct settlement arrangements in areas where there are pockets of expats. “You do need the volume but where this isn’t the case we always encourage pre-authorisation. This enables us to negotiate with the hospital, which makes it easier for the employee but also enables us to secure a better deal,” she says.
Putting these mechanisms in place can secure savings. For example, covering a pregnancy in China can be expensive but insurers can reduce the costs by around 30 per cent by paying an initial deposit to the hospital.
It’s not always an option though. For instance Apps says that in some areas it’s impossible to set up deals with hospitals. “There’s a hospital in China that insurers are constantly asking about direct settlement but they don’t want to know. There’s no competition so they don’t have to work with insurers.”
Some insurers are also looking at extending direct settlement to out-patient costs. This has been offered by Cigna International for several years but others now see the merits. “We are looking at this,” says Rogers. “We’ve made the claims process slicker already by accepting faxed or emailed copies of invoices for out-patient and pharmacy claims but setting up direct settlement would improve the situation further.”
Country specific challenges still continue to dog those placing international business, with medical insurance becoming an increasingly common requirement for visa applications. This is the case in a number of countries including Abu Dhabi, Holland and Germany.
“Some countries insist that the employee holds a local healthcare plan, otherwise they are unable to fulfil minimum visa requirements but there are issues with these local plans,” says Woodhead. “The level of cover may be lower than an international plan and the extent of the coverage might not enable them to have treatment outside the country.”
In some cases this has meant doubling up cover, running an international plan alongside a local one. Increasingly insurers are addressing this by offering international plans that are fully regulated in these countries, thereby negating the need for a local plan. But Woodhead warns this could change. “There’s been talk that even a regulated foreign insurer plan won’t be compliant enough in near future, especially throughout the UAE. If this happens there will be a rush to partner up with local insurers to avoid the risk of non-compliance,” he explains.
Keeping on top of changing regulations around the world is also important and can lead to complaints from advisers. For instance Beardshall says changes can come in with immediate effect. “Requirements can change overnight and it can be a bit of a scramble to get things in place,” he adds.
While there’s plenty of business available, Apps says that advisers need to start thinking beyond the UK’s expats and look to meet the needs to other countries’ nationals travelling abroad. “Many advisers have a mental block and only think about the Brits abroad but the UK is in a great position to capture this market. Our insurance market is well respected,” he says.
“Additionally, while I’ve heard reports of several advisers quoting for every piece of UK PMI business, I’ve never seen more than one adviser for an international plan. The opportunities are huge.”