Fertile foreign fields await the healthcare advisers who can retool their businesses to target international PMI. Sam Barrett investigates
With the UK economy teetering on the edge of a triple dip recession, businesses are looking further afield for growth opportunities. And, as companies are generally taking on more overseas business, brokers are beginning to take a similar stance and add international medical insurance to their portfolios.
Certainly there are some compelling reasons for exploring the international medical insurance market. While the UK medical insurance market is stagnating, with Laing & Buisson reporting a meagre increase of 1.2 per cent in company paid policies in 2011, growth is considerably healthier on the international side. “Over the last few years the market’s grown by between 10 and 12 per cent each year and we see a significant amount of virgin business,” says Andy Seale, regional general manager UK, Middle East and Italy at Allianz Worldwide Care. “Businesses look to new markets when there’s a downturn and if they’re sending someone overseas it’s likely that they’ll need medical insurance.”
As well as healthy growth, remuneration is also attractive. Although commission levels are on a par with UK domestic business, the fact that premiums are higher means the adviser also receives a higher payment. For example, while a UK domestic premium will be in the order of £500 to £1,500 per head, international clocks in at £2,500 plus.
The financial incentive isn’t limited to the commission either. Kevin Melton, sales and marketing director at Axa PPP International, says that selling international alongside domestic cover can serve as a protection mechanism. “If you’re not asking your clients about their international exposure you can be sure that their international brokers will be asking them whether they need any domestic cover. Offering this service will protect your book of business,” he explains.
But while the international market offers good prospects for growth, from a medical insurance perspective it presents a number of key differences. Because of these, sound preparation is key to success.
Without the NHS to fall back on, international cover needs to be more extensive than domestic. While the UK product focuses on treatment for acute conditions, an employee overseas would need more extensive cover, including chronic conditions, maternity, private GP consultations and, in some instances, evacuation and repatriation.
But while experience in the UK market means these differences are relatively easy to master, more complexities lie in the regulations, taxation and legislation surrounding placing business around the world. For example, while some countries can be easily covered with an international plan sold in the UK, others such as Abu Dhabi and Saudi require the sale to be made by a broker registered in the country. Care also needs to be taken about the status of the employee being covered as it may not be possible to cover nationals in some countries, for instance the US.
Chris Beardshall, senior consultant at the PMI Health Group, says it is essential to be aware of these differences. “You do need to understand these issues to ensure a sale meets local regulation and there are no surprises for the client at the point of claim. The potential risks of getting it wrong are greater than on domestic cover.”
Demystifying the market
But while the insurers readily admit these regulations make the international market more complex, they are keen to add that it shouldn’t deter advisers from exploring the products. “There’s lots of mystique around the international market but it isn’t really warranted,” says Melton. “You do need some knowledge before you start but this is relatively easy to acquire.”
The insurers are keen to assist with this acquisition process. Many have adviser toolkits that outline the products and some of the issues that can be encountered when placing business.
Training is also available as Janice Hughes-Madden, business development director at Expacare, explains: “This can help an adviser gain an understanding of the market and know what questions to ask their clients. We do find that the advisers that become successful with international cover have had training with several of the insurers.”
Insurers are also developing technology to help advisers find their way around the international maze. For example Aetna International is launching an online app covering 50 countries in its first release due this April.
This will provide country by country information including details on the healthcare system; any regulation surrounding the sale of medical insurance; and visa requirements for anyone working in the country. “It isn’t rocket science to identify the opportunities but it is more difficult to be able to understand what cover is needed and the potential issues in each country when it comes to arranging it,” says Nic Brown, head of global distribution at Aetna International. “You do need to be able to understand the potential issues your client may face.”
As an example he points to Sierra Leone. This country has just three hospitals, with healthcare very limited outside of the main cities. This means that cover for evacuation is essential.
But, while this level of detail will help advisers appear more knowledgeable about their clients’ international plans, Andrew Apps, director, sales and marketing at ALC Health, argues that this level of knowledge isn’t strictly necessary. “It is true that it’s different but if I was an adviser I wouldn’t get wound up by the legislation. Build up relationship with the insurers instead,” he says. “Unless you intend to make international the core part of your business, leave the detail to them as they’re involved in the market every day.”
He suggests keeping an international panel down to a handful of insurers. These can represent a range of different models, from the large well-known brands such as Bupa through to smaller insurers that specialise in particular markets. “Understand the strengths of the different insurers so you can match client requirements but don’t get bogged down in the details. It’s about who you know not what you know,” he adds.
Arranging agencies with international insurers is relatively straightforward too, especially for FSA-registered advisers. Melton says that if someone already has an agency with Axa PPP Healthcare for domestic business it’s just a matter of adding international to the terms.
Armed with an understanding of the international market and a panel of insurers, it’s possible to start arranging international business. Tim Smithers, healthcare manager at Healthcare Partners, says a good starting point is to ask existing clients whether they have an international presence. “We find that a number of our existing UK clients are setting up businesses overseas. We recently arranged cover for a couple of companies; one was off to Singapore while the other was headed to New York. We’ve always offered international and I do think you need to do it, especially if you’re working with SME clients.”
Marketing this additional line is also important, especially as clients might be unaware you cover it. Apps recommends adding it to your website to raise awareness among existing and potential clients. “Companies will often carry out research online and if your website doesn’t include international cover you could miss out on domestic as well as international business. Having a website also adds to your credibility in this space,” he says.
Rather than writing international business themselves, some advisers prefer to build reciprocal arrangements with specialists. This can be the case where the level of international business is relatively low. Additionally, for cover in some regions, for instance much of the Middle East it is a regulatory requirement to use a broker registered in the country.
Beardshall says it is relative common to have a network of advisers from other companies within an international business model. “This can work well and ensures that as well as writing compliant cover both parties are benefitting through commission sharing,” he says. “We have relationships with advisers in countries where it’s more difficult to place business and this means we’re able to cater for local hires as well as the more traditional expatriate assignment.”
But, with insurers talking about annual growth of 10 per cent plus for at least the next few years, advisers cannot afford to ignore this opportunity. With support from insurers and other advisers, building an international presence could be a smart business move.