Growing pains

The international medical insurance sector is showing all the signs of an immature market, which should be good news for advisers, says Sam Barrett

While sales in the domestic medical insurance market stagnate, the international market has a very different tale to tell. New business and renewed interest in sending employees overseas means there are predictions that it is set for double digit percentage growth over the next year.

“We have seen decent growth of around 45 per cent over the last few years and we’re expecting to see a 20 per cent increase in business over the next year,” explains Sarah Dennis, international health director at Jelf Employee Benefits. “There’s been plenty of virgin business, both from companies sending employees overseas for the first time but also as employers who’ve previously sent employees overseas on travel insurance realise that they need more suitable cover.”

One of the key drivers behind this increased awareness of what is suitable has been rules changes relating to healthcare provision in different countries around the world. These changes kicked off in the Middle East with Abu Dhabi introducing rules requiring expatriates to hold suitable medical cover. “More and more countries are introducing rules that require expatriates to have medical insurance, sometimes as part of the visa requirements. This is really helping to drive business,” adds Dennis.

But this tale of growth has not been a simple one. Offsetting the inflow of new business has been an increasingly cost-conscious mood among existing customers. Steve Nelson, sales manager at April Medibroker, says there was definitely something of a knee jerk reaction about 12 months ago when price became a major factor in companies’ choice of cover. “Many employers used to stick with the same product year after year but we’re seeing more and more ask about cost containment measures such as excesses and co-insurance. These were virtually unheard of on international plans a couple of years ago,” he explains.

Although an excess can reduce premiums and help to deter employees from making claims, not everyone likes this development. Mark Coleman, international sales director (UK) at Cigna International Expatriate Benefits, says that although companies do want to discuss the use of excesses and co-insurance, many accept that these mechanisms will just push the expenditure into different areas. “Employees may look to claim back the costs through their expenses for instance so, for some employers, it’s easier to forego the excess and leave all the medical expenditure within the medical insurance plan,” he explains.

Trimming benefits was another response to the tough economic climate. “We saw employers questioning what they were offering on their international policies,” says Nelson. “If you’re not offering dental insurance on your domestic plan do you really want to offer it as a benefit to employees working overseas?”

In many cases the insurer only finds out about outpatient claims after they’ve been made and subsequently costs can spiral out of control

This questioning leads to the removal of some of the peripheral benefits such as dental and maternity, which although nice to have can be regarded as expensive add-ons.

But, while this pruning exercise is relatively easy for large corporate clients, who can bespoke plans to their requirements, this is trickier for smaller companies, where the drop from comprehensive to budget means a lot of benefits can fall away. Dennis says insurers aren’t really responding to this demand although there was some recognition of the issue when Aviva launched its modular plan, International Solutions, last year. “This can also be for smaller companies too. Pricing can be strange but it’s good to be able to offer this as an option,” she adds.

Another cost cutting technique that came into play over the last year was reducing the cover headcount. Coleman says that some employers looked hard at who they covered, removing cover for dependants or looking at ways to reduce the overall expense of the assignment. “We’re seeing more international commuters at the moment,” he explains. “Where a company might have put an employee and his or her family in Brussels for a year before, they’re now looking at getting them to stay for the week, commuting by Eurostar on Monday morning and Friday afternoon.”

But while cost may have been the primary focus in the last year, other demands remain on the agenda for many companies placing employees overseas. Patrick Woodhead, specialist consultant at Lorica Consulting, says that direct settlement remains a key concern for international medical insurance clients. “Members are very keen on insurers that have a large hospital network abroad due to the direct settlement agreements that insurers forge with overseas hospitals. In the past, hospitals tended to take credit card details from the patient before any treatment was undertaken, which put the member out of pocket until they were reimbursed,” he explains. “Hospital network list expansion is probably something the insurers need to look at.”

Insurers are working hard at addressing this. For instance Tim Slee, sales director for Bupa International, says he is keen to limit the number of instances where an employee has to claim back the cost of treatment. “We have more than 7,500 hospitals and clinics around the world in our network. We don’t direct or prescribe where policyholders can be treated but many like the fact they don’t have to claim back the cost of treatment,” he says.

Bupa also comes in for praise from advisers for its drive to expand its network. Dennis says it can be very responsive when one of her clients needs a new hospital adding to the network. “If a client has employees overseas who don’t have easy access to a Bupa network hospital, we can ask for a hospital to be added and they’ll assess it for inclusion, suggesting another if it’s not suitable,” she explains.

While the requirement for authorisation means direct settlement is a relatively easy option for in-patient treatment, steps are also being taken to make this readily available for out-patient claims. Nelson says this is a positive move. “In many cases the insurer only finds out about out-patient claims after they’ve been made and subsequently costs can spiral out of control. We find that if a company has a lot of people in one place the insurer will be open to doing something with a local provider but this isn’t always possible,” he explains.

Some insurers are taking a more proactive stance on this. For instance Cigna International has been expanding its network over the last five years, working with local third party administrators and insurers to get access to direct settlement for out-patient treatment. It now has a network of more than 140,000 doctors, hospitals and clinics outside the US, including 47,000 healthcare facilities in Africa. Coleman adds: “People want a cash-free process and we’re constantly looking at how we can grow our network to enable this. We also focus on the new areas of the world people are visiting. For example, we have plans to add more than 30,000 providers in Brazil and a further 4,400 in Mexico.”

Where claims do need to be settled with the insurer, policyholders and brokers are demanding a slicker service. For instance Woodhead says he would like to see more use of technology, both for claims but also more generally. “Some insurers are making great strides, including online claims tracking, quotes and registration. I hope more of them expand their online capabilities,” he says.

If you’re not offering dental insurance on your domestic plan do you really want to offer it as a benefit to employees working overseas?

Dennis agrees. She says that although many insurers either offer this or are working towards it, she would like to see them offer more sophisticated services so the employee or HR manager can see exactly where the claim is in the system.

This is recognised by the insurers who say they’re keen to improve their offerings in this area. “It’s about making life easier for expatriates,” says Teresa Rogers, international sales and marketing manager at Aviva UK Health. “They need to be able to send claims by email. You can’t rely on the postal services; this can take weeks and things do go missing.”

All the legislative changes around the world affecting medical insurance are also cause for concern for brokers and their clients. While changes have become relatively common throughout the Gulf States, legislation to safeguard healthcare spend have also been introduced closer to home. “It’s an absolute minefield,” says Nelson. “It started with Abu Dhabi requiring expatriates to have a local plan a few years ago but more recently we’ve seen rules being introduced in Europe with France, Germany and the Netherlands stipulating the type of plan expatriates can hold.”

For employees posted to these countries the ramifications of ignorance aren’t good. In an extreme situation, someone could be denied treatment if they weren’t holding the right cover but employers are also seeing people denied access to a country.

Faced with this, insurers have beefed up their legal and compliance functions, reporting on what’s happening around the world and putting structures in place to ensure, where possible, cover remains compliant. “Insurers can put fronting arrangements in place or work with local insurers to provide cover,” explains Nelson. “These changes can be testing but there isn’t anywhere in the world we can’t provide a group quote for medical insurance. It’s definitely a good market to be in; it’s huge and there’s so much capacity. “