As the global marketplace increases in size, the impending recession forces more joint ventures overseas – and the pressure on employees to gain an international CV heightens. All of which means the outlook for providers of international PMI is looking decidedly rosy.
The imminent “new” Europe should also result in yet more crossborder job hopping. Good news for international PMI providers – but are they really offering what clients want?
International PMI has sold slightly better than its domestic counterpart in the UK, but there is still a long way to go before insurers start making real inroads into the expatriate market. Although more employees than ever face the reality that at some stage in their career they may have to live and work abroad, nearly half of all expatriates fail to obtain adequate private medical insurance to cover them in their work.
According to leading brokers in the field, awareness levels of PMI products vary, according to the size of the company concerned in sending its staff abroad. “Companies are waking up to PMI – but only those with substantial amounts of employees to worry about,” says David Heppard, head of the international division at specialist international broker, IHC.
Heppard adds: “Many smaller companies who are sending just a few staff abroad fail to consider the advantages that an international product can bring.”
The insurance companies themselves have also tended to hang back from the international PMI sector, cautious about its cost effectiveness of these moves, where losses can be high. “You can get some very big claims, and there is often no control over costs,” says Inez Cooper, managing director at provider William Russell.
Unexpectedly falling ill is never a joke. But if you could not get hold of specialist advice in your native language, were unable to choose the foreign hospital or clinic where you would like to be treated and denied emergency evacuation back home due to lack of funds, the healthcare nightmare could become a reality.
Depending on the country, treatment abroad can be expensive, and many domestic healthcare and travel plans don’t go far enough to provide adequate cover for employees working abroad.
“You can’t just tag international cover onto a domestic scheme, it’s not going to be suitable,” explains Heppard.
IHC is the largest broker in this sector, and provides clients such as Arthur Andersen, BP and Guinness with insurance product details from the top 20 international PMI providers. Heppard warns clients not to rule out local cover immediately and recommends that companies always check out the balance between an international scheme and insurance schemes that are offered locally. The insurance cover which is available will vary widely, but could result in companies being able to benefit from cost savings and quicker claims service.
In this golden age of customer service, it is the insurers who are able to respond precisely to customers’ needs who will get the lion’s share of the business. And this is where a different product approach, that breaks away from the more traditional package, comes into force.
International PMI products currently fall into three main areas: packages, semi-packages and menu-based. As more employees travel further across the globe, insurers have started to realise that the traditional package approach, where a single product is expected to suit every client, is becoming outdated.
But with a menu-based approach, clients can pick extra cover on top of the core product.
The idea is that insurance cover is built to suit the client, and is based on affordability and necessity.
Dutch multinational OHRA launched its Medios International PMI product in 1997. Although the firm is unwilling to give out sales levels for new expatriate business, the insurer is certain that its menu-based approach is a winner.
Sussex-based Goodhealth International is launching a similar bespoke product this month. By merging its Falcon and Expatriate plans to form the Goodhealth International Healthcare Plan, the insurer intends to rationalise its approach in order to better respond to client demands.
“It is much better than offering a standard product with discounts which is what we were doing. For instance, if an individual is 55 years old, then they won’t want pregnancy cover,” says Sarah Jewell, spokeswoman at Goodhealth.
A core international PMI product includes AIDS cover, pregnancy complications and in-patient cover as standard. Clients can then add cover options onto the standard menu, such as evacuation to a country of choice, routine pregnancy and chronic illness.
All standard packages will cover hospital in-patient costs, evacuation charges to the nearest suitable country and parent accommodation for parents with children under 18.
The choice of hospital can be fundamental and some policies operate on a restricted list of hospitals and clinics, limiting the patient’s choice. Peter Rousseau, consultant adviser at Interglobal, warns: “If you are treated in a hospital or clinic not on your insurer’s list, you could be faced with having your claim rejected.”
Repatriation has now been taken off most standard packages. Heppard explains: “An expatriate who decides to make that country his home after retirement will have no need to pay a premium that includes repatriation cover.” But many still argue for repatriation and evacuation as standard. “What happens if you have not opted for it and somewhere across the line you are facing an emergency where you need it?” argues Rousseau. It is important that brokers and insurers inform their clients fully of the conditions in the policy.
In-between the package and the true menu-based approach fall providers such as PPP, William Russell and BUPA International. More than one package is offered, but the benefits cannot be tailored to such a degree as true menu policies.
William Russell adds out-patient care to turn the basic cover plan into Premier Care. And, if clients request maternity and dental care, they can go for the Premier Plus plan. Cooper at William Russell, defends the “semi” menu approach: “People need cover to see their doctor and that is what we offer.”
Norwich Union offers Global Care and Global Care Plus. Global Care offers £250,000 of annual cover, which provides full cover for consultations as an in-patient or day-patient, emergency dental treatment of up to £500 a year and emergency world-wide evacuation. The Plus scheme includes routine dental treatment, pregnancy cover and doubles cover limits.
Another loophole clients must watch out for are doctor’s charges. Rousseau explains: “More often than not these specific charges could represent the bulk of the actual expenditure in the outpatient treatment costs. From the wording contained in the various brochures, it is easy to assume that the doctor’s or GP’s charges are included and covered, only for the client to discover – in most cases after the event – that not all policies cover him. And some others will place a limit on the amount payable. There are other policies that will provide full cover, limited only by the overall maximum cover of the policy itself.”
PMI cover will vary according to location. In some third world countries facilities can be poor or non-existent. And insurance companies have developed cover to reflect differing standards and treatments from country to country.
Yet despite the emphasis on PMI personalisation, most insurers still use the easy option of splitting world-wide premium ratings into three main areas; Europe, world-wide excluding the USA and world-wide including the USA.
Business for OHRA is concentrated in the European region, where contacts with intermediaries are closer and healthcare systems much more similar to the UK. OHRA has decided to steer clear of the American market, due to the “horrendous” costs of health insurance claims out there. Fingers are pointing at the litigious nature of the US population, where excessive negligence and liability fears have been blamed for excessive open-ended bills in this area.
“Claims can get seriously inflated. Even when we asked for twice the initial premium, we were finding it hard to match the costs,” explains Hazel Berrill, marketing manager at OHRA.
Rates are generally far higher for the US than the rest of the world. Costs will then filter down through the Far East to Europe, and then the Middle East. The rating separations aim to reflect not only the cost of care in that country, but also the facilities available.
As international healthcare standards continue to grow apart, premiums that accurately reflect location have become more relevant to the market. Insurers are catching onto the “bespoke” adage pretty quickly – but does broadly separating the world into three easy sections really constitute a split that is representative of all the levels of international healthcare facilities?
In a growing market, where tailored products are becoming the done thing, it is undoubtedly the insurers who learn to segment the market more effectively who will ultimately emerge as the winners.