A year agomost spokespeople from international private medical insurance (PMI) providers triumphantly reported that they had remained unscathed by the global economic downturn. Nevertheless, 2009 has proved much more testing and the few companies who do not acknowledge the fact can all point to factors which have cushioned the blow of the recession.
William Russell, which claims to have “seen no downturn at all,” has not been affected by large scale redundancies as a result of its focus on SMEs; DKV Globality (Munich Re Group), which reports that “recession hasn’t really harmed us,” is still in its initial growth phase after entering the market in March 2008; and Vanbreda International, which refers to new business growth of just under 40% during 2009, has a lot of NGOs (non-governmental organisations) as clients.
Most other players point to considerable difficulties but award themselves a sizeable pat on the back for the way they have coped. Even the “over 40%” new business growth experienced by IMG Europe during 2009 was well down on the “over 100%” it recorded the previous year. The company reports that currency movements saw a massive trend towards cancelling cover or shopping around from expats suffering significant shortfalls when converting their UK pension income into euros.
Bupa International, which says that “things got a bit ugly during 2009″ is proud to announce that it expects to record some sort of growth for 2009, and regards this as “an excellent achievement given the circumstances”. Some of its markets, like oil and gas, have been incredibly volatile and the extraction industries in Africa supplying the Chinese market were particularly badly affected when commodity prices slumped.
AXA PPP International, which reports overall international business growth of around 5% during 2009, singles out Spain, where it has been experiencing markedly increased price competition from local insurers, as a dull spot. Morgan Price International Healthcare has found the renewal process in the Middle East particularly competitive and, although it has not experienced any significant contraction in scheme numbers out there, it has not renewed a couple of schemes because it was not prepared to indulge in loss-leader pricing.
But none of these accounts contain even so much as a hint of despair. It is considered to be simply a question of when things pick up rather than whether they do. Some even feel that recovery is already underway. For example, InterGlobal detected a definite improvement in optimism and business opportunities during the fourth quarter of 2009 after finding the second quarter especially tough, particularly in Singapore and Dubai – which have both experienced a mass exodus of expats.
At Newcastle upon Tyne-based specialist intermediary April Medibroker, which focuses mainly on the individual market, things are considered to have started improving even earlier.
Andrew Wilson, chief executive of April Medibroker, says: “The first quarter of 2009 saw fairly big knee-jerk reactions towards being more cost conscious from those considering going abroad. Because they were starting to plan further ahead and to think about what they were buying, they became a lot more focused about life in general and this led to plenty of eye opening. There was therefore an increasing realisation that it can be worth paying good money for quality international PMI as opposed to just trying to get everything on the cheap.
“Things started to pick up quite considerably in the second quarter when people realised that the downturn wasn’t hitting their pockets as much as they had expected, and they started looking beyond global plans and showing more interest in lower-cost country specific plans with more targeted local benefits.”
UK-BASED PLAYERS UP THEIR GAME
Perhaps the clearest indication of the widely felt confidence in the sector’s future prospects is the extensive investment in it being made by the major domestic UK insurers, who can clearly see that the international arena offers more growth potential than the UK market. Aviva UK Health, Bupa International and AXA PPP healthcare (now known as AXA PPP International) all made a heavy commitment of resources to international PMI during 2009, and Standard Life Healthcare announced that it would be entering the fray for the first time during 2010 – with a product for the group market only.
Standard Life Healthcare will be partnering with another organisation, the identity of which will be revealed during the first half of 2010, and will aim to be very easy to deal with because its research has revealed that many international PMI providers leave much to be desired in this respect. It also has a clear view with regard to how its cover proposition is going to stand out from the crowd.
Ronjit Bose, head of product at Standard Life Healthcare, says: “The international PMI market enjoys relatively strong growth and the move is about extending the appeal of our corporate healthcare proposition because we already have clients with international needs, and intermediaries have asked us for international capability for a number of years.
“We felt it was important to partner another organisation to secure the necessary technical expertise because we are aware that a big infrastructure is required. We need to be available 24/7 and to offer a multilingual and multi-currency capability with expert knowledge of hospital provision across the globe.”
Aviva UK Health’s September 2009 re-launch of its international PMI proposition was also primarily instigated by a realisation than its existing capability lacked the infrastructure necessary to support different currencies and tax rates. The modular cover format of the new International Solutions plan can be tailored to suit different geographical locations and the accompanying new platform is multi-currency, multi-tax rate and multi-lingual.
International Solutions, which is available to both the group and individual markets, offers five modules for increasing cover, including wellness benefits, dental and optical and maternity care. Three modules are also available to reduce costs, such as a choice of excesses and reduced outpatient cover. Additional attractions include access to a 24 hour medical assistance service, 24 hour medical information helpline and a portal giving customers access to everything they will need to decide the cover level suitable for them.
Andrew Turner, general manager international PMI at Aviva UK Health, says: “The customer gets a very simple document and all documentation is done online, which cuts out the post and makes changes to modules easy to perform. We are intending to give the major players a serious run for their money and have a three year plan within which to increase our portfolio size from its current £4m to £50m. In its first month the new product has already achieved quadruple the level of sales of our old one.”
Bupa International has also gone down the modular route with the launch of its Worldwide Health Options in July 2009 – following a soft launch to the direct market a month earlier. The plan, available only in the individual market, offers four bolt-on options: specialist treatment, including situations where a hospital stay is not required; prescribed medicines and medical equipment; health screening, vaccinations, dental and optical treatment; and worldwide evacuation for people who are unable to get the treatment they need in a local hospital. Further options include US cover and a range of deductibles to help manage cover costs.
Tim Slee, sales director at Bupa International, says: “Our existing Lifeline product had been around for 21 years, so we felt it was time to shake up the market, and Worldwide Health Options has been extremely well received. Its sales increased month by month over Lifeline sales during the first four months, and by October 2009 they were accounting for 58% of our overall individual international PMI sales.”
Also in September 2009, Bupa International announced a partnership with leading Russian insurer Ingosstrakh. Expatriates and Russian residents can therefore buy Bupa International’s group and individual products, including specific products for people working in the oil and gas and maritime industries. Prior research had revealed that there were over 150,000 expats in Moscow and St Petersburg alone.
AXA has not exactly been standing still either. In April 2009 its expatriate operation made the transformation from being merely a division of AXA PPP healthcare to a dedicated standalone business unit entitled AXA PPP International. Other significant developments include the March 2009 launch of its Global 24 service capability, a 24/7 pre-authorisation and claims service with first contact resolution to international customers, and a new distribution deal agreed in January 2009 between AXA PPP International in the UK and AXA Asia Pacific.
The other UK domestic player to have been in the news – albeit for the wrong reasons – has been Exeter Friendly, which withdrew from the international PMI market for new business during March 2009. But this should not be seen as any great reflection on the state of the market itself as the move can be attributed primarily to a rationalisation of activities following Exeter’s merger with Pioneer in April 2008.
Nick Jones, brand and marketing manager at Exeter Friendly, says: “Operating overseas means concentrating on a lot of different things, including constantly changing regulations. Being relatively small and specialist, it therefore made more sense to focus on the UK. The withdrawal should be seen more as a strategic decision than as an indication of lack of progress being made by us in this area.”
The overseas-based providers have hardly been short of news either, producing numerous product tweaks, new partnerships and product launches(see box on page 24). The rebranding by Aetna in November 2009, has probably been the most significant story as it represented the culmination of the integration process that has occurred since the company took over Goodhealth Worldwide in October 2007.
All products and services are now sold under the Aetna Global Benefits banner everywhere except in China, where the Goodhealth name is still being used because of regulatory restrictions.
The rebranding was accompanied by an enhanced global services capability, including a 24/7 member service facility and integrated direct settlements network. Such improvements were clearly needed.
Colin Boxall, corporate director of national specialist intermediary ADVO Group, says: “We used to place quite a lot of business with Goodhealth but since the takeover we noticed a significant downturn in service and this undermined our confidence, so we haven’t placed any new business with it during 2009. The situation could have arisen as a result of a difference in attitude between the two parties as Goodhealth was very hands-on and approachable and was also able to stand back and look at the overall picture.
“But, to be fair, over the last couple of months we have noticed a lot of improvement from Aetna and this is continuing all the time. It is now putting in place managers we can actually talk to, whereas before our contacts weren’t decision-makers.”
The fact that provider spokespeople are rarely able to volunteer opinions on anything other than their own company’s progress and developments probably reflects the fact that market conditions have been so extreme that anything other than combating the economic downturn seems barely worthy of considering a trend.
However, Mark Coleman, international sales director at CIGNA International Expatriate Benefits, has noticed an increase in the utilisation of plans as employees worried about losing their jobs and finding themselves without employer-paid cover have been bringing forward claims that could otherwise have waited.
Additionally, Sarah Dennis, international healthcare director at national specialist intermediary Jelf Group, observes that she has been seeing some “shocking” rate increases. She says: “We’ve seen some insurers increase premium rates by 20% or more, reflecting rising costs of treatment throughout the world and hospitals putting their rates up. I would hope that this will slow down, otherwise we may have to look at switching at market reviews.”
One of the most noticeable differences from previous years has been the fact that commentators have fewer regulatory changes to get their teeth into. Even Dubai, which was supposed to introduce changes in January 2009, has deferred doing so. Therefore, other than the informed rumour that the United Arab Emirates (UAE) as a whole is thinking about introducing a collective regulatory system, only Germany has thrown up any news.
In January 2009 the German government introduced legislation requiring healthcare to be with a local provider. But even this move seems to have had relatively little impact on the main international PMI players. AXA PPP International is the only one specifically to flag it up. As it is not licensed as a provider in Germany it can only conduct business through the broader AXA group, which is licensed as one.
One school of thought maintains that the lack of regulatory activity, particularly in the case of Dubai, has been the direct result of governments wishing to avoid driving further costs into business during the recession. Nevertheless, no-one doubts that regulatory change will continue to be a major trend again in the future.
This need not prevent new providers from entering the market because, as Standard Life Healthcare is about to do, they can always lean on the regulatory expertise of a partner during the early years. It will, however, continue to make life complex for intermediaries seeking to provide whole-of-market advice, and there are currently less than a dozen able to do so with any real confidence.
Intermediaries can easily access up-to-date regulatory information if they are prepared to be tied to a single insurer but making the transition to whole-of-market represents a whole new ball game and clearly involves confronting something of a chicken and egg situation. If an insurer is only receiving a small proportion of an intermediary’s overall international PMI business will it really want that intermediary to be continually phoning to pick its brains?
OTHER COMPANY SPECIFIC NEWS
CIGNA INTERNATIONAL EXPATRIATE BENEFITS opened a new office in China in August 2009 and ran half a dozen legal and compliance roadshows across Europe during 2009.
In August 2009 DKV GLOBALITY launched two new highly flexible plans which aim at the high quality end of the market. Globality CoGenio offers modular insurance solutions for companies with comprehensive benefits, while Globality YouGenio offers private health insurance for individuals and their families who reside abroad for at least three months.
IMG EUROPE’s Coversure plan, launched in June 2009, also scores on flexibility and is available to both expats and local nationals resident in either Spain, Cyprus, Portugal, Malta, Greece and Gibraltar – cover can even be extended for elective treatment elsewhere in Europe. Designed as an “A” rated viable alternative to low-cost local plans, it provides quality in-country cover and includes a 10% discount for new customers and a no-claims discount of up to 20%. In February 2009 IMG EUROPE also launched MyIMG, a customer service portal which allows insured individuals 24/7 global access to do everything from updating personal information and checking the status of claim in progress to renewing their policies and searching the company’s medical provider database of international hospitals and doctors.
In November 2009 INTERGLOBAL launched two international plans designed specially for the African market. Both offer expats and international travellers in Africa broad cover at a competitive cost. The Africa UltraCare Standard Plan provides comprehensive cover against the cost of inpatient medical treatment while members of the Africa UltraCare Select Plan also benefit from the choice of two levels of maternity cover, inclusive eye examinations and cover for AIDS/HIV treatment without the standard four year waiting period. Additionally, InterGlobal opened a new office in Singapore in March 2009 and in October 2009 it launched Sales On Line, a web-based facility which enables individuals and brokers to quote and buy individual policies online.
In July 2009 MEDICARE INTERNATIONAL introduced a new higher cover level option called Executive Plus in response to feedback from clients and brokers. It enables working and retired expats of all nationalities to choose between four levels of cover, and offers significant extra benefits in areas such as maternity care, pregnancy cover, and childhood vaccinations as well as a doubling of cover for organ transplant surgery.
MORGAN PRICE INTERNATIONAL HEALTHCARE changed underwriters from Allianz Worldwide to Brit Insurance in May 2009.
VANBREDA INTERNATIONAL created partnerships in the UAE in February 2009 and in Kenya in April 2009 and established an office in Dubai March 2009. In April 2009 it also created a broker support division in its Antwerp head office to react to increased international business from the UK.
WILLIAM RUSSELL reports significantly increased in business from Dubai in 2009 as a result of its partnership with Dubai Insurance Company formed in June 2008.
THE TERRORISM ISSUE
When Gavin Broad, a British expat working in Thailand, took his wife to hospital to give birth, he never expected to end up in the bed next to hers. But that is exactly what happened when, on going out for a meal to celebrate the birth, he found himself the victim of a terrorist explosion.
A piece of shrapnel the size of thumbnail entered just below his left eye socket and, having got a lift straight to hospital in a passing tuk-tuk, Gavin was immediately operated on. The offending object was so embedded in his face that the surgeon did not dare to remove it for fear of damaging nerves serving the eye or causing weakness in the face muscles resulting in a permanent and visible drooping of the face.
This little companion does not prevent Gavin from getting on with his life even though he occasionally suffers violent body shakes – partly though nerve damage and partly through psychological trauma. Furthermore, his problems could have been a lot worse if he had ended up having to foot the bill of over US$2,000 for his treatment as a result of having inadequate international PMI cover.
Gavin was covered by one of William Russell’s Global Health plans, which provide comprehensive cover as long as policyholders are not in war zones listed on the Foreign Office’s “don’t go to” list (such as Iraq or Afghanistan) and do not participate in terrorist activity. Many other international PMI providers limit the amount they will cover if policyholders are innocently caught up in a terrorist attack and some do not provide protection at all.