After three years of falling stockmarkets and with professional indemnity insurance becoming increasingly difficult to obtain, many financial advisers are looking to the protection market to make a living and they could do worse than consider international medical insurance.
Over the past few years, the number of companies providing medical cover to expats, as well as foreign nationals, has increased considerably, and the sector is no longer entirely dominated by monolithic organisations such as Bupa International and Axa PPP healthcare.
Although this provides consumers with more choice, it also creates an opportunity for advisers who are prepared to avail themselves of the knowledge they need to advise in what is potentially a lucrative market.
Often companies with offices overseas will use advisers to determine the kind of cover they need, and with compulsory medical insurance becoming more prevalent – much of the of Middle East, for example, will not allow expats to work there without it -opportunities abound. But there are considerable differences compared to selling medical insurance in the UK.
Penny O’Nions, at medical insurance specialist The Onion Group, says: “For brokers wishing to break into the international medical insurance market, they must understand there is quite a difference between UK medical insurance and overseas cover. Most international policies have limited benefits, the way claims are paid can be confusing, repatriations can be a grey area and there are the problems of being caught in a war situation.
“These are insurance based policies offering a schedule of benefits in return for a regular premium. Insurance is designed to cover unforeseen situations. But exclusions are imposed for conditions that are considered recurrent, ongoing or chronic.
“They should not be confused with a new breed of company specialising in arranging for UK residents to travel abroad combining treatment with a recuperative ‘holiday’, such as Operations Abroad and EurOp for example. These are ‘pay as you go’ arrangements with fixed price surgery and treatment in elegant surroundings – hotels are available for companions and aftercare. These companies may be persuaded to offer their services to those without insurance or to cover excluded conditions.”
The level of knowledge that advisers will need to work for companies sending employees abroad, and individuals already there, is considerable and any effort to get into the market should not be half-hearted. Keeping up to date with developments in the sector and changes in the rules governing the various countries in which clients are based will also be challenging.
The point Dr O’Nions makes about being caught in a war situation is of particular significance at the moment, especially as many clients will live and work in the Middle East. But the needs of clients will vary widely, depending as much on where they are living as the kind of work that they do.
Thankfully, as more companies have come into the market, the products on offer have become more sophisticated to meet the needs of both companies and individuals, and there should be something available for everyone. The difficulty is matching the product to the client.
Tables 1 to 3 show a range of plan details and benefits for those international medical insurance plans currently available on the market.
As the industry has expanded, companies have had to work hard to differentiate themselves in the market, which should be to the advantage of the advisers as much as the clients. In short, it means that companies and individuals are more likely to need help ensuring that the policy they get covers all their needs.
International insurers will cover every country, but usually tend to have pockets of clients in specific areas, perhaps where they have a specialist product.
Bupa International, for example, has nearly eight million customers in 190 countries, but has more than 14,000 policyholders in Egypt, its highest number in a single country. Allianz Worldwide Care “has secured a significant proportion of the blue chip corporate business” in the UK, but also operates in the other EU states, with operations in Germany, France and Italy.
Claude Daboul, of Allianz Worldwide Care, says: “Most of our clients are large multinationals companies located in the EU, mainly UK and Germany. Their employees are located all over the world, but mostly the Far East and the US.”
Goodhealth Worldwide, one of the specialist international medical insurance providers, has 75% of its customers in the Middle East and Far East, the remainder spread around the globe.
The increasing prevalence of international PMI is a reflection of the trend for companies to operate globally, and for insurers to provide the services they need. But the move is not, as most would expect, altruistic.
A spokesman for Goodhealth Worldwide adds: “Life assurance and investment business is hurting insurers, and international medical insurance is a good alternative to generate income. The perception is that many health insurance systems are struggling and the weaker global economy is not helping those perceptions, so there are more opportunities for selling international medical insurance.”
Karen Froude, marketing manager for Bupa International, comments: “More and more insurance companies are entering the international market, in addition to these there are also a number of new companies specialising in international medical insurance that have joined the marketplace in recent years.
“However, it is not only due to an increased number of market players that international medical insurance is becoming more competitive. Multinational insurers like Bupa International have noticed an increased loss of members to local insurers. This is because expatriates who have lived in a country for a long time may decide that they feel comfortable enough with the local healthcare facilities to take out a local insurance policy.”
The way that insurers deal with their clients will vary and will usually depend on the size of the contract that is being brokered. For example, if a provider is dealing with a multinational firm, specialist services may well be offered.
Daboul of Allianz Worldwide Care says: “The major source of our target expatriate market is multinational companies. These are demanding clients and they require specific benefits. Most of these clients have ‘tailored plans’ versus our standard plans. So, for most of our large clients, the benefits are customised to reflect their specific requirements. For example, our German clients are more inclined to provide dental benefit, which is not a common benefit provided for the UK clients.
“In our observation, products for long term assignments have not changed much in the last couple of years. But we have recognised the emergence of the short-term assignee and these require a different type of product, which we have designed specifically for them.
“Over recent years, competition has meant that insurance companies have needed to offer increasingly more sophisticated services, both in terms of claims funding options and in terms of member services. The ability of the insurer to be of practical assistance to the member in difficulties is paramount. This assistance covers services such as the identification of appropriate providers, oversight of the treatment process and evacuation services.”
The various ways that companies try to differentiate themselves range from basic premises on which the policies are underwritten, bells and whistles that make one policy different from the next, the type of company they are writing the business for and the service standards to which they try to adhere. Invariably, they will all tell you that they try to offer competitive premiums but, as you would expect, these vary widely too.
For underwriting, there are some smaller firms that offer services not available from the bigger firms, which might be a surprise since there is usually economy in bigger business. For example, Exeter Friendly Society will not increase premiums with age, which is a facility also available for its onshore policies.
This can save a significant amount of money over the period of a contract, because if an individual signs up at 26, their premiums will only increase over time with medical inflation. Since this in itself is significant – often running at between 10% and 15% a year because of medical advances – not having premiums increase with age can be a major plus.
Interglobal Insurance Services, another smaller specialist insurer, has a 24-month moratorium on existing conditions, so if an individual had a heart attack 20 months before they started the policy, they would not be covered for that condition for the first two years. This, for many clients, would not be attractive, but it is one way of helping to keep prices down across the board.
Attention to detail
Yet the finer points of the policies is where there is most differentiation between the companies and each has tried to set itself apart from the next.
Interglobal, for example, will provide evacuation cover for the whole family if one member falls ill and has to be repatriated, explains Peter Rousseau, business development director of Interglobal.
He adds: “No-one else does this. It might just be a one-way ticket and some will offer accommodation for seven days, but not everyone does. We will take the whole family, and accommodate the whole family as well. There is no limit on the number of days that the family will be put up.”
Interglobal also has a no claims bonus, which can help to reduce costs, as it does increase premiums with age as well as medical inflation.
The other wrinkle from Interglobal is the ability to claim for “wellness” benefits, such as cervical smears, mammograms and prostate cancer screens. While this is a benefit for policyholders, it is in the best interest of the insurer too.
Rousseau says: “For every $1 spent on prevention, it saves $64.” Flexibility has also become key. Exeter Friendly Society launched a policy in 2002 aimed primarily at people living in Spain and Portugal, which are favourite retirement destinations for thousands of Brits each year.
The Interplan Euro, as the name suggests, is portable throughout the EU, and offers access to a 24-hour English-speaking GP consultation service. Individuals may also choose the hospital or a consultant that is most convenient.
Neil Armitage, marketing director of Exeter Friendly Society, says: “The flexibility of the euro has highlighted the need for innovation within the medical insurance market. The introduction of Interplan Euro meets this need and provides portability across the Eurozone, giving peace of mind and the best choice in terms of medical care for our members.”
William Russell, another specialist provider firm in the international medical insurance arena, will “honour claims from any doctor, any hospital and any country”, which offers extra freedom, and is in parallel with the policy offered by Interglobal. Many firms will designate which hospitals a policyholder can attend for certain procedures in order for the claim to be met.
William Russell asserts that it deals with claims for out-patient care within three to five working days, but Interglobal will put its money where its mouth is on this point.
Rousseau of Interglobal states: “From the day the paperwork reaches us, the maximum wait for payment should be 21 days. If it is not settled within that time, then we will pay you a penalty of £10 per day up to a maximum of £50.”
Goodhealth Worldwide focusses totally on the international PMI market, as it is not an international off-shoot of a larger company, like Bupa International for example.
A spokesman says: “As a result, we feel there is more opportunity for us to listen to the needs of our clients and produce more specific products.” Its flagship range is a portfolio of country specific products, such as the Global Health Plan that enables residents of Central and South America, Mexico and the Caribbean to access medical treatment in the US.
The spokesman adds: “Another example would be Premier, a product for France that provides top-up cover to the French social security system.”
These flexible features can be important, again depending on where the client is based, and they can help to reduce costs.
Turning towards the bigger insurers, the element of service tends to take over from the differences in policies, as they have the clout, and often the number of representatives in a variety of countries to make life easier for their customers.
Says Froude of Bupa International: “There are a number of ways that international medical insurance providers try to differentiate themselves, this not only includes the products that are offered but the overall service. For example, Bupa International was the first international medical insurance provider to introduce a specialised website for both its members and its intermediaries. We also offer a 24-hour multilingual help line, so members can have the piece of mind that there will always be someone from Bupa International to help them.”
Allianz Worldwide Care also uses its size and the worldwide tentacles of the Allianz group to make the most of the service it can offer to clients. Daboul explains: “All our services are provided from within the Allianz Group. There is no sub-contracting of claims payment or reinsurance for example. Even our assistance services are provided by Mondial assistance, a member of the Allianz Group. This gives us control over service delivery.
“Allianz is physically present in over 70 countries. This gives us the ability to provide concrete, on the spot assistance as well as an unrivalled knowledge of the local healthcare market. We have invested in the most up-to-date processing system currently available in the market, which allows us to provide a range of benefit options and general flexibility of funding options.
“We have also invested heavily in multi-lingual client support, which ensures that individual members in need are only a phone call away from help.”
As a smaller player, it might be surprising to hear that Goodhealth considers its local servicing capabilities as a unique selling point.
The spokesman said: “We firmly believe that, with most international healthcare providers offering similar levels of cover, service is critical to differentiating suppliers. We have claims and servicing offices in four major centres around the world: London, covering the UK and Europe, Dubai, covering the Middle East, Hong Kong, covering Asia, and Miami, covering South America and the Caribbean.
“These offices are manned by people who have an excellent understanding of the local medical infrastructure and can, we believe, offer greater assistance than staff in a remote call centre half way round the world.”
Norwich Union Healthcare (NUH) makes a big play about the fact that anyone living abroad for a period of time who then comes back to the UK can continue their cover with NUH without having to worry about being underwritten again.
Carolyn Derrington of NUH, points out: “We have always tried to be supportive of our UK book, and in the past we have not made a significant effort in running our international business.
“But I think it makes a co-ordinated offering. It means that when the adviser is talking to the client, you know what they are doing. They want the medical insurance cover to be easy to transfer around, and it could be seamless.”
One nice extra from NUH is a compassionate travel benefit within its medical insurance policy, so if a relative, for example, died in your home country, NUH would pay for you to get home, as an “additional service”.
Derrington continues: “It has to be about value for money, and the international market is not as expensive as people fear it is. You have to look at the price of the benefits being provided, and the benefits that the customer is looking for are what you tend to see within the products.”
Considering the costs
However, there is no doubt that cost is a consideration, not least as companies are struggling to make money as markets have fallen worldwide and many employees are facing redundancies. But medical insurance is being seen more and more as an employee benefit.
The spokesman for Goodhealth says: “Salaries are generally being pegged and companies may, as compensation, add on health insurance or increase the level of health insurance cover. Important as health insurance is, people see it as a top priority in a remuneration package.”
There are a number of ways for companies and individuals to limit the cost of cover, if they have to operate on a tighter budget. “You can use the E111 to get reciprocal treatment in EU countries – though this is perhaps more for holidaymakers than contract workers or expats. But many countries have health schemes of their own – Switzerland is divided into so many subsections it’s difficult to get the right package without help, and then there is Ireland, South Africa, and the US – which can be competitive,” says Dr O’Nions. “You should question the companies about what element can be discarded in order to cut costs but be aware of what the cost could amount to if it has to be found from income or capital.”
Premiums will vary dramatically depending on the company chosen, the type of cover needed, and where the client is located. America, the land of litigation and private healthcare, is unsurprisingly the most expensive.
For example, for a 35-year-old taking the top level of cover with Bupa International, the Lifeline Gold, it would cost £949 annually for covering worldwide excluding the US and Canada, rising to £3,429 if this expensive medical area is included.
Daboul of Allianz Worldwide Care says: “We have two areas of cover: worldwide, and worldwide excluding the US and Canada. For a 35-year-old individual who would take an in-patient plan that includes maternity and an out-patient plan, the price is approximately £966. If we include dental benefit, the premium would be £1,164. These are worldwide excluding US and Canada. For worldwide cover the premium would be £2,125 and £2,562 respectively.”
Under Goodhealth Worldwide’s global product, there are five levels of cover and three levels defined by the region covered, according to a spokesman for the company.
He adds: “The range for a 35-39 year old is £400-£2,359. A “midrange” policy, with the foundation cover level, and the area covered being worldwide, excluding US, however, would be £715. The excess is £75, and it makes no difference where the person is based.”
Laura Brown, a sales consultant at William Russell, claims that many customers go to the company because it is often cheaper than some other big providers. She says: “Competitive pricing is as important as our service. Our prices are incredibly good, and we are currently cheaper than Bupa and PPP.”
There are ways of reducing costs, and Bupa International has included a range of “deductibles” on its policies sold through advisers to help with cost-cutting.
Essentially, these are excesses that the individuals agree to pay on any claims for each year, and “aim to increase accessibility” to international medical insurance. For example, on the Lifeline Gold policy, the excess could be £1,000.
Alison Steed is a personal finance writer for the Daily Telegraph
Access all areas
Access to the best global medical specialists is the primary driver in the choice of a health insurer, according to recent research. International Health Insurance (IHI), an international medical insurance provider, in conjunction with independent research agency the Opinion Research Business (ORB) carried out research amongst a representative worldwide sample of IHI customers.
Quality of treatment, ease of claims procedures and geographical coverage were also cited as the paramount services of a superior health insurance provider. Price was rated significantly lower than most other factors in the survey.
The research highlighted that the US was considered the best country in which to receive medical treatment and Russia the worst, followed by Mexico and Hong Kong. Political stability was the main concern of survey respondents when contemplating moving abroad (24%), followed by the availability of quality health services (18%) and the health risk associated with a particular country (12%).
Per Bay Jorgensen, managing director of IHI, said: “46% of respondees cited global terrorism as the most pressing problem facing the world today. They also have very clear preferences as to the countries in which they would choose to be treated.”