The Guide to International Private Medical Insurance 2005

Transcription

1 & Protection The Guide to International Private Medical Insurance 2005 In association with

2 Contents 4-9 Questions & answers 11 Addressing the regulatory burden Ron Buchan, chief executive of Allianz Worldwide Care, explains how the introduction of FSA regulation in January could be a boost for the international PMI market 13 An expanding market Karen Teasdale, senior marketing controller at AXA PPP healthcare, assesses what the accession of Poland and other Central and Eastern European countries into the EU could mean for advisers hoping to sell cover within the new Europe 17 An international solution Mark Coleman, international sales director, CIGNA Expatriate Benefits, explains why there is much to be said for the Australian healthcare system 19 Prevention is better than cure Lee Gerry, underwriting manager at Expatriate Healthcare, looks at how preventative health benefits are becoming big business 23 When only the best is good enough Sue Summers, sales director for International Health Insurance danmark a/s, describes what services and products are currently available for top level executives and high net worth individuals 25 Richer pickings High commission levels are just one reason why advisers should think about selling more international PMI policies. Carl Carter, managing director of IMG Europe, sets out the other reasons for putting more effort into promoting the product 29 Sun, sea and surgery Andrew Sandilands, international sales & marketing manager at InterGlobal, looks at the growing trend of travelling abroad for treatment 31 A world of opportunity Shah Rouf, head of international, Norwich Union Healthcare, hopes that more intermediaries will wake up to the potential of international PMI to boost their business Company profiles The Guide to International Private Medical Insurance 2005 was produced by Health Insurance and sponsored by 2 HealthInsurance The Guide to International Private Medical Insurance 2005

3 International outlook Adapting to the reams of domestic, cross border and international upheavals of recent times has ensured that international PMI has remained one of the most exciting and vibrant sectors of the insurance market. And as this Health Insurance supplement indicates there is an enthusiasm and optimism among the leading participants that will be envied by insurance providers whose focus may lie elsewhere. A common theme in many of the discussions here is that the expansion of a more global economy means employees are increasingly likely to be asked to undertake periods of overseas secondments. Whereas in the past such secondments might have been measured in years, nowadays we are seeing much shorter assignments. Nevertheless employees still demand the same level of service indeed in many cases the standard of product needed is ever higher. Clearly this situation should present a myriad of opportunities for the intermediary channel. It is no longer simply the largest firms or multi-nationals that expect their staff to spend time in foreign climes, smaller businesses themselves are looking for cross-border opportunities. Meanwhile political shake-ups such as the expansion of the Europe Union will only encourage this trend further. Of course no-one is suggesting that offering international PMI products is going to be successful or suitable for every broker although we have heard examples of some very impressive debuts that have flourished spectacularly. Certainly demand for international PMI appears to be outstripping that for domestic products but that is not the whole story. The range of requirements that buyers of international PMI will have are significantly wider than most domestic customers. Rules, medical provision levels and communications links in the destination countries will vary. At the same time, policyholders may well require their policies to be serviced in a different way often they will not be in the same time zone as the intermediary and will prefer to rely on electronic communication than the more paper-based processes favoured by some in the broking community. All the contributors in this Guide to International Private Medical Insurance are experts in their field; hopefully their insight and experience will give you some hints and guidance on how you want to approach this market that everyone agrees remains exciting and ripe with opportunities. Health Insurance Informa UK Mortimer Street London, W1W 7RE fax: tel: extensions as below Editor Richard Banks ext richard.banks@informa.com Deputy Editor David Sawers ext david.sawers@informa.com Editorial consultant Andrew Green Technical editor Andy Couchman Designer Lisa McMahon Advertising manager Kelvin McManus ext.4702 kelvin.mcmanus@informa.com Key account executive James Hayfield ext.4188 james.hayfield@informa.com Head of production, Insurance Maria Stewart ext maria.stewart@informa.com Events director Rebecca Brooke-Webb ext.4220 rebecca.brooke-webb@informa.com Circulation manager Roger Myhill ext.5387 roger.myhill@informa.com Publishing director Tim Brooke-Webb ext.4138 tim.brooke-webb@informa.com Managing director: Insurance Division Sue Rattray Member of the Audit Bureau of Circulation Average net circulation for the period 1 July 2003 to 30 June ,452 ISSN: Richard Banks Editor Health Insurance is published by Informa Professional a trading division of T&F Informa UK Ltd Supplement printer: Wyndeham Hubbard, Sheffield Annual subscription: UK 170 EUR 264 ROW $323 For subscription queries and enquiries, or back issues, please contact Customer Services Department, T&F Informa UK Ltd, Sheepen Place, Colchester, CO3 3LP, UK Tel: , Fax: professional.enquiries@informa.com T&F Informa UK Ltd, all rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electrical, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. The Guide to International Private Medical Insurance 2005 HealthInsurance 3

4 Questions & Answers The European Union (EU) Insurance Mediation Directive came into force earlier this year, requiring EU insurance providers to undertake the collection of local premium taxes and pass them on to the relevant local authorities. Could this have an impact on cost? Allianz: The EU requirements in this area are designed to stop insurance premium tax (IPT) being avoided by insuring assets in one EU country with an insurer based in another EU country. Applying that regulation to health insurance risks adds to health insurance costs. There is not only the basic cost of the IPT, but also the administration costs involved in collecting and transmitting small amounts of IPT, calculated on a member by member basis. This is to say nothing of the situation arising when an insured life moves around the EU. How is the insurer necessarily going to know where the insured is, particularly with group plans? This regulation needs further thought as it applies to international health insurance. AXA PPP healthcare: Many of the larger healthcare providers now have the freedom to provide healthcare services and insurance in countries where they were legally prevented from doing so in the past. New legislation means that in some countries intermediaries are now able to cover local nationals who wish to buy a more comprehensive policy. This is particularly true of high net worth individuals, who not only want the best product but also the best healthcare. Expatriate Healthcare: It has been good market practice for some time now to report taxes (including stamp duty and parafiscal taxes) based on the country in which the insurance was effected. Generally, underwriters (especially Lloyd s of London) are completely familiar with such working practices and therefore there should be little or no knock on effect to the customer as a result of this particular specific of the insurance mediation directive. Goodhealth: Goodhealth has already communicated the fact that we will be collecting local premium taxes at the rates set within the individual countries to our agents. This has already had an effect on premium costs because providers have simply passed these to consumers in exactly the same way as we do with UK IPT. IHI: IHI has always tried to comply with the IPT laws in the clients country of residence. The EU IPT regulations are very diverse with each country having its own rules and regulation. The Mediation Directive is the start of clarification. Aside from the fact that clients will be charged IPT, there should not be any other impact on costs. Regulation of the insurance advice industry in the EU is good for UK brokers and the UK has a well deserved reputation for expertise in this field. IMG Europe: For some of the smaller international PMI providers the cost implications could be significant due to IT system amendments as well as additional training and materials for their staff and agents. For larger providers, which have regular agent communication and training programmes and inhouse IT resources, the impact will be minimal. There is of course the added administrative work in collecting, checking and forwarding the taxes as required, although some of this work will fall upon the insurer also. InterGlobal: There is certainly an immediate impact on costs for many expats across Europe. Some policyholders could face an increase of 14%, the highest level charged by an EU country, with the introduction of the Insurance Mediation Directive. Providers have incurred costs in changing IT systems to meet the requirements, but it is unlikely that these costs will be passed on to the policyholder due to the competitive nature of the market. British brokers are recognised as some of the most competent in Europe, but unfortunately many of our EU partner countries have not wholeheartedly adopted legislation in the same vigorous manner that we have. This could cause a temporary disadvantage to UK based insurers and brokers. Norwich Union Healthcare: Norwich Union Healthcare has been levying local European Economic Area (EEA) premium taxes since before the implementation of the EU Insurance Mediation Directive based on our interpretation of European court rulings on this subject. From our perspective, by clearly requiring all insurers to levy such taxes there is now a level playing field vis-à-vis premium comparisons. Intermediaries need to be aware and ensure that insurers are collecting the appropriate taxes and paying them to relevant authorities. In a number of EEA countries liability for non-payment can fall on the intermediary and even their client - not just the insurer. William Russell: The main impact of this is an increase in administration for EUbased brokers and consultants. With the new legislation, they are responsible for the collection of these local premium taxes. Intermediaries for whom international PMI is not their main focus may see this as a burden that they may not wish to become involved in and shy away from selling the products. 4 HealthInsurance The Guide to International Private Medical Insurance 2005

5 In what ways do advances in communications technology impact the international PMI market? Allianz: Claims can be electronically processed and policies can be bought online. In addition, membership information can be sent electronically while 24/7 call centres can handle all enquiries regardless of location of client or call centre. In short, local service no longer requires a local presence. AXA PPP healthcare: With the growth of the internet, insurers have the opportunity to both sell and service their members through virtual offices. The advantage of the internet to insurers, intermediaries, members and people making enquires is easy access to information around the clock and the ability to quote for, purchase and administer a product in two totally different parts of the world. Improvements in telephone technology provide enhanced customer service by giving access to bedside services such as AXA PPP healthcare s helpline which provides an interpreter to liaise between both patient and doctor. CIGNA: From our research, we know that 96% of expatriates utilise online facilities daily. We also receive as many s as we do phone calls each month within our European service centre. Therefore we have ensured that all the information that they require in order to access quality healthcare in their country of assignment is available to them online. Equally they can also track their claims online and be completely self sufficient through the claims process. This does not detract from their ability to speak to a CIGNA person at any time, but provide them with an alternative route for claims settlement. Q & A Expatriate Healthcare: Expatriate insurers have always been at the forefront of IT solutions. They are required to service global broker networks and their customers and so they must ensure that their IT system is able to respond as if it were in a local environment and is able to deal with enrolment, fulfillment, claims and underwriting accordingly. Goodhealth: The internet has brought the most advantages to Goodhealth in terms of client communications at a global level. Clients can now obtain a significant amount of independent advice online before taking out a policy. Once they have made a decision to purchase, they can use the internet to pay for their policy, download documentation, access medical information and even track the progress of claims. The whole process of insurance transaction and usage has been improved for the customer by these technology advances. IHI: The very nature of international PMI is that clients can be anywhere in the world, often in inaccessible places. Advances such as the internet, and so on, allowing instant communication between insured and insurer, are encouraging a new range of services. New technology has allowed IHI to introduce mypage which gives clients access to online policy management and a range of online health services. In addition we have a chatroom which our clients use to retrieve instant advice from our inhouse team of medical consultants. IMG Europe: For companies such as IMG who have embraced the internet and invested heavily in it, the rewards for agents and customers have been considerable. Whereas some international PMI providers do not even quote online, IMG, for example, has had a full online sale system since 1995, with more than 60% of agents applications now coming in via the internet. Customers can undertake live online chats with customer service staff, instantly receive documentation and store their policy details. They can even undertake pre-certification of treatment, find a hospital or simply log a claim or ask a question. Agent training has also benefited in the availability of downloadable training and reference materials as well as the new IMG online training conferences where up to 75 agents worldwide can simultaneously participate in an online training seminar. InterGlobal: The internet has had an immense impact on the international PMI market and this will continue as more providers create opportunities for clients to buy and service their policies online anywhere and anytime. Confirmation of cover at the time of purchase, documents being issued automatically by , monitoring accounts, payments and especially claims tracking are all capabilities that are facilitated by technology and enable better service to clients and better internal efficiencies to be delivered. You only have to look at internet banking to see the advantages technology brings. Norwich Union Healthcare: 24- hour access is perhaps the most obvious technology-enabled aspect of international PMI but increasingly we are seeing more use of internet services. Individuals and international groups are increasingly using and the internet as the standard form of interaction and information exchange much more so than in local domestic PMI, for reasons of obvious ease across geography and time zones. William Russell: is continuing to change the way that we operate. Sales literature and documentation such as renewal packs can all be sent by which is quicker and more efficient than post or fax and more secure. On a separate note, it has allowed us to work more efficiently and more focused inhouse. Accurate databases contain a lot of information that can be accessed at the touch of a button allowing us to deal with enquiries more quickly and precise than before. In short it helps us provide an effective and professional service to our clients. 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6 Saudi Arabia is just one country which demands that expats have comprehensive medical insurance before they are issued with residence and work permits. Are there opportunities for advisers to sell more bundled products, in which legal and immigration services are combined with medical insurance? Allianz: Only in countries where the immigration laws require health insurance. Russia is an example. AXA PPP healthcare: Saudi Arabia has very stringent immigration controls. Most potential residents are corporate employees, under the sponsorship and the responsibility of their local employer. Most major employers handle all registration work internally. In addition to this it is likely that the employer will have group health insurance cover for its employees. It is into this that any new employee will move through a simple notification process. There is unlikely to be a huge, immediate demand for bundled services as a result of new legislation. Goodhealth: Expats are not yet, in our view, required to have comprehensive medical insurance in place because the minimum requirements of cover are very low just a few hundred pounds. The potential here will be significantly enhanced if and when the authorities raise these minimum standards. This may, however, be some way down the line because insurance is not favoured in some countries due to religious and socio-economic factors. Another issue restricting the potential of this development in Saudi Arabia is the existing law, which requires that only employers with 500+ staff need to insure their employees. All the other categories of employers do not have to insure at this stage. IHI: When regulations change, it is an opportunity for insurance companies, intermediaries and financial advisers to work together with, for example, employment lawyers and immigration experts to develop products and services. Giving expert advice about insurance conditions in different parts of the world is a way of adding value. IHI often works with authorities in order to tailor products to suit specific markets. IMG Europe: The changes represent some major opportunities for innovative international PMI brokers and providers alike. Some companies, including IMG Europe, have started to bundle in more non-medical insurance covers and services to widen the range of cover and services available in recognition of the increasing needs of expats. For example, our newly launched GlobalSelect plan offers legal expenses cover, out of country car rental insurance and even a lost property identification and retrieval service - all backed by a 24-hour medical emergency helpline. In addition to this IMG Europe also offers a range of low cost add-ons including term life insurance, travel insurance and hospital income plans for expats. InterGlobal: It is fair to say that there have always been opportunities for bundled products of this nature whatever the destination of the client and whatever the legislation. There are real opportunities in offering added value to clients, and advisers who can leverage their knowledge and resources to provide a complete package solution will be building for the future. People often need help and guidance through the mass of information and the process of moving to a new country. With time being a precious commodity, increasingly people will be willing to pay for expert advice and a service that does it all for them. Exactly in what form this might take is unclear. Whether advisers will widen their expertise or form strategic alliances is yet to be seen, but there is great potential in offering clients a broader, more complete service. Norwich Union Healthcare: The immigration path into the Gulf markets is a well-trodden one. Most locally based companies retain inhouse personnel to not only organise new incoming workers but also to support their various bureaucratic needs thereafter. Therefore it is unlikely that bundling will be a huge success in this instance. A significant number of individuals and parent companies of groups organised cover centrally from an international insurer. They may have then purchased a state issued health card as a mandatory requirement of the immigration process as well. With the health card being removed international PMI insurers are increasingly going to be required to produce local insurance certificates for cover to be deemed acceptable by the authorities. Norwich Union Heathcare, through local partners where required, is able to provide complete solutions for customers in the region. William Russell: Some of our providers are immigration consultants and use our products because they are flexible and tick the boxes required by countries that make medical insurance compulsory. As a provider, we need to ensure that the products we offer are in line with the standards asked for by countries like Saudi Arabia. 6 HealthInsurance The Guide to International Private Medical Insurance 2005

7 What concerns/issues have led you to tweak your products over the last 18 months? Allianz: In the past 18 months we have made many enhancements to our product offering, including: our standard plans now provide cover for occupational therapy, an area of concern for more and more of our corporate clients we have introduced a short-term full medical plan we have produced products tailored to local conditions, for example the Middle East and the Far East we are considering such an approach for the US we have more provider information available for members. We are constantly reviewing our hospital/medical provider listings, increasing substantially the number of providers listed we now offer an optional repatriation plan. This was introduced to allow our members to return to their home country for treatment, in the event that the necessary treatment for which they are covered is not available locally. Historically, our plans had only allowed members to be evacuated to the nearest appropriate medical centre. we entered into a partnership with Air Partner, to provide our clients with a non-medical evacuation programme that complements the medical evacuation service we currently provide we developed a range of international healthcare plans for the UAE, which provides direct settlement of outpatient treatment within the UAE AXA PPP healthcare: In the last year, benefits have been added to include preventative treatment such as travel and childhood vaccinations and adult health screens, making our plans better value to Q & A expatriates. In addition, the outpatient limit on Prestige has been increased from 3,000 to 5,000 thus reflecting the inflation in medical costs. CIGNA: We constantly review and refine our benefits to ensure that they remain leading edge. With a full refund product we see the issues more around service and delivery of quality healthcare, rather than product design. Expatriate Healthcare: Expatriate Healthcare is a new entrant to the international market. With the many years of experience brought by the principals, we are confident that we will be able to improve the products, rather than simply tweak them to respond to negative market conditions. Goodhealth: The major concern to Goodhealth and probably all other providers is the inexorable rise of medical inflation. We have no real control over this and it is a headache we all have to manage as carefully as possible year after year. On the benefit side, we regularly review our products to ensure we are offering the best possible level of cover. There has been a real focus in recent years, for example, on offering quality maternity cover. IHI: IHI reviews contracts every year. One of the developments in response to market feedback this year has been to provide more help in security matters. For example, IHI Security Monitor offers corporate clients access to specialist information and the latest research about international politics, security and travel risks. IMG Europe: Increases in UK citizens owning homes overseas and restrictions in the NHS system regarding eligibility for expats returning home have prompted IMG to further widen both coverage and accessibility to ensure our products dove-tail smoothly with the NHS and EU state healthcare systems. IMG is one of the few international PMI providers which have always provided home-country cover for expats at home or overseas. Many providers stop their cover once a customer returns home and is no longer an expat - but with the NHS changes many customers returning home may not be eligible under the NHS or their international PMI policy. InterGlobal: We constantly compare and review our benefits to ensure they continue to meet the demands of our clients. One particular concern which has caused us to tweak our benefits is the need to cover chronic conditions to include ongoing palliative treatment and provide medication, which in the UK would be free, but in some countries could be relatively expensive. Norwich Union Healthcare: Norwich Union Healthcare s most significant changes have been the launch of Global HR Assistance service to support SME customers with international personnel management issues, and our nonemergency medical information line. Global HR Assistance was driven by the needs of newly globalising companies who did not have the infrastructure support or experience of established multinational corporations. We have found that our medical information line is being used for needs such as travel advice, checking prescription drug names (which can vary from country to country) and requesting fact sheets on particular ailments and so on. We will be further enhancing our main Global Care product offering during William Russell: The increased demand for international PMI has seen the emergence of a number of new competitive insurance providers. This has led to several older established companies into re-evaluating their position within the international market. Many have responded by enhancing traditional inpatient/outpatient products to include increasingly comprehensive benefits and optional modular benefits tailored to meet the regional demands of their clients. In particular we have seen an increase in cover for in-patient treatment on the most basic plans and introduction of new benefits and preventative measures such as well being check ups. The Guide to International Private Medical Insurance 2005 HealthInsurance 7

8 Are providers offering products which are flexible enough for companies sending employees on shorter assignments, or on assignments that involve regular movement in and out of the host country? Allianz: No. Products should not necessarily draw a distinction between domestic and international coverage, which is only a distinction existing in the minds of insurance companies. The consideration should be the coverage needs of the client. A frequent traveller or short-term assignee should be able to obtain coverage which provides seamless cover both at home and abroad. Such products are available, but not universally so. AXA PPP healthcare: Some international health plans such as those provided by AXA PPP healthcare offer large geographical areas of cover allowing people to easily move around, giving cover for short unforeseen assignments abroad. Whichever area of cover customers choose, all our plans offer emergency out of area treatment. When customers buy international PMI, it is important to consider where their principle country of residence and likely areas of travel will be so that they can choose the most appropriate cover for their own circumstances. CIGNA International: Our products have always been robust enough to allow for members to travel to areas outside of their chosen region of insurance and also provide the same benefits in their home country as well as their host country. Companies can accommodate their frequent business traveller in the same global plan that they operate for their longer term assignees. Expatriate Healthcare: Expatriate Healthcare is one of the few providers happy to offer short term cover - starting from six months - to assist individual customers on short term assignments. For groups, however, it is generally accepted that employees are allowed to move around, both by assignment length and by country/region. This is especially true due to the proliferation of satellite offices employing more local nationals. Goodhealth: There is a grey area between the need for a good travel insurance policy and a comprehensive international medical insurance policy. Modern group policies are now very flexible in terms of their ability to add and delete staff members. Generally, they are also very flexible in terms of offering cover wherever the expat is living or working in the world. Our International Healthcare Plan, for example, incorporates this feature as standard. The real difficulty arises over price, not flexibility. International healthcare plans will always be more expensive because they offer higher levels of benefits and protection services than travel policies. IHI: There are many different contracts available to suit different clients/ companies. IHI First Choice is specifically designed in a modular format to allow a company to match the cover to their needs. This includes a choice of benefits, deductibles and special underwriting models for larger groups. Portability has become so important to today s traveller that products like First Choice have to cater for all eventualities. Moving in and out of a host country is certainly not a problem. IMG Europe: Unlike some international PMI providers, all of IMG s products are fully portable with a region of cover, which means there s no need to change plan or re-enrol if a customer changes his location overseas. It also means that an insured is free to choose their treatment accordingly within their area too. They are not tied to hospital lists either, so if a treatment is not available in-country, then the customer can seek treatment overseas. All plans come with a wide choice of instalment options and on group plans employers can add or remove employees each month, thereby accommodating short term overseas placements quickly and at a low cost. InterGlobal: In general providers have remained rigid in their approach to the demand for shorter term contracts favouring the standard one year arrangements. Some also offer limited flexibility when it comes to allowing the policyholder to use the benefits in their home country, unlike ourselves. There is also a growing trend towards increasing the number of areas of cover from the traditional two or three, to over seven in some cases. While this allows more accurate pricing for particular locations it does make it more restrictive for those who move around frequently. There is no doubt that increased flexibility and portability of plans remains high on the client s wish list. Norwich Union Healthcare: Most leading international PMI insurers offer flexibility in movement from country to country. Short-term assignments of, say, less than six months have traditionally been the scope of group travel policies. The difficult part for international PMI insurers is how to offer international PMI benefits for such short term assignments at a cost that is not a multiple of group travel premiums. We at Norwich Union Healthcare are working on an innovative solution to this need. William Russell: Portability and transferability are highly important to us. We recognise that expats are often on the move and our products reflect this. Our clients need to be covered wherever they are both for work or pleasure. Our plans allow clients to move around the world and for as long as they want. We can continue cover when they return to their home country something most British expats find useful. We do not have specific areas of cover for this reason - clients do not need to be re-rated unless they move to the US or Canada. Furthermore we have an optional high value travel insurance that can be added to the health plan to cover frequent travel. 8 HealthInsurance The Guide to International Private Medical Insurance 2005

9 Addressing the regulatory burden Ron Buchan, chief executive of Allianz Worldwide Care, explains how the introduction of FSA regulation in January could be a boost for the international PMI market From January 2005, the Financial Services Authority (FSA) assumed responsibility for the regulation of general insurance sales, including, of course, PMI. The move means that financial services across the broadest spectrum, from general insurance to banking services, are all now regulated by the same authority. The purpose behind this unitary regulatory approach is to ensure that consistent principles of regulation apply across all financial services activities. Intermediaries involved in general insurance, including those specialising in PMI, have therefore been obliged to alter significantly the way in which they conduct their business. Indeed, in many cases, this legislation has resulted in ownership changes and consolidation of intermediary businesses. Those intermediaries wishing to continue as totally independent advisers have needed to apply to the FSA for this status and they need to satisfy the various reporting and financial criteria demanded by the FSA. This regulatory burden is significant and particularly onerous for very small intermediary practices. It is this fact alone that has been the principal stimulant to the consolidation which we have seen within the intermediary market. Those intermediaries not willing or able to apply successfully for fully independent status have the option to elect tied status to an insurance company. To further complicate the picture, intermediaries can tie to a number of insurers per principal line of business, thereby arguably allowing intermediaries with multi-ties to offer almost as broad a range of advice as fully independent intermediaries. Certainly the difference may not be very clear to clients. The main difference is that the burden for compliance with FSA regulations rests with the insurer in the tied situation as opposed to the intermediary in the fully independent scenario. Clearly this UK regulation is designed to oversee the sale of financial services products to UK individuals and companies. The purpose of the regulations is to ensure that competent advice is given on the one hand and that costs and benefits are clearly explained to the prospective client on the other. Regulation of insurance sales started in the late 1980s in the life assurance sector. This is not surprising since such contracts are invariably long-term and opaque in terms of actual benefits and true costs. Indeed, at the time, savings-orientated life assurance plans, with high hidden The Guide to International Private Medical Insurance 2005 HealthInsurance 11

10 costs and draconian exit penalties, were being aggressively sold by large and poorly trained commission-only direct sales forces. The need for consumer protection rules was clear and, despite the extremely high costs of the various regulatory environments which have followed since the original introduction of the legislation, it is clear that poor life sales practices have been all but eradicated. Furthermore polices are clearer in terms of benefits and costs and sales people need to be qualified by examination. The dynamic in short-term business is different to the extent that the benefit and cost equation is clear and contracts only last for one year. This is why general insurance is only now becoming subject to the same regulatory regime. However, it can be strongly argued that PMI fits into a middle ground between life business and other general insurance categories when it comes to the need for regulation. This is because although there is not the long-term cost/benefit opacity as with life business, the terms and conditions of PMI plans are difficult to understand. Not only is an insurance degree useful, but a medical degree would also help. Real cost/benefit comparison is genuinely difficult for the lay person. Professional and expert advice is necessary. Regulation in our area of business was therefore just a matter of time. However, for the intermediary active in selling international PMI, there is the added dimension that such intermediaries will not only compete with UK-based rivals, but they will also compete with non UKbased competitors. This means that from the perspective of the UKbased intermediary involved in the international PMI market, the new regulatory regime will distort the competitive playing field. The significant regulatory costs falling upon UK regulated intermediaries will not apply to overseas domiciled intermediaries. In order to be able to sell international plans to UK-based corporations, or in order to sell international PMI to individuals currently in the UK, even those who sign the contract in the UK but leave to go abroad, the intermediary needs to be properly This has to introduce a competitive edge over internationally located competitors authorised. This means either authorisation as an independent intermediary or authorisation as a tied agent. However, should expatriate individuals, or indeed overseas companies, including overseas subsidiaries of UK companies, choose to sign the contract of insurance outside the UK, then this business clearly falls outside the Financial Services and Markets Act provisions if the business is handled by a non UK-based intermediary. Such intermediaries will not have to suffer the regulatory cost burdens suffered by UK domiciled intermediaries. It is uncertain whether there would be any advantage, cost or otherwise, passed directly to clients should they elect to have such matters handled by a non-uk domiciled intermediary. Having said that, there would be a clear overhead cost advantage for the non- UK based intermediary. Of course, the purpose of the FSA regulations is to improve the quality of advice and transparency of premium and commission payments from the client s perspective. The UK intermediary will need to ensure that the information which must be given to the client in any UK sales situation is also given when an international plan is being sold to a UK company or to a British national. Additionally, inpats purchasing international plans in the UK will also need the full suite of FSA required information. Selling to overseas domiciled companies is a grey area, but good sense would mean that the UK intermediary handles all sales in an FSA compliant way. Given that the UK regulatory regime is all about protecting the client, it should therefore be to the advantage of the UK domiciled intermediary to focus on FSA authorisation as part of the process of the establishment of credibility in the mind of the prospective client. Certainly, there will be resonance with UK expatriates currently domiciled outside the UK and overseas-located subsidiaries of UK multinationals. Furthermore, the regulation of the intermediary sector is fast gaining traction across the European Union (EU) and already the various Intermediation Directives of the EU lay the ground work for an authorisation of intermediaries similar to that currently in existence in the UK. There will be clear advantage for already registered and authorised UK intermediaries as this trend moves across the EU. This move towards European regulation will also serve to highlight more clearly the different status of EU regulated intermediaries on the one hand and non-eu and non-regulated intermediaries on the other. Undoubtedly, this legislation places great financial burdens on the general insurance and particularly the international medical insurance intermediary sector. Time will tell whether the burden of this regulation produces a commensurate benefit in terms of client protection and client service. The history of regulation in the long-term business sector has been one of cumbersome processes, unnecessary changes, and huge expense. The current requirements falling upon UK intermediaries are significant. But the purpose behind the regulations is appropriate and necessary. Let us hope that the sector is spared the frequent changes in regulatory approach which have beset the long-term business sector. Individual expatriate clients and the companies that employ them are sophisticated purchasers. The attraction of seeking the services of a UK, and in due course, EU regulated intermediary, will be strong, particularly if the regulated intermediary segment emphasises the differences and stresses the advantages of regulation. This has to introduce a competitive edge over internationally located competitors. There is also the clear fact that UK-regulated intermediaries can sell in non-regulated international markets. On the other hand, the nonregulated international intermediaries cannot sell in the highly regulated UK market. The secret here is to make a virtue out of a necessity. 12 HealthInsurance The Guide to International Private Medical Insurance 2005

11 An expanding market Karen Teasdale, senior marketing controller at AXA PPP healthcare, assesses what the accession of Poland and other Central and Eastern European countries into the EU could mean for advisers hoping to sell cover within the new Europe With the expansion of the European Union, relaxation of border controls and increased interdependency and trade between member states, Europe could be viewed in many ways as a single entity, as British nationals continue to move throughout the continent to live and work. By becoming member states of the EU in 2004, Central and Eastern European countries such as Poland, the Czech Republic and Latvia are now covered by legislation which not only provides a level playing field but also a greater confidence in the market through reputable companies providing insurance in areas in which they were previously unable to trade. At the same time, however, it is evident that a huge amount of diversity still exists across Europe that makes it far from uniform. The healthcare systems across Europe vary enormously in quality and cost. While the European expat workforce may face little exposure to the types of tropical diseases and health issues faced in other global destinations, the need for quality healthcare provision remains apparent. The Euro-expat Intermediaries who want to be successful in the European market are faced with a wealth of opportunities to sell PMI and it is critical that they understand the varying types of expats and their healthcare needs. Traditionally the British expat is seen as retiring to a life of relaxation in sunny southern Spain. However the type of person seeking medical insurance under an international plan may also be the working expat, travelling throughout Europe and making frequent trips back to the UK. The Guide to International Private Medical Insurance 2005 HealthInsurance 13

12 With this sort of lifestyle they require a comprehensive PMI package, covering them for medical treatment across Europe, as well as back in the UK, as opposed to readily available local products which may only provide cover within one particular country. Research shows that more than 400,000 working British expats are living in the EU. Where the expat is part of a corporate health scheme, product requirements may vary significantly from the self-employed expat who is paying the cost of their PMI plan themselves, and where extended periods of ill health need to be avoided in order to keep their business running. Getting to grips with legislation In many parts of Europe, where quality healthcare does exist and the state system provides reputable medical facilities, there is an increasing amount of legislation which impacts on both the extent to which the expat is eligible to receive state healthcare and the corresponding cost. Intermediaries can guide companies through the complicated field of healthcare legislation that appears to be increasing across Europe, making eligibility for state healthcare far from uniform. Intermediaries who are well read on these varying legislations are a valuable tool for any individual or employer who is considering international PMI. Opportunities abound So, what does the accession of Poland and other Central and Eastern European countries into the EU mean for advisers hoping to sell cover within the new Europe? First, many of the larger healthcare providers now have the freedom to provide healthcare services and insurance in countries where they were legally prevented from doing so in the past. Second, new legislation now means that in some countries intermediaries are able to cover local nationals who wish to buy a more comprehensive policy. This is particularly true of high net worth individuals, who not only want the best product but also want the best healthcare. With an international plan they can select to have their treatment in a hospital which specialises in their condition or treatment but is not in their country of residence. This is often not possible with locally provided insurance which may not only dictate that treatment takes place in that country, but may also dictate the hospital the member must attend. The economic gains for the country itself are good, with the possibility of greater migration of people going to or coming from the new member states to work. This opens up a new sector of people who will be looking for PMI if they are not already covered by their company. The choice for the expat looking to purchase health insurance will be governed by their principle country of residence as even within Eastern Europe facilities and legislation vary greatly. Although a state system does exist in Poland, for example, where there are private clinics, Poland itself has a very limited number of private hospitals. So many people choose to be covered privately allowing then to travel to Western European countries for care and necessary surgery where these facilities do exist. Expats working in Hungary can choose to join the state system. However most still opt to take out private health insurance giving them access to English speaking doctors, or as with AXA PPP healthcare s member, access to an interpretation service if no English speaking doctors are available locally. The Slovak Republic (Slovakia) has adequate medical facilities although Intermediaries who are well read on these varying legislations are a valuable tool for any individual or employer who is considering international PMI the level of standards may vary outside of the capital where most of the private hospitals and clinics can be found. AXA PPP healthcare s European policy provides cover for members living, working and travelling in Europe, giving them the freedom to move around the EU knowing that they are still protected by their policy. They can also choose to go anywhere in Europe for treatment, although transportation costs are not covered. By choosing a policy that covers the whole of the EU, people have access to a greater range of facilities across a number of countries, something which may not be available on policies sold through smaller local providers. With the growth of the internet, insurers have the opportunity to both sell and service their members through virtual offices. The advantage of the internet to insurers, intermediaries, members and people making enquires is easy access to information round the clock and the ability to purchase and administer a product in two totally different parts of the world. It is no surprise, therefore, that the desire for international health plans in Europe is high. 14 HealthInsurance The Guide to International Private Medical Insurance 2005

13 Many clients even large employers have relatively small expatriate populations. So while employers and expatriates are increasingly seeking the optimum solution of the safety net of global healthcare, combined with local provision, few know how to obtain their ideal solution. For many expatriates, Australia is a perfect example of that elusive optimum healthcare solution. For while the Australian healthcare system may provide excellent standards of care and access for Australian citizens, it is also a complex system, full of financial pitfalls for expatriates and the companies that employ them. This is a significant issue for many businesses, because there are quite a few Australian expatriates. They come in two main varieties Australians who are living and working outside Australia, and foreign nationals who are living and working within Australia. More than half a million Australians are estimated to be living outside their country at any given time and every year around 100,000 leave to work overseas for at least 12 months. At the same time Australia has nearly 300,000 inpats. Each of these groups faces unique challenges in dealing with the Australian healthcare system, but they also have a lot in common, since there is a disconnect between their needs and what the system was designed to do serve Australians living in Australia. That disconnect provides employers of expatriates with a major opportunity to improve the benefits they provide to their expatriate employees who are either going to Australia or leaving Australia to work elsewhere in the world. The Australian healthcare system In Australia, healthcare delivery is centred on a publicly funded national health insurance system called Medicare, which was established in its current form in The objective of Medicare is to provide all Australians with access to high-quality, affordable healthcare in Australia. Medicare publishes a schedule of fees and reimburses outpatient services at 85% of the scheduled fee. For services in a public hospital, the individual has a choice. As a public patient, there is no charge for care, but you do not get to choose your doctor. An international solution Private patients can choose their doctors in a public hospital, and Medicare will reimburse the doctor s charges at 75% of the scheduled fee and cover the hospital costs. In a private hospital, Medicare will reimburse the doctor s charges at 75% of the scheduled fee but the hospital charges accommodation and so forth are the responsibility of the patient. Private insurance is available to pay private hospital charges and the remaining 25% of scheduled inpatient practitioner fees that Medicare does not cover in a public or private hospital. Local private insurers are not allowed, by law, to reimburse the part of outpatient scheduled fees that Medicare does not cover. In addition, practitioners are allowed to charge above the Medicare scheduled fee. Gap cover schemes are available to cover these charges when they are incurred in the hospital. Medicare is administered by the Health Insurance Commission (HIC), an agency Mark Coleman, international sales director, CIGNA Expatriate Benefits, explains why there is much to be said for the Australian healthcare system of the Federal Department of Health & Ageing, and is funded in part by a 1.5% levy on taxable income, known as the Medicare levy. Individuals who earn more than AU$50,000 and families that earn more than AU$100,000 must pay a Medicare levy surcharge of 1% (for a total of 2.5%), unless they have private patient hospital cover for themselves and all of their dependents from an approved health fund. For families with two dependent children, the income threshold is AUS$101,500; it increases by AUS$1,500 for each additional child.) Encouraging PMI Australian Medicare is largely funded by general revenue (ie taxation), and like such systems around the world, it is under considerable financial pressure. As a result, the Australian government has for some years been encouraging the expansion of PMI. In addition to the Medicare levy surcharge (introduced in 1997), the The Guide to International Private Medical Insurance 2005 HealthInsurance 17

14 government has taken two other steps to encourage individuals to take out PMI: In 1999 the government established a rebate programme for those who purchase private health insurance. Anyone who is a member of a registered health fund can get a reduction currently 30% for people under 65 on the cost of the insurance. The rebate can come in any of three ways: the insurer may reduce the member s premium; the individual may mail a claim in to Medicare and receive a cash payment; or the individual may claim the refund on his annual income tax return. The rebate is available to the member regardless of who pays the premium. Employers paying the premiums on behalf of employee members need to obtain assignment of the rebate from the employee to receive the premium reduction. In 2000 the government established the Lifetime Health Cover scheme, which encourages people to buy private health insurance before they reach 30, and to maintain that coverage continuously. If they do not, they wind up paying more when they do decide to buy private health insurance. According to the Private Health Insurance Administration Council, an arm of the Australian government, as of June 2004, 42.9% of Australians had private health insurance, an increase from around 30% in There are approximately 40 private health insurers (technically registered health benefits organisations ). Most are small nonprofits. Six firms have 76% of the market. Private health insurers have started to move beyond the system of filing paper claims. HICAPS (the Health Industry Claims and Payments Service) provides an electronic interface with providers of ancillary services, such as dentists, chiropractors, and optometrists, where the insurer pays the fees since Medicare does not provide coverage. Most of the private insurers in Australia participate in HICAPS. In addition, HIC and the private health insurance sector have been working in concert and separately to increase the automation of medical claims transactions. Tax issues for expats The Australian health system also raises thorny tax and regulatory issues for expatriates and the companies that employ them. These include the Medicare levy and the Medicare levy surcharge, which total 2.5% of income. If an inpat a non-australian living and working in Australia comes from one of the reciprocal countries, he is liable for the 1.5% Medicare levy. Those from nonreciprocal countries may avoid both the Medicare levy and the Medicare levy surcharge if they file for exemption when obtaining their work visa. An expat an Australian living and working outside Australia will also be liable for the tax if he is filing an Australian tax return and remains Medicare eligible, usually for assignments of less than five years. But Medicare will not reimburse the expat for medical services rendered outside Australia. The new new thing The way for a global benefits company to resolve these issues is to establish an alliance with a local Australian insurer. With such an alliance, the Australian insurer provides coverage to inpats non-australians living and working in Australia and also provides certain legal advantages to expats Australians working outside Australia. By law, only a local insurer can provide some of the critical elements of this package. Meanwhile, the global insurer continues to provide coverage everywhere outside Australia. And its other service resources, such as the 24-hour contact centre, continue to be available to the expat, wherever he or she may be. Standard inpats apply for exemption from the Medicare levy and the Medicare levy surcharge when they apply for their work visa. They are not eligible for benefits under Medicare and must have private coverage. Membership with a local health insurer qualifies the standard inpat for direct settlement of claims and access to negotiated discounts, thus lower out-of-pocket costs. In addition these inpats gain access to the local insurer s service resources, with its detailed knowledge of local conditions. Reciprocal agreements Australia has signed reciprocal healthcare care agreements with nine countries: Ireland, New Zealand, the UK, Sweden, Finland, Norway, the Netherlands, Malta and Italy. Inpats from these countries are entitled to limited coverage under Medicare (actual coverage varies among the countries. The key concept is that the treatment must be immediately necessary ). Because of this coverage, a refund of the basic Medicare levy is not available to what is known as the reciprocal group. However, membership in a local Australian health fund does entitle them to exemption from the 1% Medicare levy surcharge. Australian expats who are still eligible for Medicare are liable for the Medicare levy if they file a tax return in Australia. However, membership in a local health fund will entitle them to exemption from the Medicare levy surcharge. The alliance approach both helps expats with the Lifetime Health Cover and offers them active coverage globally. If they receive care outside Australia, they have coverage through the global insurer and if they choose to return briefly to Australia for treatment they have coverage through Medicare and the local insurer (when they return to Australia permanently, they can easily transfer to a domestic plan). Some medical procedures, such as infertility treatments, are not covered by Medicare. The global partner, however, may cover such procedures if care is delivered outside of Australia. Inpats may have the services provided in Australia. Australian law requires that only local insurers may provide health insurance for Australians residing in Australia. The availability of a local ally is useful to global insurers who will want to recommend to their customers a good way to cover key local nationals. Naturally, the quality of the local ally is crucial to the success of the programme and in the end, it is about getting a sick child to a good doctor at 3am. A good local network of providers, and people on the phone ready to help and provide guidance, are a crucial part of the service that expatriates expect and deserve. We believe this alliance model allows global insurers to continue to provide high levels of service and even improve on that service while solving what can be described as a thicket of administrative hassles in Australia. We also believe the model developed for Australia is applicable in a substantial number of other countries around the world. So it may well be that we have come upon, not just a solution for issues in one country, but a solution for issues in many countries the new thing in expatriate healthcare benefits. 18 HealthInsurance The Guide to International Private Medical Insurance 2005

15 Prevention is better than cure Lee Gerry, underwriting manager at Expatriate Healthcare, explains why preventative health benefits are becoming big business Providers of healthcare, whether they are insurance companies or governmentfunded institutions, have long toyed with the cost benefits of preventative tests and health screenings. Even though we are still very reliant upon the reactive nature of healthcare to heal us once a problem arises, we are more and more moving towards prevention and early detection to bypass contracting full blown versions of medical conditions or even prevent ever suffering from the condition in the first place. Generally, in whichever country you are domiciled and whichever government provides your mandatory health cover, the authorities will employ screenings and preventative health measures including vaccinations and advice to control or avoid the unnecessarily long-term cost of treatment and the immediate volatile costs of invasive treatment. But in what areas can cost savings be made and why do so many providers of international PMI shy away from providing simple and cost effective preventative benefits? The benefits that screening and preventative measures can bring are clear. Domestic examples show the way but the evidence can just as easily apply to the international arena. When one considers healthcare screening, the first condition which usually springs to mind of both consumers and providers is cancer and its many variations. Breast cancer remains the most common form of cancer suffered (accounting for 30% of all female cancers, and remaining the The Guide to International Private Medical Insurance 2005 HealthInsurance 19

16 most common cause of cancer in the UK) but it has a good prognosis where detected early, as was recently highlighted following the much publicised diagnosis and treatment of Kylie Minogue. Early detection of breast cancer not only saves lives, but saves money with early symptoms being less aggressively treated, with much reduced follow up treatment. Cost effective studies performed in the US have estimated a screening cost saving of between $13,200 and $28,000 per year of life saved. Another easily identifiable form of cancer is cervical cancer. The PAP smear has been routinely available in England and Wales since 1989 though available since 1967 with 3.9m women being routinely tested in England each year. There is a 1-in-116 lifetime incidence of a woman being diagnosed with cervical cancer and the test, which costs around 75 privately, allows early detection and subsequent treatment to actually prevent cancer from developing in 80% to 90% of cases. But even with these promising statistics almost half of the women who develop cervical cancer in the UK have never had a cervical screening test. Recent improvements in the testing process (through liquid-based cytology) have greatly improved both the precision of the testing and reduced the requirement for re-testing, making the provision of preventative testing as part of a medical plan even more attractive benefit to both the consumer and underwriter. For men the highest number of new cases reported is for that of prostate cancer, which has recently overtaken lung cancer as the most prevalent (22% of all male cancers and a 1-in-12 lifetime incidence). Prostate-specific antigen testing is available and costs as little as 40. The US has recently led the way with a much increased utilisation of the test in an attempt to detect cancer in its early stages. But it is not only cancer which can show cost savings from being detected and treated early. In 1985 an estimated 30m people worldwide were thought to have diabetes. In 2000 the latest World Health Organisation put the figure at 177m, expected to increase to at least 300m by diabetes type 2 is a common and The customer is looking to us to provide a more complete, holistic product dangerous condition. Although considered to be a mild form of diabetes (compared to type 1, which can only be controlled with insulin) type 2 can still result in heart attacks, nerve damage, blindness, strokes, kidney failure, ulceration (and subsequent amputation). This can be avoided if detected early and treated correctly, usually with simple lifestyle changes such as modifying the diet and increasing exercise. Up to two thirds of people do not show symptoms of diabetes (or put the symptoms down to old age ) and the condition can be very easily and cheaply diagnosed by a GP. In the European Union in 2003 cardiovascular disease (CVD) represented around 105bn of the 875bn spent on healthcare with 57% of these costs attributed to inpatient hospital care and 27% attributed to drugs. CVD presents itself in many forms and with many symptoms and again, by early detection and by giving the customer the right opportunity (in tandem with the right advice), much of this treatment can be completely avoided or at least it can be reduced and controlled without drugs or invasive measures. Why, in this case, are so many providers of international PMI reluctant to provide such a simple and generally cost effective solution to balancing the books? It can be difficult to substantiate that prevention is a better utilisation of premium than providing a straight forward cure. After all, it is still a tricky process to evaluate the average cost of preventative treatment over the respective cost of symptomatic treatment. But with the availability of more information, trials and experience it is slowly becoming easier to prove that preventative benefits can be passed on as a cost saving and therefore used as a facility to control future cost - rather than as simply another benefit to be claimed. Ultimately, to the underwriter, this has to be shown as a cost benefit and not an additional burden on the balance sheet and possibly, more importantly, justified to their reinsurers to whom cost savings with longer term aims can be all the harder to defend. Many international PMI insurance plans are based on providing a reactive plan and simply responding to symptoms or emergencies alone. However, the customer is changing and he or she is looking to us to provide a more complete, holistic product which meets all of their healthcare needs, not symptomatic relief alone. An ever greater number of people are moving to work and live abroad and, unlike in the past, many of these do not have the support of regional offices and exhaustive HR departments. Our role as providers of international healthcare services is more akin to government facilities in the treatment, advice and information that we are able to offer - but with the need to provide instant results. With the inherent cost efficiencies that are generated by providing preventative benefits and with the facilities at our disposal to target those benefits to the correct audience by demographic, it is possible to present a product which allows for an inclusive range of benefits, in a cost effective method. It is about ensuring that there is a balance maintained in the overall facility, rather than the necessity of having to concentrate all aspects of the service we provide solely responding to acute problems. As the customer seeks a holistic package of benefits, so we need to provide a holistic approach to the underwriting considerations and service that we provide. This in itself offers us opportunities to get to know our customers better and to provide them with a service that they feel they can rely upon not only to improve on the facilities they often leave at home but also take the service, care and information that they receive to the next level. 20 HealthInsurance The Guide to International Private Medical Insurance 2005

17 Sue Summers, sales director for International Health Insurance danmark a/s, describes what services and products are currently available for top level executives and high net worth individuals When only the best is good enough The old adage you get what you pay for is certainly true in relation to international PMI. The spectrum is very broad, covering every aspect from standard to deluxe. Those product providers who aim at the top end client are dealing with very discerning and demanding customers. Exactly what is available to them, who are these clients and what do they want? The definition of top end client is very subjective and using other adjectives such as high net worth individual or top level executive is not a great help. Being the chief executive of a successful trading company in Hong Kong may indicate that the potential client has a high level of income, but does it mean that he is willing to purchase a platinum product? The answer is that he will have the means to invest in a high quality international PMI, but whether he does so is often based on his own perception of the value of healthcare. A healthy economy is one cornerstone when it comes to buying a platinum product. But neither status, title nor income alone can define a potential buyer. If we can always identify the target groups by sight, can we identify them by what they want? In terms of healthcare, clients who purchase platinum products are searching for comprehensive, fully inclusive cover, highest quality service delivery and added value. The Guide to International Private Medical Insurance 2005 HealthInsurance 23

18 Annual maximum Geographic limits/restrictions Chronic conditions War/terrorism cover Sports cover Children Choice of treatment provider Renewal terms Claim form Comprehensive, fully inclusive cover At the high quality end of the market, any restrictions in cover can present a real problem. At this level clients demand the security and peace of mind that comes from knowing that when they need help, there will be no surprises due to an obscure clause in the policy conditions. Meeting expectations Clients buying platinum products expect to receive excellent service. They do not want to be treated as a policy number. With regard to their investments, they may very well be used to dealing with a private bank which is very proactive in service delivery with dedicated staff to ensure that the client s needs are meet without delay. They expect the same from their international PMI. The challenge for the insurer is to manage administration costs and fulfil client expectations. For the standard product providers, the cost aspect must take priority and volume servicing is needed. In the platinum market, the insurer needs to project the personal touch perhaps giving the client a named service contact who deals with all the client s administration issues. Well educated and customer focused staff are essential here, and their aim should be to exceed the clients expectations. Added value Many insurance purchases such as motor or home insurance can be perceived as an irritating necessity. The client pays the premium hoping they are Platinum type plan 1m+ Worldwide cover and no restrictions on travelling The policy covers pre-existing conditions and continuous treatment of chronic conditions that arise after enrolment Full cover provided the insured is following their lawful activity/occupation Full cover for all activities including winter sports, dangerous sports and professional sports Full cover up to annual maximum of policy and free of charge to age 10 Free choice worldwide Annual, but guaranteed renewal. Premium and terms unaffected by claims history None covered sufficiently and that they will not have need to call on the policy. In the platinum market, clients are looking to move away from this commodity driven approach towards a value proposition. They do not want a sickness insurance; they are looking for a lifetime relationship which will proactively help them maintain and improve their health and wellbeing and fully cover them if they are unfortunate enough to fall ill or have an accident. Clients buying platinum products expect to receive excellent service. They do not want to be treated as a policy number To fulfil these requirements, the insurer needs to offer a suite of services which the clients can use at will. For example: in-house doctors who can provide routine health advice, second opinions and advice on treatment options; websites covering health and security information; and personal health assessment and health improvement plans. This move towards wellbeing services is growing in momentum and any insurer that wants to access top-end clients must be able to offer services which complement the insurance. Seal the deal The majority of high quality platinum plans are sold via professional insurance advisers and will normally form part of the client s overall financial planning. So how should the adviser prospect and offer advice on this area of the market? First, make sure your potential client has the ability to finance premiums. Many clients appreciate the benefit of investing in high quality healthcare, but only those with healthy finances will be able to sustain the ongoing cost. Second, the adviser will need to establish the client s view of health insurance. If they express the opinion that it is a necessary evil, the challenge will be to get them to focus on greater value not lower price. The following questions might help: What is the client s location? Can they access healthcare locally or would emergencies always involve evacuation? What are local hospitals like? Is there a benefit of free choice? What is the client s family situation? If they are married with children or planning to start a family, they will appreciate the need to have access to the best hospitals and doctors. What is the client s lifestyle? Are they used to having the best in terms of cars, houses and holidays? Does their work involve travel? What are their leisure activities? As mentioned, most standard plans do not cover sport injuries. How will they want their insurer to act when they have a serious illness or want to make a claim? Do they want access to online information? Do they want to be able to talk to a doctor or even get a second opinion? In reality, all international clients would like to believe that their healthcare is platinum. Unfortunately, many find out the hard way that this may not be the case. Skimping on international healthcare is a false economy and can lead to expensive uninsured costs or worse denied treatment options. If clients have a limit to what they can spend then removing dental cover or other non-essential options from a quality plan is always better than choosing a cheaper product. In addition, taking on a deductible and self-insuring a modest amount of annual cost will tailor premiums to the client s needs without reducing quality. Get what you pay for but make sure what you get is the best. 24 HealthInsurance The Guide to International Private Medical Insurance 2005

19 High commission levels are just one reason why advisers should think about selling more international PMI policies. Carl Carter, managing director of IMG Europe, sets out the other reasons for putting more effort into promoting the product. Richer pickings In addition to high commission levels, there are many strong and commercially sound reasons why an adviser should be adding international PMI to his product portfolio. Feedback from intermediaries shows that an increasing number wish they had started looking at this sector a few years ago, given the success that many are now enjoying. In fact, some of most productive intermediaries around the world today were not selling international PMI five years ago. While the domestic PMI market has remained relatively static over the last five years, the international PMI market has continued to grow in leaps and bounds, with no sign of a slowdown on the horizon. International PMI draws many similarities with domestic PMI and as such an adviser should not shy away from the product. So what are the key reasons for the international PMI market continuing to thrive and why are there such rich pickings for the adviser who takes a closer look? The dream of escaping to a new life abroad is becoming a reality for many Britons, who are benefiting from rising UK house prices, a strong pound and considerable asset bases. Over 1.5m Britons live in France alone, and there are a substantial number in Spain, the rest of Europe and countries even further afield such as the US. Factors such as the countless television programmes about buying properties abroad are driving thousands of Britons to move abroad to either live or work. But the international PMI market is of course not simply restricted to outbound British expats. Our research shows that an area of opportunity that many advisers overlook is inbound expats. There are hundreds of thousands of people moving around or coming into the EU every year to live or work. Often they will not be eligible for NHS treatment and indeed even those moving within the EU may not automatically be eligible for NHS/state healthcare or to purchase PMI cover from a domestic provider. In fact many now want the flexibility to seek treatment at home or away. This is an important factor an adviser should consider when selecting international PMI providers as many will insure expats only when they are expats and not when they have returned home. The expansion of European member states, increased mobility of labour and low cost air travel have made it easier for many firms to expand overseas or send staff on short-term secondments to establish new offices. Indeed many people commonly now commute between the UK and a home aboard. In addition to the individual and family market, there is a thriving international corporate market. But it is not just large corporate companies that send staff abroad on secondment. There are hundreds of thousands of international The Guide to International Private Medical Insurance 2005 HealthInsurance 25

20 contractors working all over the world at any one time. Some companies will consider a group plan from a little as three employees and some plans will even allow the individual to take their cover with them when they leave a group arrangement. In addition, when sending staff to the UK some foreign companies often leave it to the local company to arrange healthcare for the relocated employee. In many cases the local company will leave it to the employee to source their own arrangements with the company simply picking up the bill. On many occasions this is even the case with embassies. Some firms have mistakenly tried to use travel insurance as a solution, but this is often not suitable for long-term placements as it tends to relate only to accident and emergency cover. Most travel insurance excludes cover for preexisting medical conditions and usually just pays for enough treatment to enable customers to return home for follow-on care. In most cases people working overseas on a long-term basis want local ongoing treatment. This is particularly true when their family is with them and they do not wish to be sent back to their home country without them. In fact it is now law in some parts of the world, especially in the Gulf states, that expats must have their own healthcare provision. This is in addition to the requirements imposed by countries which are members of the Schengen Treaty that have certain requirements before a visa will be issued. While most international PMI providers operate on a moratorium basis for covering pre-existing medical conditions, some will now even provide cover for declared and accepted pre-existing medical conditions after a certain wait period. Cover for preexisting conditions is often an important factor when expats consider insurance as they are often unsure of what the cost will be for treatment when they are overseas. The introduction of new regulations which restrict access to NHS healthcare once someone has been outside the UK for several months have resulted in the development of new products which give cover at home and abroad. Products such as IMG Europe s GlobalSelect also come without restrictions on where treatment can be sought. Why have standard domestic PMI when you can now have international PMI? The growth and awareness of health tourism is continuing to grow in popularity. Many clients are also now looking at wider alteratives than six week plans for combating NHS waiting lists. New products have been developed giving customers access to the best treatment wherever he or she needs it - even if it is not available in the UK. All of these factors have led to increased awareness and new product innovations in the market, often forcing advisers to reconsider their existing old school providers and look at new opportunities for promoting international PMI. It is the ideal time for an adviser to increase his or her awareness and activity in the international PMI market. In fact some pro-active providers even provide marketing support to help advisers new to the sector, in the form of marketing guides or advanced internet sales and administration technology which allow an adviser to sell via their website or office 24/7. With various internet marketing initiatives it is possible to develop a truly international client base. Some providers even allow agents to introduce sub-agents with the introducer earning a healthy commission override without any administration, premium collection or policy issues. Many intermediaries can come back from a busman s holiday with not only an armful of holiday souvenirs but a healthy collection of sub-agents as well. Commonly accepted currencies, the availability of credit cards and global internet access mean that it is now easy to do business internationally. Some international PMI providers not only provide products in multiple currencies, but also in different language versions, supported by multilingual international claims departments and helplines. It is not just English-speaking expats or agents that can be targeted, adding another dimension to developing a truly international client and sub-agent base. One important and very attractive factor is that expats tend to live in groups, often making them easier to identify and target. This often means that once one client in a community comes on board, then, assuming the service and product is right, often many will follow. Expat communities are typically small and word of mouth is one of the most effective marketing methods. It is not just international PMI that expats need. There is a whole host of crossselling opportunities for a proactive provider. Expats often have difficulty in obtaining personal accident, life insurance or income protection cover and some international PMI providers even offer these as add-ons. In some cases, advisers who have actively promoted the add-on cover can see increases of up to 25% in their average premiums and therefore commission levels all from one point of contact, spotting an opportunity and asking the question. In addition to seeking new customers, traditional marketing tells us that, as always, advisers are best placed with their existing customers to spot an opportunity to help them and to make a sale. With the growth in demand for international PMI and awareness of its rewards among intermediaries on the increase, there is a growing need for an adviser to ring-fence his client away from his competitors. If an adviser is not offering international PMI to his clients, he has to face up to the possibility that a competitor will gets to the prospect first. When an adviser next talks to corporate clients and their human resource (HR) departments it is always worth checking if they have overseas groups or offices, as some international PMI providers can even combine home country and overseas groups under one plan. Research has shown that often HR departments are very favourable towards operating one panterritory healthcare policy as opposed to several domestic plans particularly when staff may be mobile between offices for periods of time. Agents who actively sell international PMI know that the average premium level is usually much higher than for domestic products. Typically there is also a very high renewal rate, as expats are on two or three year placements. This is reinforced by the fact that with many plans new benefits come into play after years one and two, helping to retain customer loyalty. In short, an adviser needs a very good reason not to be promoting international PMI, as the chances are that if he is not offering it to his clients then someone else is. The product offers many opportunities and there is often help and advice available from the provider. In getting started, it is important to review the market, work with providers who will work with you and offer a flexible product portfolio. This helps advisers to meet the budgets and demands and needs of most clients without the need to stock and understand a multitude of different providers products. 26 HealthInsurance The Guide to International Private Medical Insurance 2005