The cost of medical treatment is rising all around the world and with real pressure on public finances, access to publically funded healthcare for expats – which always was limited – is becoming nigh on impossible. Expatriates have to accept that they either take out private medical insurance – or face the real possibility of being unable to access healthcare when they most need it.
Selling IPMI presents a real opportunity for financial advisers serving the expatriate market – consumers need advice as the range of plans, benefits and costs is wide. The market is far from commoditised and high-quality advice can help an expatriate to identify the plan which is right for their circumstances and their pocket.
2010 market trends
The market for IPMI is not immune to the economic pressures facing the world’s economies and this year’s big themes are going to be centred on cost management and service delivery. Product development will also feature strongly as providers develop their plans to be more flexible and tailored to meet their customers’ needs and pockets.
The upward trend in medical costs is unlikely to abate, driven by improved procedures, increasing hospital and medication costs and greater life expectancy, not to mention the impact of issues such as obesity, alcohol and pressured lifestyles. At the same time, many expats will be looking for ways to manage the cost of their cover. It is how providers respond to these two conflicting pressures which will mark out the likely winners. Delivery of medical care, when and where it is needed, backed up by a high standard of customer service is the key to success in the IPMI market
Maintaining service standards
Advisers have to be absolutely confident that the plan they choose for their client will deliver when needed. An IPMI policy which fails to respond when an expatriate is facing a medical emergency is useless – so if a provider is offering big discounts on cover – or its plans are priced well below the market norm, the adviser should take great care to understand how the cost savings are being achieved.
If this has been delivered by cuts in customer service or claims teams – or by using lower cost global assistance services, the plan may respond less effectively when needed. If discounts are being funded by providers to build or protect their existing book is this sustainable in the long term? Don’t forget that once a member has a medical history it can become harder to switch providers and discounts now may mean big price rises in the future.
Managing cost, however, is vitally important and advisers should understand how their provider is delivering value for money. In many cases this will be by establishing more efficient processes with medical providers to manage the cost of claims and by reviewing all points in the service delivery chain.
Product differentiation
Efficiency and value for money is, however, only part of the picture. Providing the right level of cover tailored to the need of each customer is also becoming increasingly important and is a trend which will continue to develop in 2010 and beyond.
Most providers offer a choice of plans, ranging from the plain vanilla – which provides basic emergency cover – to high value plans which offer additional cover for outpatient care, dental treatment and a wide range of other benefits.
Different clients will be happy to accept different levels of cover – some will pay for absolute peace of mind, while other will be looking for the lowest cost option. Plans which allow benefits to be personalised are already available and the demand for greater customisation of cover is likely to increase as the year develops.
One trend we are already seeing this year, and is likely to develop as the year progresses, is the introduction of plans limited to particular areas of the world. Take for example a group scheme for a company with a number of expats in Africa – few of these expats are likely to be travelling to the Far East or Americas – so a plan which only provides cover in Africa, is likely to suffice for the vast majority of members of staff. Tailoring cover to specific client requirements – offering either enhancements in service or a reduction in cost is likely to be an accelerating trend as the year progresses.
Underwriting developments
Product development will not only be focused on plan benefits and enhancements – we are also likely to see developments in how plans are underwritten by providers. Originally nearly all private medical insurance plans were underwritten on a full medical underwriting basis – where a member’s full medical history was taken into account. This approach became less common as plans offering moratorium underwriting increased in popularity.
On moratorium plans expats’ pre-existing medical conditions are excluded for a period or permanently, which greatly simplifies the application process, but can penalise expats with existing medical conditions. Many group schemes are also now underwritten on a medical history disregarded basis – where all members of staff of a group are covered no matter their medical history – as low claims from the majority of staff will offset insurers’ exposure to the unhealthy few.
In 2010, with a move back towards greater flexibility and more tailoring of cover – full medical underwriting is again likely to rise in availability and popularity as expats with existing medical conditions seek greater certainty in their cover.
Healthy outlook
The market for IPMI will remain strong in 2010 and beyond and will continue to offer excellent business opportunities. As the year progresses we see ongoing efforts to manage and control medical treatment costs, developments in customer service and a trend towards greater personalisation in IPMI plans. Despite global economic uncertainty, international labour mobility is increasing and the IPMI market will continue to thrive, benefiting advisers and their clients.
