Dec
12
India Insurance Sectors to Continue Growth, Alongside Emerging Asia
Filed Under Asia, Health Insurance, Life Insurance, Medical Insurance, general insurance | Leave a Comment
A recent forecast report by Swiss Re predicts that both life and non-life insurance lines in India, and indeed in many emerging economies, will see larger growth coming into 2012.
With the global economy poised to grow at only 2.9 percent, Clarence Wong, the Chief Economist Asia for Swiss Re sees three hurdles that insurers globally will have to overcome, namely the Euro debt crisis, emerging markets experiencing slower growth and greater inflation, and low government yields due to the prevailing economic climate.
However, Wong also sees India and other emerging markets in Asia outperforming developed markets. Wong says that “Emerging Asia is not decoupled from the developed economies and its growth is expected to slow while inflation is elevated. But policymakers have leeway to leverage monetary and fiscal policies to counter economic slowdown.”
While non-life insurance business in India seems to have performed well in 2011, growing 8.6 percent, the life insurance industry saw new business only grow by 2.5 percent for the year. This is largely seen as attributable to regulations from India’s Insurance Regulatory and Development Authority (IRDA), which were promulgated in September, 2010.
The regulations mandated that life insurance companies had to offer a capital guarantee on pension products as well as reducing the commission on unit-linked insurance products (Ulips), causing the Indian life insurance market to decline significantly. However, many see this as a good sign insofar as that it has pushed insurers and agents to reevaluate their business and products, leading to more cost-effective operations and investments.
Despite the steep decline in life insurance sales over the past year or two, Wong sees economic indicators pushing towards higher growth for life insurers in 2012. In expectation of slower economies and higher unemployment, life insurance premiums are forecast to rise by 4.5 percent across the Asia-Pacific region, while rising economic risks will whet appetites for more routine protection products. This could lead to an increase in life insurance premiums in India by 7.5 percent next year.
While non-life remained strong in 2011, the Swiss Re forecast expects the industry to slow slightly in 2012, coming down to 7.9 percent from 8.6 percent this year. This is somewhat expected, given the slowing economies in many countries around the world. However, many observers believe India’s non-life insurance sector will continue to outperform many developed economies based on continued desire for motor and health insurance products. Motor sales in India have been booming recently and the IRDA’s ruling that allowed health insurance portability between insurers makes the landscape more customer friendly.
According to Swiss Re, the rest of emerging economies in Asia are largely predicted to see strong growth in both life and general insurance industries over the next few years. Life insurance across emerging Asia is estimated to grow by a cumulative 9.5 percent in 2012, with China, Vietnam and Indonesia leading the way with 11 percent, 8.6 percent and 8.2 percent respectively.
Non-life insurance industries across emerging Asian economies are forecast to grow by a cumulative 10.6 percent in 2012, mostly due growing demand for personal accident and health insurance as well as an increasing number of car owners across the region. China Vietnam and India are expected to grow the most next year at 12 percent, 9.2 percent and 7.9 percent respectively.
The long term conclusions of the Swiss Re forecast largely mirror a Bricdata report earlier this month, with both having confidence that as economies start to normalize globally in 2012 and 2013, it will provide a solid macroeconomic background for further insurance growth and improved performance from investments.
Company Mentioned
Swiss Re
The Swiss Reinsurance Company Ltd was established in 1863 and is present in more than 20 countries. Swiss Re provides reinsurance products and financial service solutions. It offers various reinsurance products covering property, casualty, life and health insurance as well as special lines such as agricultural, aviation, space, engineering, HMO reinsurance, marine, nuclear energy, and special risks.
Nov
2
Is the Latin America Health Insurance Market in Good Shape?
Filed Under Aviva, Health Insurance, Healthcare, Insurance Company, International Healthcare, Medical Insurance | 2 Comments
In recent weeks there has been a wave of news from within the international Health insurance industry revealing that Latin America is causing a host of issues for Health Insurance companies.
The leading causes of concern are primarily fraudulent claims being submitted under plans, and massive overcharging by healthcare providers for individuals seeking treatment who are in possession of medical insurance coverage. Both these issues are leading to increased health insurance loss ratios for most companies providing policies to the region, and is placing the continued viability of international health insurance for LatAm in doubt.
This is especially concerning considering the fact that Latin America has weathered the global economic downturn in a fairly robust manner. Brazil, for instance, as a key market for many international insurance companies and a major emerging BRIC economy should present high growth opportunities for insurers.
Despite the perceived opportunities in the Latin American health insurance market insurers are increasingly wary of the region and are slowly beginning to pull out of these markets. One such insurance company planning to leave LatAm is Nordic, the health insurance brand of Europæiske Rejseforsikring A/S; Nordic has revealed that it plans to cease the sale of NHC Americas Health Insurance products.
The company is also moving towards a complete withdrawal from Latin America, and will no longer sell NHC products through Agents or Brokers located in the region.
The move has surprised many industry insiders as it has been known that Latin America was one of Nordic’s biggest markets, and the company was well placed to capitalize on the expansive economic growth of the region over the near term future.
However, Nordic sources have revealed that this withdrawal from the LatAm health insurance market was instigated after an extensive internal review, and is being conducted in order for the company to consolidate its positions in other markets, with Asia being a key focus.
Unlike the recent announcement regarding the complete shutdown of Aviva Global LifeCare Health Insurance products, Nordic has stated that policyholders currently enrolled on an NHC Americas health insurance plan will still be able to renew their policies going forward, and that the plan will be serviced in accordance with existing policy terms.
This means that in contrast to Aviva, Nordic will not completely disable its NHC Americas business, but rather stop the sale of any NHC Americas products to new customers. As such, existing NHC Americas policyholders will be able to receive continuing coverage for any medical conditions they may have developed while on their health insurance plan.
The two companies, Aviva and Nordic, could not have handled the “shut down” of their respective plans in a more contrasting manner. Nordic, unlike Aviva, has shown its commitment to policyholders and has displayed its intent to provide high quality on-going services to members who may have developed serious medical conditions while enrolled on their health insurance plan. Aviva, on the other hand, has shown a complete disregard for the impact of its actions on its clients.
While the Aviva Global LifeCare plans may have been loss making for the company, the position they have placed themselves in by simply ceasing to operate these products could do major damage to the perception of “safeness” which IPMI policies offer on a global level. Facing a similar position, Nordic has elected to stand by its existing customers who may have otherwise faced a difficult proposition in obtaining continuing coverage for this region.
Nordic will not force policyholders off plans which are already in place. This key distinction over the manner in which Aviva is treating existing members is a major insight into the duality displayed by many major Global health insurance providers in the modern age. For the international insurance industry to grow, consumers must have trust in the company they are working with, in that the protection they are purchasing is often intended to provide their medical coverage for the rest of their life. While Aviva may have had a negative impact on the perceived trust levels clients have towards their insurer, Nordic has proven that at least some international insurance companies do care about the people they are protecting, and that these insurers are committed to protecting customers over the long haul.
At present it is still unclear why NHC has made this startling decision. Market Analysts suspect that one of the major contributing factors is due to the company’s Claims Ratio in the LatAm region; future claims development in Latin America for NHC was viewed by insiders as potentially unsustainable.
While the news will undoubtedly come as a blow for individuals in Latin American countries due to the high quality and coverage levels associated with the NHC Americas policy, the fact the Nordic remains committed to continuing service of existing customers will be welcomed by many.
Oct
26
Aviva Global Lifecare Plans to be Shut Down
Filed Under Aviva, Expat Insurance, Health Insurance, Hong Kong, Medical Insurance | 4 Comments
Aviva Life Insurance Company Ltd, part of Aviva PLC, has announced to its brokers and agents in Hong Kong that the company will be cancelling its line of Aviva Global LifeCare products.
The Aviva Global LifeCare plan is an individual international private medical insurance policy licensed out of Hong Kong SAR.
In a recent communication to the Aviva distributor network in Hong Kong the company has stated that ”we have decided to discontinue any new business of our Aviva Global Lifecare products with immediate effect and also the renewal of all existing Aviva Global Lifecare policies.”
This means that any policyholders in possession of an Aviva Global LifeCare plan will be unable to renew their policy. However, until the plan reaches the renewal date, now the cancellation date, Aviva has confirmed that customers will be able to seek coverage under the plan.
This poses a grave concern for many individuals and families currently covered by the Aviva plan, as the cancellation will force them to seek alternative health insurance options. Any medical conditions developed by the policyholder while enrolled on the Aviva policy would subsequently be treated as Pre-Existing with any new health insurance application.
Pre-exsiting medical conditions are normally not eligible for coverage under an international health insurance policy.
As of the time of publishing, Aviva has offered no solutions for continuing coverage to Aviva policyholders currently suffering from severe chronic conditions whose plans will be cancelled. This means that individuals experiencing life threatening medical conditions, such as cancer, are now no longer to obtain coverage from a plan which they have been enrolled on for a number of years.
Additionally, many Aviva policyholders are finding that they have only just completed the waiting periods associated with coverage benefits such as Maternity, and are now being told that their policy is no longer being offered. These individuals must find new coverage and complete a new set of waiting periods before they are able to start their family with the protection they deserve.
A current Aviva policyholder, who did not wish to be named for this story, said of the cancellation:
“This is horrific; I’m absolutely outraged at the decision. This belies an utter lack of commitment to the customer and is, quite frankly, extremely disappointing from one of the world’s, supposedly, ‘premier’ insurance providers… How am I meant to get coverage now?”
Upon being asked if he had any pre-existing conditions which would require continuing coverage the policyholder stated:
“Yes, and it’s definitely a condition which will be excluded from my next plan – if I’m even accepted. The whole situation is verging on the criminal, in my opinion.”
One woman, asking to be called Mrs. S in this article, who had purchased the policy expressly for the maternity coverage said of the news that “this is insane! My husband and I were going to try to start a family this year…. We now have to wait another 10 months on a different policy before we can give birth? How can Aviva do this?!”
Aviva entered the international health insurance market with the Aviva LifeCare plan in 2007 and it is unknown at this moment why the company is choosing leave. Additionally, it is also unknown whether Aviva’s offerings in the United Kingdom or Singapore will be affected by this decision.
However, it should be noted that Aviva has had a history of extreme premium increases over the last 2 years with the LifeCare product, with average plan costs doubling for 2 consecutive years. This is unusual for Health insurance and may indicate a structural unsoundness at the core of the Aviva LifeCare business.
At this time International Insurance News recommends that any person holding an Aviva Global LifeCare Health Insurance policy should contact their agent, broker, or representative to establish continuing coverage options.
Jun
28
Boosting Big Investments in “BRIC”
Filed Under Health Insurance, Hong Kong, Insurance Company, International Healthcare, Life Insurance, Medical Insurance, USA Health Insurance, Uncategorized | 1 Comment
As the economies of Brazil, Russia, India and China continue to grow, increasing numbers of international insurance and reinsurance companies are seeking to enter into these burgeoning regional markets. As some of the most recent international insurers to tap new country markets have found out, not only must they balance short and long-term strategies, but also provide appropriate and appealing products to local populations, sometimes even in the middle of shifting regulatory environments.
Just last week, at the Insurance Day Conference in Bermuda, Joe Plumeri, CEO and Chairman of Willis Group Holdings, spoke about the importance of maintaining growth in the Indian health insurance market along with the markets of Brazil, Russia, and China, or the “BRIC” countries as they are sometimes called. He stated that due to these countries’ developing populations, “the wealth and insurable value that an exploding global middle class will create will be unprecedented in history. The resulting demand for insurance will dwarf the capital and capacity of today’s insurance market.” Plumeri emphasized that “the new middle class will need brokers that understand them and their industries. They’ll need carriers who are innovative, financially secure, and who are there when they need them-carriers with a reputation for paying legitimate claims quickly.” A report published by Standard and Poor’s this week reaffirmed his opinion, with S&P credit analyst Magarelli stating that India’s “non-life sector, which includes property/casualty and health insurance, has one of the lowest penetration rates in Asia.” Again asserting Plumeri’s opinion on what customers will need from carriers, Magarelli proclaimed that in order to maintain the growth of the Indian insurance market, insurers need to start focusing more on key factors such as customer service, innovation, and efficiency; currently, “the insurers’ persistently poor underwriting performance..could potentially stunt the industry’s growth if it remains unchanged.”
As the demand for insurance in Brazil grows, The Travelers Companies Inc has just purchased 43 percent of Brazilian insurance company J. Malucelli Participacoes em Seguros e Resseguros SA for US$410 million, with the opportunity to increase its stake in the company to 49.9 percent over the next 18 months. As J. Malucelli already commands 30% of Brazil’s largest market, it is no surprise that Vice Chairman and head of Traveler’s Financial, Professional, and International Insurance business segment Alan Schnitzer said that J. Malucelli’s “extensive customer base provides us [The Travelers Companies, Inc.] with an exceptional platform for expanding the joint venture beyond the surety business into the growing property and casualty market.”
In accordance with projections for growth in Malaysia’s insurance sector, Zurich Insurance Company Ltd has just purchased Malaysia’s Assurance Alliance Bhd, a subsidiary of MAA Holdings Bhd, in full. A financial holding company, MAA offers general and life insurance, reinsurance, property management, investment advising, and more; Zurich purchased the general and life insurance sectors of the company. The sale comes a few months after Dan Bardin, Zurich’s chief executive of Global Life Asia Pacific and the Middle East, disclosed that the company was interested in expanding in Malaysia, saying that now is a “great time” to focus on expansion in Asia, although it can be “an enormous task to integrate.” Unfortunately, the sale effectively removed the basis of MAA, resulting in the quick descent of MAA’s shares on the Bursa Malaysia Stock Exchange from 5 sen to 67.5 sen on a volume of 32.63 million shares. MAA is also suffering other monetary issues, as without adequate internal funding, the company may not be able to pay their final principal payment of RM140 million. Whether or not they are able to do so will depend on the profit made from the RM344 million (US$114 million) sale to Zurich.
Bardin has reported that the company is also interested in expanding to Singapore and Taiwan. Contrary to S&P credit analyst Magarelli’s opinion that India has “one of the lowest penetration rates in Asia”, Zurich Regional Chairman of Asia/Pacific and the Middle East Geoff Riddell has reported that the company is currently not looking at expanding to India due to the competing prices caused by large private life insurers entering the market already. In March, Warren Buffett’s Berkshire Hathaway entered the Indian insurance market to sell automobile policies for Bajaj Allianz General Insurance, while New Zealand/Australia insurance giant IAG currently owns a 26 percent share of the Indian sector of its business alongside the State Bank of India.
Managing Director of Swiss Reinsurance’s Corporate Solutions Division Ivan Gonzalez elaborated on Swiss Re’s goals for expansion in the future in an interview last week. With 80% ownership of Brazilian insurance company UBF Seguros, Swiss Re has already gotten a footing in the Latin American insurance market, but they hope to use this ownership to expand in and out of Brazil; to grow the company “as a business”. With an eye on the other three largest Latin American markets-Mexico, Chile, and Columbia, Swiss Re is also opening an office in Miami, in order to “be closer to the Latin America market”, Gonzalez said.
Locally, Hong Kong is also trying to maintain its global financial foothold, as the Hong Kong government has begun to talk about creating an independent insurance authority; its aim will be to enhance “regulation and development of the insurance industry”, the government said. Secretary of Financial Services and the Treasury KC Chan also stated that the authority will “reinforce Hong Kong’s position as an international financial center.”
It is clear that companies will continue expanding into Brazil, Russia, India, and China, but only time will tell if they will be able to provide customer service that will maintain a good relationship between these countries and their new insurers.
Insurance Companies Mentioned:
Zurich: Although its headquarters are in Switzerland, Zurich services customers in more than 180 countries, providing insurance for markets in North America, Europe, Latin America, and the Asia Pacific. In North America, Zurich is the second-largest provider of commercial general liability insurance and the fourth-largest commercial property-casualty insurer.
Swiss Reinsurance: As the second-largest re-insurer in the world, Swiss Re maintains a presence on all continents, providing reinsurance for Property and Casualty and Life and Health related issues, as well as risk management services for corporations.
Bajaj Allianz Insurance Company: A joint venture between global insurance giant Allianz SE and Bajaj Finserv Limited, one of the 2 and 3 wheeler manufacturers in the world, Bajaj Allianz offers health, child, and pension policies in more than 1,200 offices across India.
J. Malucelli Seguradora SA is a Brazilian insurance company that provides surety insurance.
Malaysian Assurance Alliance Holding’s Berhad (MAA Bhd) is a financial holding company that provides financial services and insurance in South Asia, dominating in Malaysia while also establishing a presence in Indonesia and Malaysia.
Berkshire Hathaway: Under CEO Warren Buffet, Berkshire Hathaway manages many subsidiary companies, including Geico Auto Insurance, and can also provide financial planning help.
UBF Seguros: is a small Brazilian insurance company that provides agricultural and surety insurance.
Willis Group Holdings: As one of the world’s leading insurance brokers, Willis provides professional insurance services, reinsurance, risk management, financial and human resource consulting, and more in almost 120 countries.
The Travelers Company: One of the largest American insurance companies and the largest writer of US property-casualty insurance, The Travelers Company provides personal, business, financial, professional, and international insurance and ranks 106 on the Fortune 500 list.
Jun
23
Earlier this month, The International Finance Corporation (IFC), an integral member of the World Bank Group, announced a partnership with Archimedes Global to invest US$3 million in equity in health insurance ventures in Georgia and Kazakhstan, aiming to eventually increase access to sufficient healthcare services throughout other emerging markets in Eastern Europe and Central Asia.
Georgia inherited from the Soviet Union an obtuse, highly centralized, state healthcare system, which the government has since struggled to afford and maintain since its independence in 1991. Subsequent market-driven reforms have led to some improvements in care but, due to very limited national resources, the utilization rate of healthcare services has dropped and the vast majority of expenditures are financed through out-of-pocket payments at the point of service without insurance. The Georgian healthcare system has thus faced several obstacles: quality of health services has stagnated, the standard on medical facilities and equipment is poor, and access to any healthcare services is an issue in rural areas, with availability and affordability of even basic medicines remaining a significant problem. For visitors and expatriates in Georgia, it is recommended that international health insurance be taken out prior to your visit.
The IFC’s six figure direct investment makes the organization a minority shareholder in Archimedes Health Developments, a newly formed company founded by multinational investor group Archimedes Global Ltd (AGL). The IFC’s outlay will be combined with US$2 million in additional financing from AGL. This injection of fresh capital will enable the new joint venture company to construct vital medical clinics throughout Georgia and to incorporate both firms’ expertise in developing viable healthcare services and health insurance businesses.
Speaking at the signing ceremony the Chairman of Archimedes, Doron Inbar, explained that the IFC’s contribution would also pertain to AGL’s health insurance and healthcare services in nearby Kazakhstan, and other new markets in Eastern Europe and Central Asia that the company may enter later.
“This investment marks an important step in our expansion in Georgia and within Eastern Europe and Central Asia, especially in countries that have the greatest potential for high-quality health insurance,” Mr. Inbar said, adding: “The validation of our business model by the leading international finance institution focused on private sector development will be instrumental to our efforts to expand our activities in larger markets and raise additional funding.”
The Archimedes staff in Georgia has substantial operational experience in the local healthcare sector, together with the institution’s sound technical skills related to insurance and health services. The IFC’s involvement will help mitigate financial risk against people seeking treatment and will also promote transparency and better business practices in the local health sector.
Ed Strawderman, IFC’s Senior Manager of Financial Markets for Europe and Central Asia, told reporters that this deal was an important venture for the organization and could be of great benefit to the people of Georgia. “Private health insurance is one of the integral elements of a mature insurance market. It leads to better quality, transparent, and efficient healthcare. This will be IFC’s first investment in health insurance and we believe it will help to further promote top international standards and attract other investors to the insurance market,” Mr. Strawderman said.
IFC is the largest global development institution focused on the private sector in developing countries. Georgia has been a member of IFC since 1995, joining in the aftermath of an economic collapse and mounting civil unrest following independence. To date, The IFC has approved nearly US$500 million worth of investments in Georgia, funding 36 projects across a wide variety of enterprise sectors. IFC is currently working through its advisory services to reform Georgia’s tax system to better benefit small businesses, and is also helping improve food safety standards among Georgian companies, at the same time increasing their international competitiveness.
The IFC has also been active in Brazil this month, signing an agreement with Brazilian insurer American Life to develop life insurance products targeting low-income families in the large South American country.
IFC will use its consultancy services to help American Life on planning the business, followed by a pilot and testing phase and further refining the product. The finalized insurance scheme is scheduled to be ready for 2012. The targeted microinsurance market in Brazil represents some 128 million people whose families cumulatively earn less than US$800 a month. Despite the tremendous size of this market, development of appropriate coverage schemes have thus far has been limited and general awareness of insurance products has not penetrated low-income Brazilian populations.
Loy Pires, IFC’s Brazil Country Manager, said the project met the IFC’s mission statement on promoting access to finance for low-income segments of society. “We acknowledge the importance of insurance products for low-income families in managing risks, and through the partnership with American Life, we expect to provide relevant contribution to the Brazilian microinsurance space and to develop innovative ways to reach the base of the pyramid,” Pires stated.
IFC also has plans to increase private sector participation in Brazil to strengthen infrastructure and public services, particularly in health and education. Other priorities include improving the investment climate in Brazil, helping small business enter the formal economy and strengthening their private sector competitiveness, and promoting socially and environmentally sustainable business practices.
Pedro de Freitas, Head of American Life concluded that the challenges present in the Brazilian microsurance market would prove a daunting enough task, “American Life is a Brazilian insurance company that offers life insurance to niche segments not covered by most large insurance companies. Building a strong presence in the microinsurance space is now among our high priorities.”
The Brazilian insurance market is the largest in South America, and offers the potential to become a more prominent international insurance market across all disciplines. Recent economic stability, positive credit trends, and regulatory reforms that have stabilized the currency and promoted domestic savings, have all contributed to growth across the insurance industry in Brazil. In spite of continued regulatory obstacles, large multinational insurers cannot ignore the market’s size and growth potential and will be looking to invest themselves further in Brazil, and other emerging economies, to offset the continued static performance of the established North American and Western European markets.
Companies Mentioned
IFC
The International Finance Corporation (IFC) is a member of the World Bank Group and is headquartered in Washington, DC. The IFC is the largest global development institution focused on promoting private sector investment in developing countries. Established in 1956, The IFC now has 182 member countries which collectively determine the organization’s policies and approve investments.
Archimedes Global Ltd
Archimedes Global was founded in 2007 as an investment vehicle targeting health insurance developments in emerging economies. Today Archimedes owns three separate insurance companies in Kazakhstan, Greece and Georgia with plans to expand further into Eastern Europe and South Asia. In addition, the company provides health services that complement insurance companies’ services.
American Life
American Life Companhia de Seguros is a life insurance company focused on offering niche insurance products to undeserved consumers in the Brazilian insurance market.
Jun
10
Nicotine Shows Promise as Weight Control Method
Filed Under Health Insurance, Healthcare, Technology | Leave a Comment
For many years it has been common knowledge that smoking is an extremely harmful habit, with smokers presenting an increased risk for a host of medical conditions including Cancer, Cardiovascular Disease, and infertility, to name but a few. However, a recent study published in Science has highlighted a potential positive effect in Nicotine, a key chemical contained in tobacco products.
It has long been known that smoking suppresses appetite, and that individuals who quit smoking are prone to significant weight gain. The research presented in Science has shown exactly why smoking, and consequently nicotine, is able to control hunger urges. This has lead the researchers involved in the study to become hopeful about some potential future uses of the Nicotine compound, and are also hoping to use the study in order to help individuals attempting to quit tobacco products control their weight after they have ceased smoking.
So how does this process of weight control actually work?
The easy version is that the human brain has a large number of nicotine receptors, spread throughout the tissue. While not all nicotine receptors have an impact on hunger researchers found that the α3β4 nicotinic receptor, located in the hypothalamus, suppresses an individual’s appetite when activated by nicotine.
The news of nicotine’s ability to influence weight gain follows a study published in Science Daily during May 2010 which found that smokers have a decreased risk of developing Parkinson’s disease, a serious degenerative condition of the central nervous system. In this study researchers found that active smokers, who had smoked for more than 40 years, were up to 46 percent less likely to develop Parkinson’s disease than people who had never smoked. Individuals who had smoked for between 30 – 39 years were 35 percent less likely to develop the condition than their non smoking counterparts, while persons who had smoked between 1 and 9 years had reduced their risk of developing Parkinson’s by 8 percent.
However, researches noted that the decreased risk of developing Parkinson’s disease was due to the length of time that an individual had smoked, and that the risk did not change based on the number of cigarettes that were smoked in a single day. The study also noted that in the event that an individual had already developed Parkinson’s symptoms smoking would not retard the progression of the disease, and that treating Parkinson’s with nicotine was not a viable option.
Chemicals in the Tobacco plant are coming under more scrutiny as global health initiatives to encourage people to give up smoking become more prevalent. However, with the news that there are some potentially beneficial effects of this incredibly harmful activity it can be expected that scientists will continue to build on their knowledge of this substance.
One projected line of inquiry into the new knowledge of the nicotine compound is as a weight loss aid for individuals suffering from chronic obesity. Obesity is a rapidly growing issue in many developed nations, especially the USA, and a non-invasive method of controlling appetite outside of drastic stomach surgery or a complete overhaul in lifestyle choices could be a welcome sight for many individuals around the world.
However, there are some key concerns with using nicotine as a form of medical treatment, not in the least is that the substance is highly addictive and that most forms of tobacco use carry the previously mentioned, severe health risks. Using a pure form nicotine pill of some type, nicotine gum, or even the patch could be possible treatment methods but researchers have yet to come to a full understanding of how these options will impact conditions like obesity.
Additionally this could cause a range of issues with regards to medical insurance and life insurance coverage. Smokers and tobacco users will typically receive higher premiums than non-smokers when obtaining health insurance in many parts of the world. In fact, many life insurance policies will check for the presence of Cotinine, a byproduct of nicotine found in the blood of smokers, and impose higher premiums on those who test positive for the molecule. If scientists and doctors find a way to use nicotine as a legitimate treatment option for conditions such as obesity and Parkinson’s disease then a simple test to check for the presence of Cotinine may not be sufficient to calculate the risk presented by a specific individual. However, any development in this direction will be at least a few years off, giving insurers around the world time to prepare for new forms of treatment.
May
12
Low Cost Indian Health Insurance Spurring National Healthcare Investment
Filed Under Health Insurance | 6 Comments
The Indian government is looking to develop public-private partnerships in hospitals to improve and expand healthcare access towards the more remote and impoverished areas of the country. However, the success of an existing government health insurance scheme designed for the poor has already begun to meet these objectives.
The Rashtriya Swasthya Bima Yojana (RSBY) scheme was launched on April 1st 2008 by the Indian Ministry of Labour and Employment to provide sufficient health insurance coverage for families living Below Poverty Line (BPL), and to better protect them from the financial liabilities that arise out of health shocks involving hospitalization.
Enrolled BPL families under the RSBY are entitled to hospitalization coverage up to a Rs 30,000 (US$670) limit per anum for most maladies that require inpatient services. Transportation charges are also covered up to a maximum of Rs 1,000 (US$22) per year. The beneficiaries of the RSBY initiative pay only Rs 30 (US$1) as an initial registration fee per enrolled family. After the registration fee has been paid, all medical transactions for enrolled individuals are cashless. The RSBY scheme involves cooperation between the Indian Central and State Governments working in tandem with private Indian health insurance companies. Companies offering RSBY coverage are pre selected by the State, and will administer the policies on behalf of the Indian government. Premiums, however, are handled by the Indian government with the Central and State organizations splitting costs 75 percent and 25 percent respectively.
Under the RSBY scheme, coverage extends to five direct family members, including the head of the household, a spouse and up to three dependants. There is no age limit on beneficiaries and pre-existing conditions are covered. Each beneficiary family is issued a biometric-enabled smart card, containing fingerprint and photographic data on each member. Health insurers manage the issuance of cards and, eventually, the payouts of any claims made under the scheme.
The smart card system is portable, enabling migrant labor to utilize the large scale medical IT network created specifically for the scheme. An RSBY policyholder who has been enrolled in a particular district will be able to use their smart card in any of RSBY’s 8,000 empanelled hospitals, both public and private, throughout India
Despite early administrative hiccups, the ambitious RSBY system is a pronounced success and has helped quadruple India’s overall health insurance penetration in the three years it has been in operation. The scheme now covers some 23 million poor families in 330 districts and 27 states across India. This performance has prompted the Labor Ministry to plan for the development of further extensions for the poor, including old age pension schemes and various labor related tie-ins for cover.
The RSBY’s achievements in extending health coverage has also presented an attractive opportunity for entrepreneurs interested in developing hospitals and clinics primarily targeted towards India’s rural poor.
Indian investors are being drawn to low-cost healthcare development due to RSBY’s financial design. RSBY premiums are paid out through a district-wide basis to insurance companies. Many districts, however, remain without accredited hospitals, leaving RSBY beneficiaries to travel to another district or state when medical issues occur. If investors come in and set up sufficient medical facilities in an underserved district, the RSBY can incorporate their services and substantial client-base into the operation straight away. With millions of RSBY smart cards issued and private health insurance premiums on the rise, there is potential to craft sustainable healthcare businesses in more remote parts of the country.
Harendra Singh, owner and CEO at Asarfi Hospital Limited, is an example of one such investor. Mr. Singh is constructing a 100-bed multi-specialty hospital in Baliya in eastern Uttar Pradesh, an area outside of most existing Indian healthcare networks. The state of healthcare around Baliya is currently very poor and he hopes to make a difference.
The first Asarfi Hospital was set up in Dhanbad, Jharkhand in 2007, a year before the RSBY launched. Once the scheme came into effect, Mr. Singh noted that many rural poor were coming in for an assortment of procedures, from gall bladder surgery to appendix removals. On average Mr. Singh estimated that 35 inpatients in his 130 bed hospital would be RSBY cardholders. He further believed that the RSBY’s effect on increasing demand for treatment would have a substantial impact on the healthcare system.
Other established healthcare providers are looking to augment their services around the RSBY. GV Meditech is developing an ambulatory service that travels periodically to distant villages, pools 20 to 30 RSBY cardholders with medical problems, and transports them to the nearest Meditech hospital. The company is also in talks with a prominent Bangalore-based cardiac hospital to set up a 100 bed hospital designed for RSBY patients.
Kolkata-based Glocal Healthcare is aiming to better regulate its rates on RSBY packages. The company is developing a new system that will standardize premium rates for over 750 medical procedures, which empanelled RSBY hospitals will comply with. Glocal hopes to use the success of the RSBY scheme to launch a range of innovative India medical insurance products which would aim to provide affordable healthcare for individuals and families who are not currently eligible to receive coverage under Rashtriya Swasthya Bima Yojana.
The RSBY has rapidly opened up an underdeveloped healthcare market in India. Most hospitals that now deal prominently with low-income families will have some relationship with the RSBY. The growth of this scheme demonstrates that the Indian government could have more success in moving from being a healthcare provider into primarily a healthcare financier.
The Indian government has long focused on supply-driven healthcare management through investments in public hospitals, resulting in an inefficient, centrally-concentrated state healthcare infrastructure. The growth of quality private hospitals in districts where there were no facilities before shows that through providing more citizens and business with the wherewithal to make decisions, the government can more easily satiate healthcare demand.
RSBY furthermore acts as grass-roots advertising for the health insurance industry in India. Every person who gets claim settled under RSBY makes another 5 people aware of the concept of health insurance, it is argued. This in turn has spurred a number of local and international health insurance providers into taking a renewed interest in the Indian health insurance market. The success of the RSBY scheme has proven that health insurance products and providers can achieve success in what was previously considered to be an unprofitable market.
In addition to the RSBY, state-sponsored schemes such Aarogyasri in Andhra Pradesh are having a similar positive impact. Bangalore’s Narayana Hrudayalya recently opened a 500-bed cardiac and specialist hospital in Hyderabad to cater to their state community health insurance system for BPL families.
Deviprasad Shetty, founder of Narayana Hrudayalya, spoke of the changes in low-income healthcare assistance: “We predicted ten years ago that it was a matter of time before government became a health insurance provider and not only a healthcare provider.”
May
3
Many Expat Residents No Longer Able to Afford Rising Healthcare Costs in Dubai
Filed Under Expat Insurance, Health Insurance, Healthcare, Medical Insurance, Middle East, UAE Insurance | 5 Comments
In Dubai, public healthcare costs are rising at a significant rate, which has become a major concern for expatriates, especially those without private health insurance.
Dubai residents can apply for health cards that are supposed to grant them access to public health facilities at a discounted rate. However, with the rising costs of treatment, those health cards essentially offer no discounts now. Treatment costs in government hospitals are now about the same as those of private hospitals, with a consultation costing around 250 Dhs to 400 Dhs (US$ 75 to US$ 120), and a one night stay in the Intensive Care Unit costing around 3100 Dhs (US$ 845).
There has been discussion of passing a legislation that would make health insurance mandatory for all expatriate employees that would be paid for partially by their employers. Abu Dhabi currently already has a similar law in place, which has led to around 98 percent of workers being insured. However, after years of talks in Dubai, expat residents are still waiting to see whether a mandatory health insurance scheme materializes.
To exacerbate the situation, the Dubai Health Authority (DHA) has recently announced that they will start charging expatriate patients for chemotherapy sessions. This announcement was made 2 weeks ago, and is due to be in effect in 1 week.
A staff from the Oncology Department of Dubai Hospital announced, “From May 3rd, patients will have to pay for their chemotherapy injections, the cost of which will depend on the medications.”
The vast majority of expat residents will not be able to afford these costs out-of-pocket. One session of chemotherapy can cost around 8000 Dhs (US$ 2,177), and around 14 – 16 treatments are needed in one year.
Many physicians, authorities, and patients have criticized the DHA for the short notice that it gave patients, and the lack of consideration for patients who have already begun a course of treatment and cannot afford to stop.
For many expat patients, they cannot wait to go back to their home country to seek treatment because it may take a while for the paperwork to be processed before they can start receiving treatment. The delay in treatment can drastically change the outcome of their recovery. It is also too late for these expat cancer patients to apply for and get private health insurance because no private insurer will agree to cover cancer treatment costs once the patient already has cancer.
Other costs, aside from chemotherapy, are also on the rise. Expats, B. Joseph and his wife, had a baby in Dubai in 2000, said, “We paid just Dh 100 for the delivery then. The health card is of no use now” Eleven years later, they have to pay 12,000 Dhs (US$ 3,266) for the same delivery package.
A DHA representative stated, “The card has no specific benefits. It only gives you access to government hospitals and clinics.”
Currently, treatment is still free for Emirati nationals. Emergency treatment for expats is also free until the patient’s condition stabilizes. At that point, they will be billed for all other treatment received outside of the emergency ward.
For example, an Arab woman, who was stabbed during a robbery, was billed 285,000 Dhs (US$ 77,589) for her treatment costs after her situation stabilized. She cannot afford the bill, and felt that the burden of the bill should not be on her. She complained to the Dubai Police Chief Lieutenant General Dahi Khalfan Tamin, and has started a discussion in the Emirate about who should be responsible for treatment costs for crime and traffic accident victims.
The DHA has responded to criticisms of cost cutting measures and rising costs by saying, “As a vital service provider, we take into account ethical and moral requirements. We are always aware that the field involves the life and death of patients and keep in mind the oath all doctors have taken – to treat all patients no matter what race, religion, or social standing – leading to the fact that all patients coming to the hospitals, especially emergency cases, need to be treated immediately regardless of their capability of paying or not. However, taking into account the rapid increase in the population of Dubai and the spiraling costs in running health organizations, there should be a mechanism in place to at least cover the costs of such services.”
He goes on to add, “We believe that most of the issues, if not all, will be resolved with the introduction of a universal mandatory health insurance scheme, whereby every resident of Dubai is covered for certain health services. Dubai is moving forward in that direction.”
However, many Dubai expat residents are skeptical about whether the scheme will ever come into effect. The DHA has said in the past that the scheme was originally to be introduced in January 2009.
According to a month-long Dubai Household Health Survey performed by the DHA, 75 percent of workers in Dubai have no health insurance. This creates a chain of consequences that results in reduced interest and investment in Dubai healthcare services as well as escalating bills.
Dr. Haider Al Yousuf, Director of Health Funding at the DHA said, “Limited access reduces utilization; this does not provide enough volume to maintain a high quality of services provided, allow specialized centers of excellence nor promote medical tourism.”
Ram Lachhan Raj, a laundry worker, ran up a bill of 44,000 Dhs (US$ 11,978) in one week after he was diagnosed with leukemia and renal failure. Neither him nor his employer can afford the costs.
“As good residents, we would like to pay, but just cannot afford it,” said Somsun S, a small business owner, who is left with a bill of 45,000 Dhs (US$ 12,250), after an employee was paralyzed after a fall.
In the past, hospitals have been understanding and have waived the bills for many people. NGOs and other organizations have contributed to treatment costs, but this solution is no longer sustainable as the amounts involved have become much too high.
Patients and hospitals are also trying to organize charity drives by holding garage sales and markets to raise money for patients who cannot afford the costs, but many experts believe that the only permanent solution is mandatory insurance.
Others have pointed out that it is not as simple as passing a law that makes health insurance mandatory. Albert Rodrigues, the Managing Director of Millenium Insurance Brokers noted, “It is not easy. The challenge for the health authorities is to find the right formula that would satisfy all the stakeholders – medical providers, employers, insurance companies, and the general public who include both Emiratis and expatriates. Most employers do not have the margins to cater to the new equipment”
Deteriorating economic conditions are another contributing factor to the delay in implementing the mandatory health insurance scheme. Sanjay Tolani, Director of Goodwill Insurance Brokers expressed, “After the financial crisis, some multinationals have sized down employee covers, while others have begun to share premium costs with the employees.” Tolani also said that to compromise, many large employers have opted for Health Management Offices (HMOS), where employees can have discounts at a network of predetermined clinics and doctors.
Until employers, health authorities, and insurance companies reach a deal, the situation continues to worsen with hospital bills continuing to escalate.
According to the World Health Organization (WHO), the UAE expenditure on health per capita is 3,607 Dhs (US$ 982). Comparatively, this is much lower than many Western countries. However, since the UAE is a tax-free country, medical care costs are becoming more difficult for the government to carry entirely on their own.
Apr
27
As Medical Insurance Premiums Rise in the UAE, Many Local Insurers Turn To Takaful to Remain Competitive
Filed Under Health Insurance, Insurance Company, Medical Insurance, Middle East, UAE Insurance | 1 Comment
Medical insurance annual premiums are expected to increase by around 10 to 20 percent this year to catch up with rising healthcare costs in the UAE. This annual increase is expected to continue for years to come.
Many factors have contributed to this price hike, including ones caused by insurers, healthcare personnel, impending legislation, and from individual medical insurance policyholders themselves.
One leading reason is that many hospitals and physicians often prescribe treatments that are not always necessary. A healthcare insurance official commented, “It’s fair to say the local health-care industry has not lagged in prescribing all manners of treatments…even when they are not required. They know that if the patient is covered, it’s more or less a given that the insurer would pay up. Most healthcare operators assume that health insurers are there to facilitate their operating cash flows.”
Although the cost of drugs have decreased or been held in place by authorities, local healthcare personnel may not necessarily prescribe these cheaper alternatives. One insurer expressed his opinion about how lower cost drugs do not necessarily translate to savings, “There is definitely a misuse by certain doctors—and the institutions they represent—by prescribing expensive brands even if cheaper generic drugs are available for the same treatment and with the same results.”
However, local hospitals and physicians are not the only ones to blame for rising costs. Many patients with medical insurance often abuse their policies. A significant number of insurance policyholders go to the doctor for the slightest medical concerns. Since many insurers calculate applicants’ and renewing policyholders’ annual premiums based on the community they live in and their age, as more and more people make claims in an area, the overall premium for everyone in that community will also rise. Insurers hope to check this behavior by raising insurance premiums.
Another reason for the increase in premiums, especially for insurers in Dubai, may have to do with the move to make medical insurance mandatory for all employees in Dubai. Although this proposal has been discussed for several years, it seems highly likely that it will happen this year.
Abu Dhabi is currently the only emirate that has a law that mandates health insurance coverage for all employees. Insurers stand to benefit from this legislation if the premium hikes are made before Dubai passes a similar law.
Dubai insurers, especially, need to find a method of managing their portfolios. Without the government subsidies that Abu Dhabi insurance firms enjoy, it is even more difficult for Dubai insurers to make the business profitable.
The increase also comes as a consequence of years of adopting a low-premium strategy by insurers in order to remain competitive and win business. In the past 4 years, while in- and out-patient treatment costs have increased by 30 to 40 percent, annual health insurance premiums have not reflected this trend.
Often, it is not unusual for an insurer to offer the lowest possible rates in order to secure a large group insurance contract. This strategy may have worked in the past, but now it is no longer feasible.
“Medical insurance has never been a highly profitable line in the UAE and in recent years insurers have been feeling the pinch from substantial—and ever growing—claims outgo, so when the time comes for medical policy renewals, insurers have to rationalize their expenses. The proposed increases in premium is a testament to that,” said Abdul Khader Panakkat, the Nasco Karaoglan’s senior director of claims.
Local UAE insurance firms, which already have trouble competing with more experienced and stable international insurers, suffer the most from these price increases. According to the Business Monitor International (BMI) report, local insurers cannot be competitive with multinational giants of the insurance industry outside of the UAE. Instead of trying to compete in conventional insurance, local firms are now looking towards Takaful, a concept of insurance that is compliant with Islamic law.
BMI reported, “These local firms have little economy of scale and limited access to the resources and skills required to be competitive internationally. Where there is more opportunity for growth is in the development of Islamic financial products. Takaful is a particular area where the UAE could lead the way. It will have to battle through structural problems that still exist, however, such as the general lack of popular understanding of Shariah-complaint products and the shortage of suitably qualified Shariah scholars.”
The UAE Takaful insurance sector looks very different from that of the western world. Instead of a few large multinational giants, the UAE Takaful insurance industry is made up of small, local companies that are often listed affiliates of larger firms, and founded by affluent, well-networked families, as many businesses in the region are.
According to data from the Abu Dhabi and Dubai stock exchanges, the Oman Insurance Company (OIC) is currently the largest local insurer, making up 14 percent of total premiums. The next largest is the Abu Dhabi National Insurance Company (Adnic) and the Islamic Arab Insurance Company.
The UAE insurance market is extremely competitive. There are around nine companies that provide Takaful insurance, and over 50 companies offering conventional medical insurance.
How much the premium rate hikes will be remains to be seen, although it depends at least in part on whether there will be changes in legislation. However, it seems likely that this trend will continue for the next few years.
Apr
19
AETNA Partners with Huatai Insurance
Filed Under Aetna, China, China insurance, Health Insurance, Medical Insurance | 1 Comment
AETNA, one of the world’s oldest insurance companies, has partnered with Huatai Insurance in the People’s Republic of China in order to provide a comprehensive individual international private medical insurance policy within the Chinese insurance market.
The AETNA offering is thought to be extremely similar to the company’s existing individual international health insurance products, and is designed to offer medical protection throughout the Greater China Region.
AETNA entered the Chinese insurance market in 1997 through a joint venture with China Pacific Life Insurance Company; the companies formed Pacific An-Tai Life Insurance Company, although AETNA later sold its stake in the venture to ING during 2000.
However, it was not until 2008 when AETNA officially established a presence in the China, opening a representative office in Shanghai in order to explore the growth potential offered by the world’s second largest economy. With the interest from a number of global insurance leaders towards China, the partnership with local insurance provider Huatai places AETNA in good stead to capitalize on the rapid growth of the burgeoning Chinese middle class.
Huatai insurance company has been active in the Chinese insurance market since 1996, when the company was created by a group of 63 large-scale enterprises. Huatai specializes in the provision of Accident and Health, Property, and Liability insurance.
With more than a decade of experience working within the Chinese healthcare system, the Huatai partnership presents significant opportunities to AETNA as the company seeks to develop the future of its business in China.
The AETNA Huatai health insurance offering is expected to be available to purchase within China by the end of Q2 2011. However, actual details of the policy, and its expected deployment date, remain uncertain at this time.
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