In order to help develop growth and regulation of professional insurance services in South East Asia, The World Bank is looking to appoint Thailand as the new ASEAN insurance hub.
The Office of the Insurance Commission (OIC) made the decision in line with the formation of the Asean Economic Community (AEC) scheduled to be ready in 2015. With ‘regional economic integration’ as the ultimate goal for the AEC, the insurance industry will be keeping a close eye on the role Thailand will play in promoting insurance products throughout the region.
Read the rest of the Thailand to be ASEAN Insurance Centre article
There have been a number of notable changes in International Private Medical Health Insurance in the last few weeks, while not as earth shattering as the Libor scandal or the crop failures in the US, the progressive and continual changes reveal an industry that is currently very dynamic and competitive. While Bupa is launching products to fill gaps it sees in the IPMI market, US healthcare giant UnitedHealth Group is steadily working to increase the scope and quality of their international healthcare cover. Medicare International has been tuning their products to keep them competitive, and have made efforts to keep premium increases down to a minimum.
Bupa, one of the world’s largest insurers, has recently announced a new range of international private medical insurance products called Bupa Flex. Until now, international health insurance policies were only available for a minimum of one year, but Bupa Flex aims to provide the benefits of traditional long term international medical cover without the usual 12 month minimum duration. It is aimed at international travellers and expats who are planning to be abroad for a period of between 3 to 11 months. Now, people moving abroad for short term transfers can tailor the duration of their policy to their exact needs. It offers benefits above short term travel insurance because policyholders can increase the duration of their cover at any time, and even convert to long term health insurance without a loss of or break in cover.
An innovative aspect of Bupa Flex is that it is managed online. Bupa has created a secure online portal called Membersworld, through which subscribers can manage almost every aspect of their insurance cover. The portal allows clients to access their policy documentation, request pre-authorisation for planned treatments, submit claims and access live 24 hour webchat with experienced advisors. The service also uses email and SMS alerts to notify members of the status of their claims, or to alert them that there are documents online which require their attention.
Bupa Flex comes in two flavours; Bupa Flex and Bupa Flex Plus. The basic plan covers inpatient and day care treatment, local air and road ambulances costs, and outpatient surgical operations. Bupa Plus adds a full range of out-patient coverage as well. Because of the short term nature of the products, there are no options to add maternity, newborn care or cancer benefits. Both plans have a total limit of GBP1 million (USD 1.7 million) and do not offer cover in the United States.
NIB and Unitedhealthcare International Join Forces in Australia
NIB, Australia’s fifth largest health insurer, and UnitedHealthcare, based in Minnesota, have signed a strategic partnership whereby NIB will support UnitedHealthcare’s international health insurance members in Australia. The deal gives UnitedHealthcare International customers access to NIB’s network of healthcare providers in Australia, which includes more than 500 hospitals. It extends UnitedHealthcare’s customers direct settlement options at a wider range of healthcare facilities in Australia, like dentists and opticians.
UnitedHealthcare sells international expat medical insurance, under their Global Solutions brand, to employers with employees based internationally. “UnitedHealthcare International’s clients are benefiting from our expanding global health care network, providing their employees with seamless access to high quality health care. A growing number of our clients have operations in Australia, and they now will have access to top hospitals and care providers there,” said Simon Stevens, president of Global Health at the UnitedHealth Group.
The company recently set up a similar alliance with Dubai-based Al Sagr National Insurance Company, to expand their Global Solutions coverage to seven countries in the Middle East. Through this alliance, UnitedHealthcare members have access to local services in the Kingdom of Saudi Arabia, UAE, Jordan, Qatar, Oman, Bahrain, Lebanon and Kuwait.
NIB currently provide healthcare cover in Australia to about 20,000 international customers, and are aggressively working to position themselves for expansion into the international healthcare market. “We have a view that increasingly people will need global health insurance cover and that if we don’t have an involvement in this phenomenon we could be missing an enormous opportunity,” said Mark Fitzgibbon, CEO of NIB.
UnitedHealth Group serves 75 million people worldwide through its family of US and international health and well-being businesses and are the market leaders in supporting employers with international workforces.
While there is no reciprocal agreement in place for NIB customers in the USA, NIB may be hoping to expand their international healthcare coverage through partnerships of this kind.
Medicare improves international health cover
Medicare International has made a number of improvements to its international health insurance products.
Organ transplantation and HIV/AIDS benefits will now be included in their International and International Plus policies at no extra cost, with the transplantation benefit carrying a limit of USD 170,000 for the International, International Plus and Executive plans which rises to USD 340,000 with the Executive Plus plan. The HIV/AIDS benefit will be subject to a two year waiting period, and will have a lifetime limit of USD 17,000 across all plans.
Maternity and complicated or abnormal pregnancy cover available on the Executive and Executive Plus packages will no longer be subject to an excess of 20% and 30% respectively. and the 20% co-payment on newborn care has been scrapped. The reduction in out-of-pocket expenses may be a welcome change, as simplifying and streamlining the process at a stressful time may increase the perceived value to policyholders.
Claims are also no longer subject to a USD 5100 limit for group and individual claims, but claims are now fully recoverable and without any cap, subject to the policy limits of USD 1.7 million per annum.
Price rises for 2012 have also been well below the expected annual medical inflation rate of 12-14%, with an average increase of 8% for individual plans and just 5% for group policies. With the current state of the economy, it is a welcome change to see policies undergo significant improvement while still keeping premium increases in check.
The competitiveness of the International Health Insurance market, the rising demand and scope for growth into developing parts of the world, like East Asia, are keeping insurers on their toes. We can expect a continuing stream of innovative products and new solutions as insurers contend for market share.
In recent announcements, AXA, the Industrial and Commercial Bank of China Co Ltd (ICBC) and Minmetals declared the launch of their foray into the China insurance market for life insurance. Officially branded as ICBC-AXA Life, the company recently received official approval from China’s State Council and all other relevant governing bodies to do business in the country. This follows the acquisition of 60 percent of the equity stake in AXA-Minmetals by ICBC.
ICBC-AXA Life represents AXA’s long term commitment to the Chinese market, according to Henri de Castries, Chairman and CEO of AXA. By partnering with ICBC, AXA stands to gain significantly in terms of expertise and experience, bringing diversified and comprehensive insurance coverage for the Chinese market.
Prior to the partnership, AXA and Minmetals formed the venture known as AXA-Minmetals and was established in 1999. In October of 2010, ICBC acquired a 60 percent equity stake in AXA-Minmetals, resulting in an equity split of 60 percent ICBC, 27.5 percent AXA, and 12.5 percent Minmetals. The equity stake was purchased for 1.2 billion yuan by ICBC and prior to the acquisition, the equity split was 51 percent-50 percent AXA-Minmetals.
With headquarters in Shanghai and operations in over 20 major cities and provinces, ICBC-AXA intends to service a vast majority of China. Beijing, Shanghai, and Guangzhou will serve as major service hubs. Some of the products which ICBC-AXA will offer include education, family protection, wealth management, and retirement insurance advice and services.
ICBC-AXA will be leveraging ICBC’s 282 million clients and expertise in the Chinese financial industry. The strategic move on both parties should prove to set a new precedent as China’s power player teams up with Europe’s largest insurer. Ambitious plans are in place as ICBC-AXA strives to be the leading provider for insurance in China.
In recent statements, Mr. Castries was quoted as saying that Europe looks like Chernobyl before the explosion, indicating forecasts of tumultuous times ahead. The development of ICBC-AXA represents a diversified move for AXA and a new area of opportunity for ICBC. As financial woes continue to haunt the financial industry, the insurance industry represents a stable move despite the large gains that can be achieved through it.
The Chinese market is difficult to penetrate due to strict Chinese government oversight and regulation. As such, China represents a significant opportunity due to its sheer size of population. Previously, AXA utilized Minmetals’ network and Chinese state-controlled status to break into the Chinese market. However, as Minmetals is a mineral and metal company, AXA stands to gain much more through the help of ICBC’s broad reach within the relevant sector.
The Chinese market is expected to grow at an average rate of 12 percent per year between 2010 and 2020, according to analysts. Chinese national companies maintained a 95 percent market share on life insurance and 99 percent in damage products, while more than 50 foreign players were struggling to win more of the market for general lines. AXA aims to bypass regulatory brakes which have restricted the company’s ability to compete in the past. ICBC has agreed to distribute AXA’s product in over 16,000 branches. AXA remains dedicated to the Chinese market and is actively trying to withdraw from activities within Australia and New Zealand.
Appointed as the Chairman of the Board of ICBC-AXA Life is Mr. Sun Chiping and President Mr. Jamie McCarry will oversee the day-to-day business operations of the newly formed joint venture.
While AXA is attempting to significantly increase market share in China, ICBC is actively trying to increase their market share in Europe. It is understood that ICBC will leverage AXA’s connections and expertise within the European market to help ICBC expand.
ICBC is the world’s largest bank by market capitalization and is looking to diversify its holdings outside of banking. ICBC is one of China’s four state-owned commercial banks and was initially founded as a limited company in 1984. It entered two stock markets simultaneously, Hong Kong and Shanghai, in the world’s biggest initial public offering at the time, featuring $21.9 billion US in public funding.
As Europe’s second largest insurer, AXA Group is a worldwide leader in insurance and asset management. With over 101 million clients in 57 different countries, AXA boasts revenues of over 86 billion euro and earnings of over 3.9 billion.
Minmetals, officially China Minmetals Corp, is China’s largest metal trader. Minmetals specializes in the production and trading of metals and minerals, namely copper, aluminum, tungsten, tin, antimony, lead, zinc, and nickel. As a state-owned enterprise, Minmetals is under the jurisdiction and laws of China.
Insurance Companies Mentioned:
AXA the global insurance group in Paris
Aviva Indonesia is introducing an International Health Insurance product offering to the Indonesian market in response to a growing number of expats and well heeled local Indonesians.
The portfolio offers international health insurance coverage with limits between US$1-2 million, depending on the product, and will allow holders of a policy to travel internationally in order to receive qualifying medical treatment.
According to Aviva Indonesia’s vice president, Albert Wanandi, the products are targeted squarely at the wealthy Indonesian and expatriate market, with premiums starting at around US$ 1,360 per annum.Read the rest of the Aviva Indonesia Targets Affluent Indonesians and Expatriates with International Coverage Offerings article.
Bank Danamon Indonesia has announced that, in partnership with Asuransi Jiwa Manulife Indonesia, the bank will be offering new insurance and wealth management products.
The bancassurance deal, which is set to run for ten years, is a follow up of a partnership agreement between the two companies in October 2011. The agreement was to grow bancassurance in Indonesia, and has now come into effect a little under a year later.
Speaking about the new partnership, Alan Merten, the CEO and President of Manulife Indonesia was quoted as saying: “I am very pleased that the partnership between Danamon and Manulife is now officially launched! This is another significant step Manulife is taking towards realizing our vision to provide strong, reliable, trustworthy, and forward-thinking solutions to our customer’s most significant financial decisions.”Read the rest of the Bank Danamon Indonesia Partners Up With Asuransi Jiwa Manulife Indonesia article.
Insurance Australia Group (IAG) is planning to expand its presence in Asia following successful initial investments worth around US$735.5 million in five countries including India and Thailand. The expansion is part of IAG’s long term goal to have 10 percent or more of its premiums come from Asia by 2016.
IAG’s CEO, Mike Wilkins was confident that building on the company’s investments was the right decision, stating that: “The Asian opportunity is here and now. Over the past couple of years we’ve quietly gone about our Asian strategy and are now getting real traction. We are entering an exciting phase of our Asian ambitions as we shift from a market entry focus to one of driving operational performance from our enlarged regional presence”
Despite his confidence, shareholders are wary of investing even more money into Asia as it brings back memories of the company’s last offshore investment; a costly and damaging expansion into the UK market. The company expanded into the UK in 2006 with the purchase of motor insurer, Hastings Insurance. The investment was considered a failure after the Hastings posted losses which in turn brought down IAG
Some IAG shareholders have expressed that they want the company to focus on domestic markets rather than going abroad. Portfolio manager at Tyndall Investment Management Jason Kim said on his company’s stance: “[Asia] might be exciting but it’s very, very long term. They’ve got such a great business in Australia and New Zealand, and it would be really good to focus on that and harness that.”
Wilkins said IAG will be relying on the ever expanding middle class in Asia to ensure that the company’s latest investments prove to be successful as it is expected that middle class consumption will experience a 200 percent increase by 2020.
The investments that IAG has already made in Asia, including a venture with the State Bank of India and Malaysia’s AmBank have contributed approximately 6 percent to the group’s total premiums and it is next looking to expand into Indonesia.
While a merger in Indonesia is still some ways away as no official deal has been reported, IAG does have a number of possible merger partners. Citing a number of reasons including Indonesia being a “very-high growth market” with “very low insurance penetration” Justin Breheny, Chief Executive of IAG’s Asian operations said: “Its [Indonesia's market] got the characteristics which are very attractive to us.” If a deal occurs, the company will be leaning towards a bancassurance model, teaming up with a bank to provide insurance products through the bank’s existing sales channels.
It is expected that the Asian businesses will collectively lose US$50 million over the short term, however it’s not something that IAG executives will be losing sleep about. This is because by 2017, it is anticipated that the investments will bring in return rates of up to 17 percent, further cementing the point that the expansion into Asia is very much for the future rather than the present.
One of IAG’s three “developing businesses” is its joint venture with the State Bank of India. The venture resulted in the creation of the SBI General Insurance Company Limited, which IAG are hoping will be profitable by 2015.
Despite existing laws stating that IAG cannot immediately add on to the 26 percent of SBI General it already owns, it still expresses hopes that in the future a change in regulations would allow it to increase its stake to 49 percent. In the meantime IAG are hoping that the joint-venture’s plans to set up more distribution channels (including Bancassurance) will increase the amount of money it brings in.
The other two ‘developing businesses’ in China and Vietnam have both initially been successful. In China, IAG own 20 percent of Bohai Property Insurance. China’s insurance industry is dominated by domestic players, with foreign investors only holding 1 percent of the market, and as a result, one of IAG’s big goals for the future is to increase Bohai’s market share.
In Vietnam, IAG own 30 percent of the country’s 6th largest motor insurer, AAA Assurance. Much like China, the industry is dominated by local insurers, and through AAA, IAG are aiming to become the first foreign entrant to gain a meaningful market position by becoming one of the top 3 motor insurers.
With investments in China, India and Vietnam still in their infancy, it’s IAG’s ventures in Malaysia and Thailand that have been the most successful for the company. In Thailand, the company owns 98.6 percent of Safety Insurance, the sixth largest general insurer and one of the top three auto insurers in the country. In the future, IAG expect to increase Safety Insurance’s national presence and achieve a top two position in the motor insurance industry.
While IAG only has a 49 percent stake in its joint-venture in Malaysia, it also has proven to be a good investment up till now as the product of the venture, AMG Insurance, has become one of the top ten insurers in the country. In a couple of months the company is also expected to acquire Kurnia Insurans, a merger which will make AMG Insurance the largest auto insurer in the country.
In response to the seemingly positive investments made, Breheny attributed the success to a couple of elements: “Our extremely disciplined approach to market entry has resulted in an attractive portfolio of businesses, with differing stages of market development and associated growth and return profiles, but all with a clear ability to create value for the Group.”
Insurance Companies Mentioned
Insurance Australia Group
Insurance Australia Group was founded in 2000 and owns a number of smaller insurance companies around the world. It specializes in all sorts of insurance including general, commercial and auto.
SBI General Insurance Company Limited
SBI General Insurance Company Limited is a joint-venture between the State Bank of India and Insurance Australia Group. It has a presence in 20 cities in India and specializes in the retail, corporate and SME insurance industries.
Bohai Property Insurance
Bohai Property Insurance is partially owned by Insurance Australia Group. It has 25 provincial agencies and more than 200 municipal and county agencies and sepcializes in a wide variety of insurance.
Established in 2005, AAA Assurance is part owned by Insurance Australia Group. It boasts more than 30 branches in Vietnam and specializes in motor, property and other types of insurance.
Safety Insurance, a Thai insurer is 96% owned by Insurance Australia Group and deals predominantly with Motor Insurance.
AMG Insurance is 51% owned by AmBank Group and 49% IAG. It is Malaysia’s fourth largest motor insurer and has 2,900 insurance agents.
Kurnia Insurans is a Malaysian company that was formed in 1978. It is one of Malaysia’s top auto insurers and is expected to merge with AMG Insurance in the near future.
The National Bank of Fujairah (NBF) and the Oman Insurance Company (OIC) have signed a lucrative strategic agreement that will pave the way for the bank to release a number of new insurance products in the near future.
The latest deal comes a month after Oman Insurance Company signed a similar agreement with another leading bank in the United Arab Emirates, Commercial Bank International. It comes as no surprise that OIC have signed two major deals that should offer its products to more customers in quick succession This is because at the beginning of the year OIC CEO, Patrcik Choffel, announced that the company would pursue a goal of offering their products to an even great number of people across the Middle East, exactly what these agreements have achieved.
Oman Insurance Company’s stature as one of the biggest and most stable insurance companies in the region was cemented after being rated ‘A’ by rating agency, AM Best and ‘BBB+’ by Standard and Poors. However, their main competitor, Gulf Insurance Company, was given two ‘A-’ ratings from both agencies, and was announced as the ‘Best Insurance Provide in the Middle East 2012′ meaning that for now at least, OIC remains the second biggest local insurer in the region.
OIC’s deal with the National Bank of Fujairah should see the bank offering customers new bancassurance general and life insurance products. According to Sharif Mohamed Rafei, the bank’s Head of Retail Banking, the products “will strengthen our [NBF] efforts to become a one-stop destination for our customers’ financial and security needs.” He went on to say that the new bancassurance products will be “convenient and competitive products to meet their [the customer's] needs.”
It’s a high profile merger in the UAE, not only because Oman Insurance a leading company in the region, but also NBF recently picked up awards for the Best Commercial Bank, Trade Finance and Treasury Management at this year’s Banker Middle East Industry Award.
The Middle East insurance sector is becoming an increasingly lucrative industry. As insurance penetration is estimated to be lower than 10 percent in the region, there is still a large segment of the local market which is not adequately being served – pointing to significant upside if OIC is able to capitalize on the existing coverage gap. A low level of penetration is part of the reason why teaming up with banks and expanding reach can be extremely beneficial for OIC and other Gulf insurers.
Speaking about the agreement, National Bank of Fuajirah’s CEO, Dane Cook, explained that the deal signified the banks desire to expand into new areas of banking products: “NBF has traditionally focused on its core strengths in corporate and commercial banking, trade finance and treasury, and we now see an opportunity to deepen our longstanding client relationships with a wider range of personal banking products.”
The insurance market in the UAE, where the deal will have the greatest impact, is expected to grow at a double digit rate from 2010 to 2015. As OIC are the biggest insurer in the country, they are expected to benefit greatly.
One area of rapid growth that will not benefit Oman Insurance Company is the huge expected increase in the number of people purchasing Takaful (Islamic Insurance) products. In the past, the UAE’s Takaful industry alone has experienced an astonishing 135% increase in growth. However, laws specifying that Takaful operators cannot also offer conventional insurance, lead OIC to opt out of offering Takaful products, as they would risk losing huge amounts of customers with conventional coverage.
Insurance Companies Mentioned
Oman Insurance Company
Oman Insurance Company was founded in 1975 and is one of the leading insurers in the Middle East. They specialize in a whole range of insurance products including life, health and small business insurance.
Gulf Insurance Company
Established in 1962, the Gulf Insurance Company is the largest insurance company in Kuwait, and one of the largest in the Middle East. GIC specialize in a variety of insurance products ranging from life and health to marine and aviation insurance.
As ING Group continues to sell off its overall Asian insurance operations in order to repay part of the USD $7 billion in bailout funds that it received from the European Union in 2008, the Dutch company is also getting ready to offload its separate ventures in India.
The news comes as no surprise to many as the sale is part of ING’s global restructuring plan. The plan entails that by 2013, ING will cut its balance sheet by approximately USD $751 billion by selling off many of its businesses outside of Europe, including those in Asia and America. Thus far, ING have been looking to sell a number of its Asian insurance businesses (not including those in India), such as those in South Korea and South East Asia, as a single unit.
A number of factors, including the fact that the firm deals with local Indian players, means that ING has decided to sell its Indian businesses separately. This means that the imminent sale of its three Indian companies will take a while longer as ING are reportedly focusing all its efforts towards getting rid of its other Asian insurance business which are valued between $6 and $7 billion US dollars.
The creation of ING Vysya Bank, one of the three ING companies, was the first merger between an Indian bank (in this case Vysya Bank) and a foreign group. ING currently holds 44% stake in ING Vysya bank, with other shareholders including Aberdeen Asset Management, Morgan Stanley and Citigroup. ING also have an investment management company in the country that is also up for grabs. The company, ING Investment Management India, has a number of interested bidders including Pramerica, and South Korean company, Mirae.
ING Life India is ING’s third company in India. Due to Indian laws that state that a foreign owner can only own 26% stake in any Indian insurance firm, ING are not the majority shareholders. It does however have management control of ING Life India. The majority share holder in the insurance company, formed in 2002, was initially GMR Industries. GMR then sold its stake to Indian battery manufacturer, Exide Industries who now hold a 50% stake in the company, making it the majority shareholder.
While the life insurance company did report increases in its premium three months in a row from January to March, at the start of the new fiscal year in April it saw its premium collection take a huge plunge and drop to Rs14.09 crore (US$4.05 million).
What is even more worrying for ING Life India is that Exide Industries, the major shareholder, is also reportedly looking to sell their stake in the venture. This was almost the case a year ago, but Exide opted to stay on. However, following the recent news of ING’s decision to sell, it seems that Exide have now followed suit. With both sides looking to sell, the future looks uncertain for the company as it will have to look for a new foreign and domestic partner or opt for a merger.
A number of insurance companies have expressed an interest in buying up ING’s 26% stake. They include insurers like Samsung Life, Manulife and Japanese company, Sumitomo. However, as none of the interested companies currently have a presence in India, before purchasing the stake they have to find an Indian partner to enter the market with.
ING Life India operates two distribution channels, Tied Agency and Alternate Channel. The Tied Agency channel has over 30,000 life insurance advisors, while the Alternate Channel contains the company’s bancassurance (BIM) partnership with banks such as ING Vysya Bank.
ING are not the only company selling its Asian operations. Struggling British firm, Aviva have also announced plans to sell its Malaysian operations as the economic crisis’ aftermath continues to affect insurance companies.
Insurance Companies Mentioned
Formed in 1991, Dutch institution, ING, is a group that specializes in a number of financial services including insurance. It currently has a presence in more than 45 countries with a client base of approximately 85 million individuals.
India-based HDFC ERGO, the joint-venture between Indian finance group HDFC and Germany’s insurance company ERGO International, have recently established their own in-house claims servicing department for health care and insurance claims and questions.
The HDFC ERGO General Insurance Company, which is the 4th largest general insurance company in India, provides a number of lines of private insurance including motor, home and local health insurance plans. ERGO recently established their own department to service health claims in-house. The new department, called Health Claims Services (HCS), will focus on expediting HDFC ERGO’s claims settlements, while also ensuring a level of transparency throughout the process.
Customer satisfaction surveys focused on Indian general insurance companies have indicated that customers often stake their opinion of health insurance providers on their experiences during claims settlement. Meanwhile, regulatory adaptations in India allowing portability between insurers for health insurance products and a new system for filing and tracking complaints have also improved consumer choices further raised customer expectations.
By creating the Health Claims Services department, HDFC should be able to control their customers’ claims experience from end to end, rather than relying on an outside entity, like a Third Party Administrator. By increasing their engagement in the process and also with the customers, HDFC ERGO may be able to build trust with its clients provided that the Health Claims Services department continues to provide quality services.
In order to further this goal, the Health Claims Services will not only manage the claims settlement of health policies, but will also assist customers with other relevant health queries. HDFC ERGO is facilitating this through partnership with numerous network service providers such as diagnostic and wellness facilities, ambulances and pharmacies in addition to their 3,000 strong network of hospitals.
HDFC ERGO’s Head of the Strategic Planning Group, Mr. Mukesh Kumar said about the announced creation of HCS, “In today’s era, customer expects to interact with company directly. There is more trust generated with higher accountability involved in servicing the customers. With this internal mechanism we are planning to establish better control on the overall claim settlement process & improve the turnaround time (TAT) with seamless, hassle free & transparent services in health claim settlement.”
HDFC ERGO General Insurance Company is a Indian general insurance joint-venture between ERGO International AG, the main insurance arm of Munich Re Group, and HDFC Limited which is one of India’s leading finance institutions for housing. The joint-venture which is split 26:74 between ERGO and HDFC, is the 4th largest general insurance provider in India, and operates a number of lines of insurance including motor, health and home.
Both Qatar and Dubai are well placed to become regional insurance hubs, reports have revealed, following the creation of a Governmental partnership with Samsung Life Insurance in Dubai and the implementation of a national health insurance law in Qatar.
According to a Financial Times report, the Investment Corporation of Dubai is set to agree to a memorandum of understanding with Korea’s largest Life Insurance underwriter, Samsung Life, to deliver high quality life protection products to the Middle Eastern and North African Regions. Historically both underserved markets for life products, the ICD and Samsung intend to grow the distribution of life insurance plans across the region with a view to entering the less developed markets located in Sub-Saharan Africa.
Read the rest of the Qatar and Dubai Set to Become Major GCC Insurance Hubs article
International medical insurance company Cigna is planning on opening a joint venture in India in the next couple of years, creating a partnership with local Indian Conglomerate TTK Group in forming a standalone Indian medical insurance company.
According to the WHO’s World Health Survey 2011, around 74.4 percent of private healthcare costs are paid out of pocket in India. Given that India’s middle class is growing at around 10 percent a year, alongside the historically low penetration of medical insurance products in the country, many analysts believe that the private health insurance industry in India will see robust growth in the near future with a projected compound annual growth rate for the industry of around 30% for the next 5 years.
Cigna is the latest foreign investor to commence the establishment of a standalone medical insurance joint venture in India and also the first American company to do so. Having already started the approval process with the Insurance Regulatory and Development Authority (IRDA) in India, Cigna and TTK intend to complete their filing in 2012 and obtain their license in 2013.
Cigna’s local partner TTK Group is a family-owned conglomerate that has business interests in a wide variety of business sectors, including both durable and nondurable goods, biomedical devices and a wide range of business and healthcare services. Based in Chennai and Bangalore, TTK operates retail locations that are soon thought to number over 1,500 throughout the country which would be a great leg up for Cigna in marketing their health and wellness insurance products across India.
If Cigna can enter the market with a portfolio of health and wellness insurance products and solutions that are inviting to relevant market segments then they stand a good chance of doing well in the largely untapped Indian health insurance market. This would further add to Cigna’s burgeoning international business.
Cigna is currently limited to 26 percent ownership of the joint venture with TKK in accordance with Indian regulations, however should the limit on the stake foreign firms can own in Indian-based companies be raised, Cigna may avail themselves of the opportunity to own a greater share.
CIGNA Health Insurance is a global health service company dedicated to helping people improve their health, well being and sense of security. CIGNA Corporation’s operating subsidiaries provide an integrated suite of medical, dental, behavioral health, pharmacy and vision care benefits, as well as group life, accident and disability insurance, to approximately 46 million people throughout the United States and around the world.
Founded in 1928 by T. T. Krishnamachari, TKK is an Indian conglomerate that is largely based out of Chennai and Bangalore. It now runs several businesses in different industries including white goods, pharmaceuticals, biomedical devices, consumer products and assorted business services.
Indian insurance regulator IRDA (Insurance Regulatory and Development Authority) is currently drafting guidelines which would allow Indian insurance and reinsurance companies to open branch offices, subsidiaries or joint-ventures overseas.
IRDA is currently circulating preliminary draft guidelines on what would be required of Indian insurance companies in order to allow them to open operations overseas. As the drafts circulate among domestic insurance companies, IRDA is asking for feedback from insurance companies before the end of 2012.
Many of the preliminary guidelines appear to be aimed at ensuring that domestic Indian insurance companies seeking to commence overseas operations are on solid financial footing to do so, and that doing so would not pose risks to local business and policyholders. As it stands now, domestic Indian insurance companies are not permitted to expand overseas, either through branch offices or investment in foreign firms, while foreign companies can currently own stakes in domestic insurers of up to 26 percent.
The draft allows for insurance companies of any category to apply to the regulator for permission to open foreign businesses after the insurers have been in operation domestically for 10 years. The proposed regulation would allow domestic insurers to start a foreign operation in a number of ways, either by opening branch offices, the formation of foreign subsidiaries by controlling the board or owning 50 percent of the paid-up equity capital, or by starting a foreign joint venture.
While many insurance companies in India have joined with foreign insurers to make joint ventures, any company that a domestic Indian insurer engaged with overseas to create a joint venture outside of India would not be allowed to enter into the domestic Indian insurance market.
Although there is a drive to make certain that Indian companies wishing to start operations abroad will have the financial wherewithal to do so without putting domestic business at risk, there are no concrete financial guidelines at the moment, whether with regards to the minimum net worth necessary to apply to the regulator for authorization or the capital requirements for establishing joint-venture’s overseas. However, the guidelines do mandate any losses incurred or capital requirements that must be met by foreign branches must be paid for by shareholder funds only, so as not to interfere with the policyholders’ funds in the domestic Indian business.
This could open a doorway to many opportunities for Indian insurance companies to globalize their business. In many places such as countries in the Middle East, there is a sizable Indian Diaspora which some insurers may already be considering tapping in to, however the opening of an office would also allow them to underwrite local business as well as expatriate Indians.