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.
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.
Apr
19
A+ International Insurance May Not Offer Renewals
Filed Under CIGNA, Expat Insurance, Health Insurance, Insurance Company, International Healthcare, Medical Insurance, Switzerland, Vanbreda | 2 Comments
It has emerged within international private medical insurance industry that A+ International Insurance may not offer policyholders the option of renewing their medical insurance policies in the future.
A+ International Insurance’s decision to not offer clients a renewal on their IPMI policies may be due to Cigna’s purchase of Van Breda International; Van Breda International was integral to A+ International’s plan offerings and policy administration.
Cigna, a leading US based international insurance provider, purchased Vanbreda International in August 2010 in order to access the Belgian insurer’s international reach.
A+ International’s partnership with Vanbreda International is through Justitia NV. Justitia, an independent insurance company within the Vanbreda Group of companies, is responsible for underwriting A+ International’s international health insurance plans.
Justitia NV generated premium collections of EUR 18.5 million (US$ 26.3 million) in 2008.
While A+ is a relatively new entry to the global health insurance market, the company does have a significant number of policyholders worldwide; the potential denial of renewal terms to existing customers may leave a substantial number of consumers without adequate medical insurance coverage.
A+ policyholders are advised to contact the company, or their intermediary, in order to understand their health insurance options in the event that they are not offered a renewal of their current policy.
At present there has been no official confirmation from A+ International Insurance regarding future business, but policyholders who have contacted the company have been informed that there may not be renewal terms on their policies.
Apr
15
Worldwide Takaful Insurance Market Predicted to Grow by 31 Percent in 2011
Filed Under Africa, International Healthcare, Life Insurance, Medical Insurance, Middle East, UAE Insurance | 8 Comments
Last Saturday at the sixth Annual World Takaful Conference in Dubai, Ernst and Young predicted that the worldwide Takaful insurance market would reach a value of $12 billion USD in 2011; the prediction was announced in the Ernst and Young World Takaful Report 2011: Transforming Operating Performance, and represents an increase of 31 percent from $9.15 billion in 2010. Takaful, an Islamic-compliant insurance concept, is a rapidly growing industry concentrated mainly in Saudi Arabia (making up $3.86 billion USD of the industry in 2009), Malaysia ($1.15 billion USD), UAE ($640 million USD), South East Asia, and North Africa.
In the past year, most GCC Takaful markets have slowed down. “The Takaful industry and its core markets have experienced another challenging year, where positive signs of economic recovery and improved business sentiment were shaken by the socio-political uncertainty witnessed across the Middle East and North Africa (Mena) region in the first quarter of 2011,” said Ashar Nazim, an executive director and Islamic financial services leader at Ernst and Young.
Despite the slowdown in the sector, global growth estimates are predicted to remain on track to reach $12 billion in 2011. “The industry’s not without risk, but its potential remains an important feature of Muslim emerging markets for many indigenous and global insurance players,” said Nazim. He goes on to add, “the (Gulf Arab region) is a competitive market with a large number of players and will drive growth for the industry… Key Takaful markets are characterized by low insurance penetration rates and comparatively high rates of economic growth.”
Other key challenges for the growth of Takaful insurance products include a lack of expertise and the ongoing socio-political instability across much of North Africa and the Middle East. Ernst and Young also said that changing regulations and misaligned cost base also hinder the growth of the market.
The Saudi Takaful market, however, proves to be an exception to the global slowdown in the Islamic insurance market. RNCOS, a research and analytical consultancy, recently released its industry report, which said that, “We have found that Saudi Arabia has emerged as the largest market for Takaful insurance, followed by Malaysia. Takaful insurance is growing at an annual growth rate of 15-20 percent globally, but it will grow at faster rate in Saudi Arabia because premium paid by the insured people is considered as donation and not premium.” In addition, with the recent mandate of compulsory health insurance for private employees, the health insurance market is expected to grow at an even faster pace.
The report forecasts that the general insurance category of Takaful products will grow at a compound annual growth rate (CAGR) of more than 24 percent from 2010 to 2012, due to increasing demand for motor and energy insurance. Property and aviation insurance policies are also expected to emerge as fast growing segments of the general insurance sector.
Similar to Saudi Arabia, other Gulf States’ insurance industries have also experienced a boost, in part due to compulsory health insurance for foreign employees, and a push towards private health insurance. The Kuwait National Healthcare system is currently pushing for a new private health insurance scheme in order to meet overcrowding, long waiting times, and a general growing dissatisfaction with the public health sector.
Bahrain National Holding (BNH) is also growing despite the political turmoil occurring in the country. In its annual shareholder meeting on March 29th, 2011, BNH announced that it remains adamant about continuing with plans on expanding its services throughout the Gulf region.
Sudan, which contributes $340 million USD to the Takaful insurance industry, is currently the largest market outside the Gulf region. However, Egypt, Bangladesh, and Pakistan’s Takaful industries are all growing quite rapidly.
In fact, Egypt could even stand to benefit from the ongoing regional instability. The UAE-based Salama Islamic Arab Insurance’s chief executive stated that turmoil in the Egyptian market has not only resulted in more claims, but has also generated more interest and awareness of Takaful insurance, which creates more demand and unprecedented opportunities for the market.
Regionally, the Indian subcontinent’s Takaful contributions have increased by 85 percent, making it the fastest growing Takaful market in the world. The next fastest growing market is the Middle East, which has grown by 40 percent, followed by the GCC (31 percent), South East Asia (29 percent), and Africa (26 percent).
In terms of individual countries, Indonesia had the largest Takaful market growth rate with 67 percent. It is followed by Bangladesh with 58 percent and Saudi Arabia with 34 percent.
The overall Malaysian insurance industry is also growing at a rapid pace with 12 percent projected growth in 2011. The Malaysian Takaful Association attributes this predicted growth to the expansion of the Takaful industry into rural areas of the country. There is a large interest in Takaful products. With only a 10 percent market penetration, there is much room for improvement and growth.
Generally, the Takaful industry receives a lower return on equity (RoE) because of the intense competition that small local insurers encounter from more established firms who have had experience in the conventional insurance market.
For the GCC, conventional insurers received an average RoE of 11 percent, while the Takaful insurers announced an average of 10 percent in 2010.
In Malaysia, the disparity is even greater with an average RoE of 16 percent for conventional insurers and 6 percent for Takaful companies. This difference, however, may arise from a significantly lower claim ratio than the GCC, mostly because of differences in business lines.
Also, in the GCC, the Takaful market is dominated by general insurance, while in Malaysia it is dominated by family Takaful. In the Mena region, the family Takaful market is still underpenetrated, contributing to only 5 percent of gross global annuals premiums, while conventional life insurance contributed to 58 percent. In comparison, in Malaysia, the family Takaful industry contributed to 77 percent of gross annual premiums in 2010.
Insurance Companies Mentioned
Bahrain National Holding
BNH, established in 1998, is based in Manama, Bahrain. Together with its many subsidiaries, BNH provides insurance and risk management solutions for many industries and individuals in the Gulf region.
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Kuwait National Healthcare System Transition Underway
Filed Under Expat Insurance, Health Insurance, Medical Insurance | Leave a Comment
Kuwait’s national healthcare system is set to undergo substantial reform and transformation in the next 3 to 4 years under the new Kuwait Health Assurance Company (KHAC), affecting both nationals and expatriates who look for health coverage options in the country. Kuwait is looking to evolve its health services policy from a welfare state into a ‘healthcare business.’
KHAC was established in 2010 by Ministerial Resolution 586 to develop a comprehensive public-private enterprise tasked with improving the healthcare sector in Kuwait and to guarantee high quality medical services for residents. The expansion of the Kuwaiti health system would be financed through the implementation of a new private medical insurance system issued through the company brand. KHAC plans on eventually enacting Law 1/1999, which instructs Kuwait to begin incorporating an integrated universal medical security system that would cover expatriates and ultimately extend services for all residents. KHAC also wants to provide substantial support in the development of the Kuwaiti private healthcare industry and to promote their individual medical services through proactive participation within the health development company.
Speaking at a press conference held for potential investors, Mohammad Al-Munifi, KHAC Chairman, explained the strategy of the new organization: “We have a vision for synergy and cooperation between the private and government sectors. By letting the private sector manage such a project, we expect an efficient health care system in Kuwait and a better experience for patients.”
The Kuwait Health Assurance Company has a capital sum of KD318 million (US$ 1.15 billion). The company is operating as a partnership between the Kuwait Investment Authority (KIA), the Ministry of Health and the private healthcare sector, with 26 percent of the ownership share to be auctioned off to a strategic partner. The KIA is largely in charge for the administration and auctioning of new shares in KHAC.
The initial proponent of KHAC’s healthcare development strategy calls for the construction of three major hospitals in Ahmadi, Jahra and Farwaniya and 15 new polyclinics throughout the country within the next 3 to 4 years. These facilities will be built and operated by private companies. The Kuwaiti government is set to grant renewable 20 year leases with KHAC for the proposed locations, and has given the company a three-year grace period to obtain all necessary licenses and successfully finish the construction and equipment of all new medical buildings. Kuwaiti Health Minister, Dr Hilal Al-Sayer claimed that the project represents the biggest health development initiative in the Middle East and would provide employment opportunities for over 1400 doctors and 4000 nurses and technicians.
The development of these new facilities, providing a projected 1,600 new hospital beds in Kuwait, will help ameliorate the structural pressure the state health provider network is currently facing. Substantial population growth, especially from the growing expatriate community, coupled with increased life expectancy rates and the escalating global costs of medical treatment have placed substantial burden on the health system’s resources. Demographic forecasts will exacerbate this trend. The current population of Kuwait is 3.5 million inhabitants and is growing substantially at 6.8 percent a year. Life expectancy at birth in Kuwait has increased substantially by 20 years within the last half century, from 59.4 years in 1960 through to 78 years on average in 2008.
Kuwaiti citizens are provided with free healthcare services from the publicly run hospitals and clinics. Foreign nationals in Kuwait must obtain health insurance from the government run scheme, as per residency requirements, or through a local healthcare system provider. Expatriates are required to pay additional out-of-pocket payments towards medical costs in the Kuwait public medical facilities. The compulsory state insurance scheme does not cover private treatment or repatriation costs. The law defines an appropriate alternative private healthcare company as one providing over 900 beds across Kuwait’s governorates and as Ahmad Nossouli of the Advisory Group explains: “there are no such healthcare providing companies…we have private hospitals and clinics, but they don’t meet the minimum requirements.” The average cost of healthcare services per person in Kuwait has increased substantially in the last decade, doubling to KD 112 (US$ 404) from KD 56 (US$ 202) between the years 2002 and 2009. All these factors push people towards the state hospital system and have resulted in medical personnel and equipment shortages, overcrowding, longer waiting times for treatment and a growing dissatisfaction with the public health care sector.
KHAC Chairman Al-Munifi confirmed that the Kuwaiti system could not continue on this trajectory: “We don’t expect the government to continue spending money on healthcare for non-nationals, even for nationals – there are many indicators that suggest the government won’t be giving free healthcare and education.”
The new private health insurance scheme, provided through KHAC, would provide access to the newly constructed healthcare facilities as well as other public-private practices set up around Kuwait. The price for the annual health assurance policy for the first ten years has been set at KD130 (US$468.8) per person and KD120 (US$432.7) during the tenth year. KHAC reserves the right to increase charges in the event inflation in Kuwait exceeds six percent in the coming decade.
The establishment of KHAC is intended to diversify healthcare provision and will deliver more opportunities for the private healthcare industry in Kuwait. Al-Munifi asserted: “The private sector today provides about 10 percent of healthcare, which is a small market share. This percentage should be increased in the future through government support and providing health opportunities.” If another healthcare provider, meeting the minimum 900 bed capacity requirement, comes to market alongside KHAC, individuals will have the opportunity to choose between them. The Kuwaiti government is looking forward to foreign input on the marketplace, as Health Minister Dr Hilal Al-Sayer explains: “With this project we want a new health insurance system in Kuwait,” adding, “This will be an opportunity for the private sector to participate and be involved.”
Once the new KHAC insurance scheme is implemented, the Ministry of Health will stop issuing their health insurance certificates to foreign nationals. “In order to stamp their visas, expatriates in Kuwait must obtain insurance from the KHAC,” Chairman Al-Munifi continued “We believe that the maximum fee of KD 130 is very reasonable, considering the quality of healthcare the KHAC will provide.” The introduction of the KHAC insurance scheme will further necessitate changes in sponsorship laws for Kuwait, to ensure employment does not capriciously deduct new healthcare fees from their foreign staff.
The KHAC insurance system is not exclusively a healthcare option for expatriates as Chairman Al-Munifi notes: “Many [Kuwaiti] nationals prefer to go to private clinics instead of public clinics because of the poor quality of service at public clinics. We want to give affordable premium healthcare services to all residents of Kuwait whether nationals or non-nationals alike.”
The Kuwait Health Assurance Company is part of Kuwait’s National Development Plan (NDP). Initialized in 2010, the plan will organize several hundred development projects and initiatives in housing, transport, social services and healthcare, with total infrastructure spending expected to reach US$108 billion. The NDP is designed to promote and diversify further economic growth in Kuwait, improve the state’s general services and ensure the state remains an attractive global business center. The private sector is expected to account for almost 50 percent of the net spending set out in the project and would participate through joint stock companies and partnerships between the Kuwaiti state and multinational businesses. The increase in private and state funding resources will most likely improve the local marketplace. While the increase in oil prices has enabled Kuwait’s economy to successfully recover from the 2008-09 global economic crisis, further success and long-term growth could be determined by the successful execution of the NDP.
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