As medical tourism becomes increasingly popular across different continents, Costa Rica is preparing to host the fourth Medical Travel International Business Summit 2013, which will be held from from April 24th to 26th. There are already about 15 countries and some 250 medical tourism businesses that have committed to attend and participate. Many organizers are saying this is a prime chance for Latin American health care companies to open up partnership opportunities with other North American companies. Read more
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In this article we will first present our findings of the premium increases and premium inflation rates in each region and country we studied, with specific insurance findings to be presented at the end. Overall our findings were that International Private Medical Insurance (iPMI) premium inflation was very high, at roughly 10.8 percent per year over a 5 year average. While variations exist between countries, the reality is that iPMI inflation rates were extremely consistent throughout the world. However, it is important to note that this is medical insurance premium inflation at the high end of the sector, and not necessarily with regards to the mass market.
Even presenting the argument that premium increases are fairly consistent on a global basis, there are some immediate outliers – Hong Kong, for example, runs at an iPMI premium inflation rate of roughly 13 percent per year, while Kenya’s premium inflation rate is approximately 9 percent per year. Although there is a difference in premium inflation rates between Hong Kong and Kenya, the difference is not overly substantial – as will be seen inside this report.
Globalsurance is pleased to reveal the results of our latest study on the international health insurance industry and rates of international medical insurance inflation around the world as of August 1st 2012. Read more
The Philippines is fast becoming one of Asia’s most promising young insurance markets, with newly released industry statistics projecting yet another year of double digit premium growth in the country’s life sector.
Gregorio Mercado, President of the Philippine Life Insurance Association (PLIA), announced in a press briefing on Tuesday that unaudited premium income for the country’s life insurance sector amounted to P85.5 billion (US$2 billion) by year-end 2011, about 21 percent higher than the P70.7 billion (US$1.67 billion) recorded in 2010. This considerable P15 billion (US$350 million) improvement follows similar gains made during the 2009-2010 reporting period, when premium levels went from P57.241 billion (US$1.34 billion) to P70.7 billion (US$1.67 billion), a 23.5 percent annual increase. At this pace and barring any further global financial shocks, the PLIA President expects the country’s life insurance industry to grow by at least 16 percent in 2012, breaking the P100 billion (US$2.36 billion) threshold in new premium income by year’s end. “We want to hit P100 billion by the end of this year,” Mercado declared. While local non-life insurers have suffered from heavy claims losses and dubious investment practices, the Philippines life insurance market remains financially stable and well capitalized, with reserves capable of meeting all present obligations.
The continued development of the Philippines economy has enabled the country’s insurance sector to sustain its positive outlook for stable premium growth. A healthy economy together with improved consumption patterns, remittances from the sizeable overseas Filipino Diaspora, and the high liquidity present in the country’s financial system, are all strong internal factors that will continue to drive investor confidence in the emerging Southeast Asian market. These favorable economic development conditions have provided Filipinos with more personal disposable income with which to now purchase insurance. It is also worth noting that, most of the Philippine workforce is technically covered by a the health insurance scheme provided under Philippine Health Insurance Corporation (PhiHealth), and this perhaps enables them to pursue other avenues of insurance coverage as well.
Despite these strong internal indicators, the future growth and development of the Philippines insurance sector remains tied to the overall performance of the global economy, similar to that of other emerging Asian nations. The PLIA President acknowledged these external forces in his briefing, stating that their annual forecast was made “assuming that the economic issues affecting Europe and the US would not further worsen, since that may have a subsequent effect on the Philippine economy.” For the local insurance industry, further downgrades in Europe or the US would likely affect interest rates and foreign investment activity. Mercado assured reporters however that the Phillipines insurance industry already has a strong framework in place which will limit contagion with ongoing global financial market volatility, adding that “our fundamentals remain strong amidst the prudent financial regulations and vigilant performance monitoring mechanism of the Insurance Commission, along with the good record of compliance by the industry.”
The PLIA have based their projections on rising microinsurance sales, greater financial literacy amongst the general population, and the continued evolution and maturation of the domestic insurance industry towards best international standards. Microinsurance was cited by the PLIA President in particular as an integral development tool which should raise the insurance penetration rates amongst the Filipino population considerably in the coming years. Microinsurance policies in the Philippines are currently defined as retail products that offer coverage values between P500 (US$12) and P200,000 (US$4,700). Premium payments can be as small as one peso or up to P19 (US$0.45) a day and giving out benefits as large as P190,000 (US$500) per policy. According to the Insurance Commission (IC), the number of Filipinos buying microinsurance has already risen considerably, with approximately 3.5 million policies sold in the past year. This number is expected to increase to over 5 million new policy sales in 2012, driven in no small part by recent weather calamites which have increased the demand for insurance policies amongst the country’s rural populace.
Insurance companies themselves recognize the potential microinsurance offers in the Philippines, and an increased number are now entering the market. In his briefing, the PLIA President disclosed that nine member-companies have obtained the license to sell Filipino microinsurance products so far. These companies are Asian Life & General, Banclife, CISP, CLIMBS, Cocolife, Country Bankers, Manila Bankers, Philippine Prudential, and Pioneer Life. Five more companies are currently awaiting IC approval to sell microinsurance. These are BPI-Philam, Manulife, PELAC, Philamlife, and Sun Life.
In addition to greater microinsurance sales, the PLIA briefing noted that the recent decision by the Bureau of the Treasury to issue longer-termed 10-year and 20-year government securities will enable Filipino life insurance companies to more effectively match assets with future liabilities and better manage their balance sheets going forward. According to the PLIA President, these Treasury bonds are “safe, long-term, and good-yielding investments which we prefer to be part of the assets of life insurers that allow good matching with our liabilities to better service the claims of our clients.”
Overall, Filipinos are becoming more risk aware every year and are now increasingly seeking out the insurance coverage solutions that PLIA members offer. The PLIA has attributed this development in part to their on-going fiscal literacy campaign, which aims to educate more remote populations about the importance of insurance and adequate financial planning.Improving insurance awareness is the next great challenge for the Philippines insurance sector. According to government data, life insurance premiums accounted for only around 1.04 percent of the country’s GDP in 2011, the lowest in the Asean-5 region and far below the worldwide average of 4 percent. The PLIA expect this figure to increase considerably over the next few years as market conditions improve together with the introduction and development of innovative new products, such as micro-insurance.
There may be boom times ahead for the Philippines insurance industry after some difficult years. The Southeast Asian country’s life insurers are particularly confident about the performance forecast for their sector, projecting double-digit growth in written premiums for the second consecutive year due to the country’s positive economic indicators and an increased demand for insurance products.
Mayo Jose B. Ongsingco, president of both the Philippine Life Insurance Association Inc. (PLIA) and Insular Life Assurance Co, told the local press at a briefing on Tuesday that major players within the Philippines life insurance market expect premiums to rise by 23 to 24 percent in the coming year, with first year premiums (premiums for new insurance policies) predicted to expand a further 60 percent. Ongsingco commented that these figures would closely match the growth rate in total premiums the industry reported for 2010. “Based on what we’ve been hearing from the industry, this year’s growth would be close to that seen in 2010,” Ongsingco confirmed.
Newly released PLIA data showed that the insurance industry’s total premium income increased to PHP70.727 billion (US$1.67 billion) from PHP57.241 billion (US$1.34 billion) last year, a 23.5 percent increase. First year premiums meanwhile rose by a significant 59.4 percent to PHP34.28 billion (US$800 million) from PHP21.508 billion (US$507 million) in 2010. Of the first year premiums, the PLIA noted that almost two thirds were sold through bancassurance, with the remaining third being provided through the conventional agency distribution channel.
The Philippines life insurance industry remains largely concentrated with large insurers accounting for over 80 percent of the sector’s combined premiums. The PLIA reported that for 2010 the top five insurance companies in terms of premium income performance were Philam Life with PHP11.255 billion (US$ 265 million) in premiums or 16 percent of total, Sun Life with PHP10.63 billion (US$250 million) at 15 percent; AXA Life, PHP8.36 billion (US$197 million) at 11.8 percent; Pru Life UK with PHP7.36 billion (US$173.5 million) at10.4 percent, and Insular Life, PHP7.13 billion (US$168 million) at 10 percent. The next five were PhilamLife, Manulife, Grepalife, United Cocolife and Generali Pilipinas respectively.
The continued steady development of the Philippine economy has enabled the country’s insurance sector to maintain its positive outlook for sustained premium growth. The six to seven percent rise in the Philippines gross domestic product (GDP) combined with improved consumption patterns, remittances from the overseas Filipino Diaspora, sustained development of business process outsourcing (BPO) fundamentals, and the high liquidity present in the country’s financial system, are all strong internal factors that enable investor confidence to prevail in the emerging Southeast Asian market. Improved structural fundamentals and favorable economic conditions have provided Philippine citizens with more personal disposable income with which to now purchase insurance. Most of the Philippine working population is technically covered by a public health insurance scheme provided through Philippine Health Insurance Corporation (PhiHealth) and this may enable them to pursue other avenues for coverage as well.
The PLIA noted that variable life insurance and group insurance policies have proved to be popular choices among the country’s new emerging consumer class. Variable life insurance policies build cash value and link investment to life insurance. Part of the premium acts as conventional life insurance coverage while the other part is invested in a fund chosen by the policyholder to be paid to the beneficiary upon death. These policies have proven particularly popular and accounted for PHP26.506 billion (US$264 million) of the industry’s total premium income last year. The PLIA disclosed that sale of group insurance policies are also on the rise as more Filipino businesses recognize the value of providing coverage to their employees as a powerful retention tool for their companies. “Insurance is now being included as part of the benefits of employees, and it helps companies keep their people,” Ongsingco stated. Group insurance contributed PHP9.921 billion (US$233.8 million) towards the industry’s cumulative premium income for 2010.
The Philippines, similar to other emerging Asian economies, is also benefiting from the weak economic performance of established industrialized countries in the West. The ongoing debt crises facing both the United States and Europe have pushed substantial capital into emerging economies in the Asia Pacific region. This increase in direct foreign investment has buoyed local bond and equity markets, which will further boost the Philippine insurance industry by increasing companies’ yields on investments. President Ongsingco noted that the weakening of the global economy is currently working in the favor of the Philippines. “A weakening global economy would lead to higher foreign direct investments in the Philippines, including in securities and bond markets. The fundamentals of the Philippine economy are also improving—inflation is in check, the deficit is below target, and remittances continue to grow even with the unrest in the Middle East and North Africa,” Ongsingco said.
While these external international debt issues are currently helping the country attract investment, the PLIA is wary that these developments could change and pose significant risk to insurance growth going forward. Domestic life insurance companies are monitoring these events closely and may prepare for an eventual disruption. If the United States fails to resolve its policy on raising the debt ceiling by the August 2nd deadline and they default on their obligations it could have a ripple effect on markets across the globe, similar to the aftermath of the 2008 financial crisis. For the local insurance industry this would particularly affect interest rates and funds inflow. Ongsingco explained that this would be the most immediate concern for the Philippine insurance sector. “All the negative factors that may work against the industry’s growth is basically external,” the PLIA president said, adding “A lot of the growth now is anchored on expectations that the US is turning the corner.”
Improving insurance awareness and broad financial literacy in the Philippines is something the local industry has control over however. According to government data, life insurance premiums accounted for only 0.75 percent of the country’s GDP in 2010, putting the Philippines on par with Indonesia, but far below that of neighboring Asian countries such as Malaysia and Thailand at 2.8 and 1.8 percent respectively. The PLIA expect this figure to increase significantly with increased participation from overseas Filipinos as well as the introduction and development of innovative new products, such as micro-insurance targeted towards the country’s poorer members of the population.
Mr. Ongsingco concluded that explaining the diversity of protection and investment opportunities available through all insurance disciplines will become the most effective way to further the development of the industry. “Individual insurers are taking it upon themselves to educate the public about the value of insurance. Hopefully with these efforts, we can increase the penetration of insurance in the country,” he finished.
Canadian insurer, Sun Life Financial has launched a single premium, whole-life insurance product for its US-based clients with a new linked benefit rider that enables owners to contribute towards vital long-term care. The new policy, named Sun Care Whole Life, can be used to pay towards in-home/assisted-living care or nursing home facilities and will hope to address the substantial number of Americans who are finding themselves unready to cope with the costs of medical treatment after retirement.
A recent study conducted by Sun Life found that almost two thirds of Americans currently do not feel financially prepared to meet the growing costs of late-in-life healthcare (regarding either in-home help, assisted living, or nursing care options) with only 16 percent of respondents actually confident they could handle these financial burdens. According to the study, the most consistent problem mentioned when preparing for late-in-life care has been the lack of understanding most Americans have about what the true costs of said care will be. Even accounting for the most conservative estimates of inflation over the next 30 years, the average cost of long term care calculated was more than double of what respondents were expecting. Medical inflation can be between 2 to 4 times the general inflation in any given country and this was reflected in the results. According to the Consumer Price Index, the current nursing home rate for a private room is US$85,000 and the projected rate by 2030 is US$190,000, not the mere 56 percent rise to US$125,000 most respondents anticipated. The figures also reveal that 24/7 in-home care rate will currently cost US$184,000 a year, and an estimated US$272,000 by 2030 and 40 hour a week in-home care runs US$44,000 a year, rising to $65,000 by 2030. An OECD report issued earlier this year confirmed that aging populations will cause global spending on long-term care to double or even triple by 2050.
Despite the continued development of assisted living and nursing homes in America into more reverent and autonomous healthcare institutions for seniors, the vast majority of those surveyed still wanted to live out their lives in their own homes. Most (83 percent) would prefer to be cared for by their families if the financial burden wasn’t too great, and would object to staying in long-term care facilities even if this option prolonged their life.
Janet Whitehouse, VP and general manager of Sun Life’s Individual Life Insurance Division, explained in a press statement that the insurer had used these interesting statistics about the financial preparedness of many Americans to develop a new type of insurance program. According to the 2008 report from the U.S. Department of Health and Human Services, around 70 percent of American citizens over 65 will eventually require some form of long-term care, often for such necessary daily activities as eating, washing or getting dressed. “We want to help people prepare, so if they ever need long-term care, they have more freedom to pick the level of care that suits their needs, and the costs don’t have to erode their retirement savings or estate assets,” Mrs. Whitehouse, said in the statement.
Through the new Sun Care Whole Life policy, users pay premiums like any other insurance plan, but the collected funds can then be allocated towards either late-in-life care (through assisted living options, nursing homes or in-house care health plans), or the benefits can all be passed on to selected beneficiaries income-tax free once the policyholder passes away. For an additional fee, the whole life policy provides an optional ‘return-of-premium’ feature, which allows holders to recoup the value of their original premium. The plan is currently available in 39 US states.
Sun Life officials assert that the Sun Care Whole Life policyholders and their beneficiaries will get sizeable value out of the contract. The plan estimates to provide long-term care benefit between three to seven times the initial value of the premium, dependent on factors such as riders selected, age, gender and the smoking status of the policyholder. Bob Klein, VP of strategic planning for Sun Life’s Individual Life Insurance Division, detailed that “once the policy owner pays the single premium, the policy is guaranteed to provide a benefit, either to the individual or the beneficiaries.”
This is an improvement over traditional long-term-care or similar life insurance plans, which don’t benefit the holder unless he or she makes a long-term-care claim, require unending premiums or provide no death benefit if a holder never needed long-term care amenities. Making benefit options available while alive gives policyholders’ greater flexibility to act on healthcare bills and assess whether they are eroding planned estate savings.
Bob Klein concluded the statement, encouraging Americans to plan, not panic. “Since being a family caregiver can exact a huge toll, and given average annual nursing home rates projected to rise to $190,000 by 2030, you raise your odds of getting excellent long-term care by planning for it,” he said.
This past week, Sun Life also involved itself in long-term-care issues in the Philippines. The insurer is planning to expand into the country’s emerging retirement planning industry and is sounding out the prospective creation of a stand-alone trust corporation to accomplish this.
Currently only 2 percent of Filipino citizens are financially independent upon retirement. Most retirement plans are provided through employers and Sun Life recognizes the potential for growth in this sector. Without a trust license however, it would be difficult for the insurer to enter this sector because it would be unable to offer competitive returns without the same tax treatment enjoyed by entities with trust functions in the country. Recent regulatory revisions drawn up by the Filipino central bank will allow non-banking institutions to apply for a trust license and Sun Life would now be considering this option.
Sun Life is the second-largest insurance company operating in the Philippines in terms of assets and wants to continue being strong player in the market. In February, the company signed a deal to acquire a 49 percent stake of Filipino insurance business Grepalife Financial Inc., a unit of the Yuchengco Group, for an undisclosed amount, expanding Sunlife distribution network in the Philippines. The deal rebrands Grepalife into Sun Life Grepa Financial as soon as local regulatory approval has been settled. Sun Life’s existing share of the Philippine insurance market is estimated to be around 17-20 percent, but with the new partnership the Canadian insurer is aiming to increase that to more than 25 percent in the short to medium term.
In an interview last week Sun Life CEO Donald Stewart, was upbeat about the company’s business in Asia and described the Philippines in particular as a country with “enormous potential,” remaining among its priority markets for long term success. “We want to make sure we commit to markets where we can succeed in and the Philippines is very much one of these markets,” he added.
Insurance Company Mentioned
Sun Life Financial
Sun Life Financial is an international financial services organization providing a range of protection and wealth accumulation products and services to individuals and corporate customers.
Sun Life Financial has announced that it has reached an agreement with GPL Holdings – part of the Southeast Asian multi-industry conglomerate, the Yuchengco Group – in order to acquire a 49 percent stake in its subsidiary Grepalife Financial. The deal will enhance the multi-national Canadian insurer’s presence in the Philippines insurance market.
The deal will see the rebranding of Grepalife as Sun Life Grepa Financial as soon as local regulatory approval has been granted; this is expected to be obtained in the third quarter of 2011. GPL Holdings will maintain the majority share in the venture at 51 percent, with Sun Life being responsible for the operational management of the new company.
The joint venture will strengthen Sun Life’s distribution network in the Philippines through the newly established bancassurance relationship with its local partners. This will be facilitated through Yuchengco’s lending arm, the Rizal Commercial Banking Corporation (RCBC). The agreement will provide Sun Life Grepa Financial with an exclusive distribution platform to distribute insurance and wealth management products to Filipino customers.
RCBC has approximately 2 million customers and over 350 branches currently across the Philippines. The new relationship will provide for synergy between Sun Life and Grepalife operations in the Philippine insurance market and allow both parties to benefit from existing strengths and increase the range of insurance and saving products available through the new Sun Life Grepa Financial venture in an expanding Southeast Asian insurance market.
Speaking on the agreement Sun Life Financial Philippines (SLFP) President & CEO Rizalina Mantaring said: “We’re extremely excited about this deal. Sun Life Philippines has a long history in the country and is already one of the leading players in the insurance industry. This alliance allows us to take advantage of the growing opportunity in the bancassurance sector and positions Sun Life Philippines for even greater growth.”
The Toronto-based insurer’s net income in 2010 totaled US$1.6 billion a significant improvement over the previous year 2009 when total net income reached US$541 million. The increase in net income over the 12 months was down to a strong performance across the range of Sun Life operations. Along with its presence in the Philippine insurance market, Sun Life has a strong foothold in the Canadian, Chinese, Indian, Indonesian, Irish, UK and US insurance markets.
In addition to Southeast Asian neighbors Thailand and Indonesia, the Philippines potentially offers insurers huge increases in written premiums as improvements in wealth levels, within a growing middle class population, takes place. This follows the progress in the growth of returns from business in the Asian powerhouse economies of China and India.
Sun Life currently holds a position in the Philippine insurance market through its Sun Life Financial business – which was established in 1995 – and has become one of the main insurers in the Filipino market. It has established a reputation as one the main protection and savings product providers in the Philippines and will continue to operate as a separate entity from the new insurance venture with Grepalife.
It is estimated that Sun Life’s existing share of the Philippine insurance market is around 17-20 percent, but with the new partnership the Canadian insurer is aiming to increase that to more than 25 percent in the short to medium term.
The parent company of GPL Holdings and Sun Life’s new partners Grepalife – the Yuchengco Group – has over 60 companies within its portfolio making it one the largest conglomerates in Southeast Asia and, with the RCBC banking link, is planned to provide a formidable combination to enhance Sun Life’s bid to penetrate the Philippine’s insurance market.
Sun Life is one of Canada’s largest life insurers and has been building its multi-national operations through joint ventures with local operators, rather than outright acquisitions, to gain a presence in emerging markets currently offering insurers greater scope for improving premium returns.
Insurance Company Mentioned:
Sun Life Financial
As the Asian medical tourism continues to grow, the Philippines’ government has announced action to help in the country’s bid to secure a bigger share of this lucrative industry.
While a number of Asian countries are positioning themselves to take advantage of the booming medical tourism industry – which is currently dominated by India, Thailand and Singapore – the Philippines is preparing to introduce a new visa, which will allow foreign nationals to stay in the Philippines for up to six months while receiving medical treatment.
The proposed new medical visa for the Philippines is being overseen by the country’s Bureau of Immigration and will mean foreigners seeking medical treatment are permitted to stay in the country for up to six months without needing to apply for a visa extension, which would normally be required by tourists to stay for that length of time.
Currently, visitors to the Philippines wishing to stay in the country for a prolonged period of time are required to secure an Alien Certificate of Registration or identity card (I-Card) to enable an application for a visa extension to be approved. The new medical visa is designed to simplify the visa process and incentivise people requiring medical treatment to use the facilities available in the Philippines.
The new medical visa requirement will help the medical tourism industry in the Philippines to become more competitive in the Asia-Pacific region, with the potential to secure an increased slice of the market. The Philippine government has been promoting the medical tourism sector in the country since 2004 – through the Philippine Medical Tourism Program (PMTP) – and has strongly promoted the healthcare system by focusing on the country’s internationally trained doctors and English-speaking healthcare professionals.
The Philippines, along with its Asian rivals in the medical tourism industry, is able to provide medical and surgical treatments to foreign nationals at significantly lower prices compared to treatment in Europe and the United States. In addition to offering a cost effective solution to medical treatments and procedures, Asian countries such as the Philippines, are able to provide modern, sophisticated, privately run facilities staffed by highly trained healthcare professionals.
While India, Thailand and Singapore are currently the major players in the medical tourism industry, other Asian countries have been jockeying for a greater share of the growing medical tourism market. In addition to the Philippines, Taiwan, South Korea and Malaysia have been stepping up efforts to appeal to more medical tourists.
Taiwan has been heavily marketing its tourism industry, particularly to the Chinese, seeking to capitalize on its high standard of private healthcare and closeness to the growing affluent population on the mainland. South Korea is aiming its medical tourism sector towards Japanese patients seeking better value medical and surgical treatments. Malaysia is promoting its private medical sector, emphasizing the country’s Islamic roots to target clients of Middle Eastern origin. In general, all the Asian countries are driving to promote their specific facilities available for medical tourists, with Europeans and Americans seen as the key targets.
India, Thailand and Singapore have been building their medical tourism industries over a number of years, developing a reputation for quality and affordable private healthcare. Facilities such as the Bumrungrad and Bangkok International private hospitals in Bangkok have established themselves on the global stage as highly regarded international medical and surgical treatment centres. The Fortis Healthcare private hospital group has been establishing itself across Asia to take advantage of the demand for private healthcare in domestic and international markets.
In addition to competition within Asian countries for medical tourists, Dubai has established a medical tourist hub for the middle-eastern region. The construction of the Dubai Healthcare City (DHCC) provides cutting edge healthcare facilities, which can cater for medical tourists although prices charged are more expensive than those available in Asian countries.
The Asian medical tourism industry is forecast to boom in the coming years, with an estimated total value of US$100 billion annually by 2012. Although India, Thailand and Singapore have gained an early advantage in establishing their private healthcare sector on a global stage, these countries are set to face increased competition from emerging countries now offering medical tourism facilities. The Philippines initiative to ease visa requirements for medical tourists is a step in this direction.
The medical tourist industry in Asia is being driven by clients seeking treatment in state-of-the-art medical facilities resourced by well trained, expert doctors and healthcare professionals. This is coupled with the facilities being located in a desirable, attractive region of the world, with medical costs which are only a fraction of the price of those in the USA and Europe.
Also, the future of the medical tourism industry may benefit further from healthcare reforms currently being developed in western hemisphere countries, as these countries seek to tackle rising medical costs. These healthcare reforms could lead to more patients from countries such as the UK seeking treatment in Asia due to the state funded National Health Service (NHS) deeming a medical procedure to be non-essential and unavailable through the free-of-charge system.
Fortis Healthcare Limited
The Group’s principal activities are owning and operating hospitals. Its flagship hospital, Bumrungrad International, is a renowned medical centre attracting over 1 million patients annually and named one of the world’s top ten international hospitals by Newsweek International. The Company also owns a businesses in real estate and anti-aging and functional medicine.
The Philippines Department of Health (DoH) and the EU have reached an agreement over the Philippine Health Sector Policy Support Program (HSPSP), with the EU having contributed a further € 36 million (US$ 47.8 million:PhP 2.12 billion) towards the second phase of the program on 17th December 2010. The focus of the second phase of the Health Sector Policy Support Program (HSPSP) is to try and ensure universal access to healthcare for all members of the population, especially disadvantaged members of society.
The second phase of the HSPSP will be overseen by the DoH working closely with other entities such as the provincial and municipal governments in the Philippines, which have the responsibility for delivering primary healthcare services in the country. The funding will enable further work to be undertaken and extend the benefits achieved under phase one of the scheme, while recognizing that considerable improvements to the access for fundamental healthcare is still required for the poorer members of society in this highly populated country.
The HSPSP is coupled with the Aquino Administration’s Health Sector Reform Agenda, with a combined focus on developing local healthcare systems and the reform of the hospital and health regulatory systems in the country. The strategy includes meeting Millennium Development Goals in respect to maternal and child health. Implementation of phase one of the HSPSP will be completed by the Philippine DoH by December 2010.
The second phase of EU funding will be used over two years to implement operational measures included in the Philippine healthcare reform proposals aimed at improving delivery of the Philippine state-run health services. The €36 million (US$47.8 million:PhP 2.12 billion) grant from EU funds follows their previous grant of €36 million (US$47.8 million:PhP2.12 billion) in 2006 and is part of the EU’s continuous support for the HSPSP in a bid to improve access to healthcare for the poor and disadvantaged population of the country.
A fundamental purpose of the HSPSP is to address the inequalities which exist in the Philippine public healthcare system, with phase two building on the lessons learned in phase one.
The Philippine DoH initially adopted the Health Sector Reform Agenda (HSRA) in 1999 as part of a major government policy action to address inequalities in the country’s healthcare system. In 2005, the HSRA adopted a program called FOURmula One for Health (F1) 2005-2010, which formed part of the HSRA’s framework to speed-up progress with the public healthcare reforms in order to eradicate the large scale divides between income levels and the urban and rural populations of the country. Since 2005, the approach to healthcare reform in the Philippines has gained momentum, with international bodies such as the World Health Organization (WHO) and UN backing the Philippines health project.
Although the Philippine healthcare sector has improved over the last decade, it still lags behind many of its Asian peers, especially in maternal mortality rates, which remain a health issue in the country.
Part of HSPSP reform agenda will be to address the challenges the Philippine healthcare sector has experienced in respect of financing and delivery of health services in the country. The proposals now allow for the devolution of responsibilities to local levels of government in an effort to achieve the prime objective of the program which is to improve inequalities and cut out inefficiencies which have existed in the Philippines healthcare system. These actions will strive to ensure all Filipino’s have fair and adequate healthcare coverage for curative and preventive services and achieve the overall goal of the Health Sector Development Project (HSDP) which is to improve the health status of the population.
The Philippines are taking a progressive approach to the healthcare reform process in the country by adopting a pro-active policy, with clear targets to eliminate shortcomings in the healthcare sector with valuable help from EU funding.
The compulsory Philippine insurance coverage scheme took effect on the 8th of November 2010. This means that it is mandatory for all overseas Filipino workers (OFWs) to be covered by Philippine government imposed compulsory insurance. The insurance law, which has been enacted by the government of the Philippines, is causing controversy in Hong Kong where many thousands of Filipino domestic helpers are employed.
The Philippines Overseas Employment Administration (POEA) released the news that implementation of the compulsory insurance scheme will start slightly earlier than initially planned, making it mandatory for all Filipino agency-hired workers to be covered by the Philippine insurance policy, with the cost of the scheme being borne by the recruitment agency or the foreign employer in the country of employment.
The introduction of the Philippine compulsory insurance scheme is in accordance with the Philippine government Migrant Workers and Overseas Filipinos Act of 1995 – as amended in 2010 – which requires recruitment agencies to provide the stipulated insurance cover for all Filipino workers seeking employment overseas; the policy covers both land based and sea based employment. Penalty payments will be imposed for failure to comply with the requirements of the new guideline.
Hong Kong – a special administrative region (SAR) of China – is one of the main destinations for Filipino domestic helpers. Imposition of the new requirement for mandatory insurance was met with large scale disapproval by employers in Hong Kong, with many seeing the compulsory Philippine insurance scheme unnecessary and counter-productive. Migrant workers from the Philippines working in Hong Kong are already protected under SAR law in respect of insurance cover. The insurance cover stipulated under Hong Kong SAR law costs around HK$ 900 (US$ 115) for a 2 year period – a cost met by the employer. Additionally, Hong Kong employers often obtain private comprehensive insurance for overseas workers covering medical expenses; annual premiums for this cover usually starts at HK$ 700 (US$ 90).
The new Philippine law on compulsory insurance requires cover to include: HK$ 116,300 (US$15,000) for death in an accident, HK$ 77,540 (US$10,000) for natural death and HK$ 58,150 (US$7,500) in case of permanent disablement; cover also includes repatriation and medical evacuation. The policy cost is HK$1,123 (US$144) for 2 years of cover. It is estimated that nearly 130,000 Filipino domestic helpers working across Hong Kong will be affected by the new insurance law, which was enacted in Manila.
The need for two forms of insurance protection for Filipino workers in Hong Kong is seen as unnecessary as the compulsory insurance required by SAR law provides an appropriate level of insurance cover for these migrant employees – with approximately 280,000 migrant workers already covered under the local insurance law. Strong calls have been made by interested parties in Hong Kong to get the government to repeal the Philippine compulsory insurance cover requirement for agency-hired OFWs. The view is that compliance with the new requirement could adversely impact on the hiring of Filipino domestic helpers.
Also the new insurance scheme has been criticized for the lack of transparency as it is not completely clear if the foreign employer or hiring-agency needs to bear the compulsory insurance cost. The government of the Philippines amended the Migrant Workers and Overseas Filipinos Act of 1995 recently with the amendment being unclear and lacking clarity. Insufficient detail has also lead to the suspension of applications for Filipino workers by Hong Kong employers.
In addition to the financial burden facing Hong Kong employers if they employ a Filipino worker, there is also the issue of the political fallout between Hong Kong and Manila over the bungled Manila hostage crisis and the tensions this is causing. The general view in Hong Kong is that the new Philippine government imposition of the compulsory insurance scheme for OFWs is needless as Filipino domestic workers are already amply protected through SAR’s own laws and, even in many cases, by additional private insurance taken out voluntarily by Hong Kong employers. There is evidence that Hong Kong residents are canceling the hiring of domestic helpers from the Philippines in favor of workers from alternative sources.
The implementation of the compulsory insurance coverage for agency-hired Filipino workers does not just affect those seeking employment in Hong Kong, it includes all countries seeking Filipinos workers hired through an agency in the Philippines. Since the 8th November 2010, all agency-hired overseas Filipino workers – either for land or sea based employment – are required to obtain compulsory insurance coverage issued by an accredited insurer through the Insurance Commission in the Philippines.
The purpose of microinsurance is to provide basic, low cost insurance cover to individuals on low incomes requiring protection for typical risks including the affects of serious weather conditions, healthcare, life and non-life products. Microinsurance offers security for individuals who need insurance protection but until now have been unable to afford the relatively high cost of cover.
Insurers are seizing the opportunity to cooperate with international agencies in providing microinsurance to populations in less developed countries, with further scope for providing insurance cover to the less affluent citizens in the more wealthy trading nations. The potential for provision of this type of insurance – by exploiting the scope for attracting high numbers of contributors making regular payments into a fund – is considered to be vast.
It is estimated that there are three billion low income individuals globally who would reap benefits and comfort from low cost insurance. The scale of the market clearly represents a tremendous commercial opportunity for local and multi-national insurers, and, at the same time, it will enable the companies to make a significant ethical contribution to social needs.
Global poverty and the recession will be the key drivers in the growth of the microinsurance business, which is already estimated to be used by 135 million people worldwide. The demand for affordable indemnities is on the rise with insurers in regions such as Africa and South East Asia taking steps to initiate microinsurance programmes.
The challenge insurers, aid agencies and governments face are promoting the concept of insurance to communities which have no or little previous knowledge of commercial and personal protection. Insurers also need to consider the commercial aspects of providing insurance for low level premiums and the trade-off on the volume of potential customers taking out indemnities.
In addition to the sale of microinsurance to new markets, the impact of the 2007/8 financial collapse, the global recession and the imposition of austerity measures in major western hemisphere countries is expected to open up additional opportunities for the sale of microinsurance; a notional estimate portrays the prospect of 50-90 million low income people being plunged into poverty in developing countries. The question then posed is whether more micro policy providers will be needed.
Recessionary pressures and economic factors will undoubtedly influence the size of the microinsurance market, but a number of other variables will contribute to this including climate change and its impact on flooding and droughts.
The provision of international microinsurance is already taking shape. In Indonesia, Allianz has secured 230,000 new customers with microinsurance policies where premiums range from IDR 10,000 (US$1.23) to IDR 100,000 (US$11.2); in a country, with a population of 240 million people, the potential for an increase in business is tremendous and Allianz Indonesia intends to expand its sales force to 50,000 agents by 2015 in order to capitalise on this opportunity. These efforts are supported by the Indonesian government.
It is estimated that the micro insurance market in Africa could be worth US$25 billion driven by a potential customer base of 700 million people. Figures indicate that around 147 million African lives are currently covered by microinsurance polices, which generates approximately US$ 257 million in premiums for insurers. Countries such as Kenya has seen a small take-up of microinsurance, but it was reported by the Association of Kenya Insurers (AKI) that there is still scope for significant improvement – but it is predicted that it may take up to three years for the insurers to develop products to meet the needs of the low-earning population. Unlike emerging and developing Asian nations, countries in Africa generally show little sign of underlying prosperity and the insurers have been slow in seeking market penetration.
Microinsurance is already popular in the Philippines where there is significant exposure to natural disasters – Munich Reinsurance has been particularly active in providing indemnities for this category of risk in this nation. Also, the healthcare system in the Philippines is currently in the early stages of planning the reform of the public healthcare service, where out-of-pocket payments are currently a main contributor to overall funding. This causes a problem for many of the local inhabitants and the government is in the process of establishing the Philippine Health Insurance Corporation (PHIC) to give poorer Filipinos access to better quality healthcare. This is being run alongside the National Strategy and Regulatory Framework for Microinsurance, which is promoting growth of the insurance sector by providing scope for equal and fair access to affordable Philippine mircoinsurance products, thereby raise the general standard of health of the population this country.
Asian countries are keen to take advantage of the microinsurance sector and the issue was raised specially at the East Asian Insurance Congress held in Bali in October 2010; governments and insurers were in unison in recognising the benefits for residents with low levels of earnings requiring the complete range of insurance cover which could be made available.
The BRIC countries – Brazil, Russia, India and China – are recognised as economic powerhouses; however, there are sizeable elements of the very large populations not reaping the benefits of national prosperity. With a wide range of insurers present in these countries, it should be possible to develop insurance products to satisfy emerging demand. India has been at the forefront of developing the microinsurance sector, with large pockets of low income people spread across the country – about 70 percent of India’s 1.2 billion population live in rural areas – and companies such as Bajaj Allianz and Aviva are able to offer life protection policies starting at as little as US$0.50 per week.
Zurich Insurance has increased its focus on providing microinsurance products in Asia, Africa and Latin America and has established good relations with international aid organizations to ensure appropriate products are designed to cater for the needs of the disadvantaged populations in the regions. Latin America has a population of approximately 569 million people, with around a quarter of those people being on low incomes; it is therefore vitally important for all parties involved with the provision of microinsurance do so to meet the needs of this element of society.
Insurers and governments will play pivotal roles in the further development of the microinsurance sector on a worldwide basis. This will fulfill many benefits, firstly, by providing the less advantaged populations in many countries with valuable insurance cover and thus providing invaluable peace of mind to this element of society and, secondly, by providing a mechanism for expanding and improving the robustness of the insurance industry. Microinsurance is not about corporate benefits, it is a means of achieving social equality particularly in the healthcare sector where many countries are looking to reform the structure of health service provision and micro insurance will be an important step in enabling this to happen.
Insurance Companies Mentioned:
Allianz Group is one of the leading global services providers in insurance and asset management. With approximately 153,000 employees worldwide, the Allianz Group serves approximately 75 million customers in about 70 countries. On the insurance side, Allianz is the market leader in the German market and has a strong international presence.
Headquartered in Zurich, Switzerland, Zurich Financial Services Group is an insurance-based financial services provider with a network of subsidiaries and offices in North America and Europe and also in Asia-Pacific, Latin America and other markets. Zurich is one of the world’s largest insurance groups, and one of the few to operate on a truly global basis. With 60,000 employees serving customers in more than 170 countries, our business is concentrated in three business segments: General Insurance, Global Life, and Farmers.
Europe’s fourth largest insurance company, with more than 300 years of experience in the global insurance industry, Aviva is committed to the safety and satisfaction of its customers. They sell a broad range of insurance products including motor and property insurance, protection and health insurance, business insurance, life insurance and pensions.
Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. This is how Munich Re creates value for clients, shareholders and staff. It operates in all lines of insurance, with around 47,000 employees throughout the world. Especially when clients require solutions for complex risks, Munich Re is a much sought-after risk carrier. The primary insurance operations are mainly concentrated in the ERGO Insurance Group. ERGO is one of the largest insurance groups in Europe and Germany and 40 million clients in over 30 countries place their trust in the services and security it provides. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand.
In 2004, the government of the Philippines introduced a medical tourism initiative – the Philippine Medical Tourism Program (PMTP) – to promote the country’s private healthcare services to the worldwide market. At that time, the likes of Thailand, Malaysia, India and Singapore had already established themselves as Asian medical tourism destinations. Since then the medical tourism industry in the Philippines has recorded an average of nearly 200,000 international patients coming to the country each year for medical treatments, generating US$ 350 million per annum.
The Philippines has an edge over some rival Asian medical tourism providers, resulting from its established reputation for providing highly qualified medical professionals, with many Filipino doctors and nurses trained and working overseas in countries such as the United States of America and the United Kingdom. In conjunction with its reputation for quality medical professionals, the Philippines has a natural beauty, creating an environment for a vibrant tourism industry and an attractive location for international visitors.
While the Philippines medical tourism sector has sound basic conditions for developing its business, it is facing increasing international competition from regional rivals and from Latin American and Middle Eastern countries. Additionally, with tough underlying economic conditions to be overcome and issues with the standard of infrastructure available, the medical tourism industry in the Philippines faces serious challenges.
An Asian Medical Tourism Analysis (2008-2012) highlighted the improvements in the medical tourism industry in recent years, with Thailand, India and Singapore being the front runners in the provision of medical treatments to international patients. The report identified the emerging prospects for medical tourism in the Philippines, Malaysia and South Korea. In order to capitalize on these opportunities, the Philippines has been strengthening its domestic healthcare infrastructure and wellness sector in order to be competitive and attractive to foreign visitors.
The future for the medical tourism industry in the Philippines is expected to remain robust in the coming years, although it faces stiff competition from the healthcare services provided in established countries in Asia such as Thailand and emerging countries such as South Korea and Dubai. The Asian medical tourism industry envisages continued growth, partly reflecting its escape from many of the negative effects from the recent global financial crises. Even though medical tourism in the Philippines is facing a challenging time, mostly due to competition from rival regional providers, the Philippines is taking positive steps to maintain a slice of the lucrative medical tourism market.
Competition in the medical tourism industry is not confined to Asian countries. Serious competition is now emerging from the United Arab Emirates (UAE), which is also making efforts to establish itself as a medical tourism destination. The UAE has invested heavily in marketing and creating a medical tourism industry to compete with the Asian private healthcare sector, but struggles to match prices available for healthcare and medical treatments in Asian countries.
Companies such as the Philippine Medical Tourism Inc (PMTI) work with the Department of Health (DOH) in the Philippines to ensure the provision of healthcare services in the Philippines for foreign visitors meet government standards. PMTI uses its local expertise and knowledge to offer comprehensive medical packages for international patients in association with hospitals, clinics, hotels and resorts in the country. Medical procedures such as hip replacements carried out in the Philippines can be arranged for a price starting at US$ 11,000 including accommodation and transport, while the same procedure in the USA would cost a patient around US$43,000. Companies such as PMTI have increased the competitive edge of the medical tourism industry in the Philippine by providing a value-added service.
It is predicted that the Medical Tourism Industry will be worth US$100 billion yearly internationally by 2012 and the medical tourism sector in the Philippines is well placed to secure a reasonable slice of this substantial and lucrative market.
Compared to Asian rivals, the Philippines entered the medical tourism industry relatively late, not until 2004. Now, the medical tourism industry in the Philippines is striving to become a US$1 billion per year industry by 2012. This is being driven by the Government of the Philippines and Philippine healthcare providers adopting large scale marketing campaigns, promoting the country’s quality and affordable healthcare services to patients in countries with high cost and a backlog in medical treatments.
The Philippines is able to offer comparative low cost medical treatment and health services to the likes of American and British patients in particular. The healthcare system in the Philippines has taken significant steps to modernize healthcare facilities in order to optimize these opportunities, with the Philippine government taking a leading role in spear-heading the promotion of this sector of their healthcare system. In order to be competitive, the Philippines government and private health sector took action to implement projects and schemes to challenge the regional leaders in the provision of medical tourism services.
The medical tourism industry in the Philippines was able to hit their planned target of 700,000 medical travelers in 2008. This has lead to the HEAL Philippines (Health and Wellness Alliance of the Philippines) organization working with the government and the private sector to drive up medical tourist numbers visiting the country. HEAL Philippines’ primary goal is to develop and promote the Philippines as a global healthcare and retirement destination in a competitive region of the world.
Part of the HEAL Philippines networks’ role is the accreditation of hospitals, clinics, spas and other health facilities used in providing a range of treatments and procedures for medical tourists in the Philippines. Currently there are 44 accredited Philippine hospitals and designated clinics across the Philippines – mostly in the capital Manila.
Medical packages like the ‘Smile Holidays’ for medical tourists seeking dental treatment have been popular, and the Philippines is able to provide certain cosmetic surgery from as little as $2000. However, at the moment, the Philippines’ medical tourism industry is finding it difficult to compete with Thailand and India for complex surgical treatments.
The prime focus currently is aimed at the medical tourists from the Middle East and the Pacific region, with secondary markets being Europe, Japan, Australia and Taiwan. Overcoming language barriers in the Philippine healthcare system is being addressed to fully exploit the medical tourist market.
In conjunction with the Philippines medical tourism industry, the access for public healthcare for Filipino citizens is set to improve by 2013, with the government of the Philippines drawing up plans in 2010 to introduce universal healthcare coverage for the indigent population of the country.
The Asian Hospital and Medical Center in Manila is one of the healthcare providers in the Philippines specifically catering to the medical tourism industry. It provides a special international health service for foreign patients, dedicated to providing comprehensive care for a visitor with a focus on reassurance to a patient when receiving medical treatment during their time in the hospital. The Asian Hospital and Medical Center is affiliated and owned by the Bangkok based Bumrungrad International Hospital, which is one of Asia’s most recognized private health providers.
The St. Luke’s Medical Centre is located on the island of Luzon in Quezon City and is a Joint Commission International (JCI) accredited hospital. The St. Luke’s Medical Centre offers a wide range of medical services covering cardiovascular medicine, ophthalmology, cancer, neurology and neurosurgery, and treatments for liver and digestive diseases. The hospital receives international patients from the United States, Europe, Asia and the Middle East. It has an international patient care center providing extra services for the medical tourist such as travel planning and airport pickup.
The Philippines has set the foundations to become a major player in the medical tourism market reflecting the government’s commitment to work with private health providers in the Philippines to provide a challenge to other suppliers in an industry which is expected to expand significantly; especially with major healthcare reforms being applied by western countries; an industry report has indicated that the Asian medical tourism business will grow by 16 percent between 2010 and 2012.
The medical tourism industry in the Philippines is still in the early stage of development, compared with its Asian counter-parts, and faces strong competition in an industry which has rapidly expanded. The rewards for being successful are enormous, with the medical tourist sector currently estimated to be worth roughly US$55 billion per year and is set to rise to US$ 100 billion in the medium-term future.
Aon Benfield, the US-based reinsurance intermediary and capital advisor, asserts that whilst the United States will continue being hit by “Supercat” events – catastrophic events that cause a minimum of US$10 billion (EUR 7.2 billion) damage in insured losses, – insurers should heed its warning that Asian countries may experience such events in the foreseeable future.
Based on the increasing property values and insurance penetration in Asian countries such as Japan, South Korea and China, Aon Benfield extrapolates that the damage done by major catastrophic events like ones experienced in the past will happen again, and insurers could be expected to suffer enormous losses. Citing Japan as an example, the potential losses insurers would face today from typhoons of the same magnitude as Mireille (1991), Vera (1959) and Nancy (1961) would most certainly lead to Supercat-level insured losses, more so by a strong typhoon directly hitting the city of Tokyo.
The Senior Director at Aon Benfield Analytics, Nigel Winspear, further explained: “Natural perils in Asia do not appear to be increasing in frequency or severity, however market conditions are changing with increasing insurance penetration and higher property values reflecting ongoing economic growth. Property insurance penetration in Asia is generally low and weakest in residential lines but often high in commercial and industrial lines.” This was followed by a warning to insurers in relation to their level of preparedness; “Some insurers opt to purchase as little catastrophe reinsurance protection as possible to maximize their retained premium.”
Bringing the focus back to the relevance to the insurance industry, it is generally estimated that tropical cyclones cause approximately 30 percent of all the global insurance losses.
Citing chronologically the damage done in Asia by typhoons, the following events put in perspective the costs associated with this kind of catastrophic events:
(Year) Typhoon / Country [ Insured Damage]
(1991) Mireille / Japan [ US$7.1 billion (EUR 5 billion) ]
(1997) Winnie / China
(1999) Bart / Japan [ US$4.2 billion (EUR 3 billion) ]
(2000) Bilis / Taiwan
(2001) Chebi / China
(2004) Rananim / China
(2006) Bilis / China
(2006) Durian (Reming) / Vietnam (Philippines)
(2006) Saomai / China
(2006) Shanshan / Japan [ US$1 billion (EUR 714.3 million) ]
(2007) Sepat / Taiwan
(2007) Krosa / Taiwan
(2008) Kalmaegi / Taiwan
(2008) Fung Wong / Taiwan
(2008) Sinlaku / Taiwan
(2008) Jangmi / Taiwan
(2008) Hagiput / Hong Kong
In some relatively positive news, AIR Worldwide, the US catastrophe modelling firm, has estimated that the insured losses to onshore properties in the Philippines caused by Typhoon Megi will likely be less than US$150 million (EUR 107.1 million). A statement by AIR stated that their “loss estimates reflect insured damage to property (residential, commercial, industrial), and contents. Crop losses are not included. While the storm was one of the strongest to hit the Philippines in years, the typhoon steered away from the Manila metropolitan area, where the highest concentration of insured properties is located. Overall the penetration of insurance in the Philippines is estimated at only 15 percent.”
Typhoon Megi is expected to hit land in Southern China in the next few days, possibly on a path with close proximity to Hong Kong.
Aon is a provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. It is based in the Aon Center in the Chicago Loop area of Chicago, Illinois, United States. Aon bought Benfield in 2008. Aon Benfield Analytics is the industry leader in actuarial, enterprise risk management, catastrophe management, and rating agency advisory. Their track record of innovation and world-class position in analytics, modeling and client-facing technology helps companies to optimize their portfolios. Proprietary tools include ReMetrica, CatPortal, and ExposureView. Also, their Impact Forecasting team develops tools and models that help companies understand financial implications of natural and man-made catastrophes around the world.
AIR Worldwide (AIR) is the scientific leader and most respected provider of risk modelling software and consulting services. AIR founded the catastrophe modelling industry in 1987 and today models the risk from natural catastrophes and terrorism in more than 50 countries. More than 400 insurance, reinsurance, financial, corporate and government clients rely on AIR software and services for catastrophe risk management, insurance-linked securities, site-specific wind and seismic engineering analyses, agricultural risk management, and property replacement cost valuation. AIR is a wholly-owned subsidiary of Insurance Services Office, Inc. (ISO).
It has emerged that Chartis Insurance, formerly American International Underwriters, was the underwriter for the travel insurance policies held by 4 of the victims in the recent Philippines hostage crisis. Tour operator, Hong Thai Travel, has promised to provide additional compensation to the remaining families not holding travel insurance coverage. The incident on Monday, August 23, left 8 Hong Kong tourists dead, and spurred mass outrage across the South-East Asian region.
Hong Thai Travel has promised HK$ 320,000 (US$ 41,025) in compensation to each victim’s family. Of the total compensation being paid out by the tour operator, HK$ 300,000 (US$ 38,461) is travel accident compensation, while the remaining HK$ 20,000 (US$ 2,564) is a death gratuity.
However, of the families of the 8 victims receiving the Hong Thai Travel compensation package, 4 families stand to receive an additional HK$ 1,000,000 (US$ 128,205) due to the fact that they had purchased extra travel insurance coverage from Chartis Insurance, Hong Thai Travel’s official insurance partner.
Chartis Vice President, Wong Fu-Tat, said “the level of compensation for victims has been doubled, from HK$500,000 to HK$1 million, under insurance covering accidents caused by public transport.” As such, the insurance company had labeled the situation as “special.” Additionally, Chartis has said that “Special Arrangements” were in place to help the survivors of the tragedy, with the company providing up to HK$ 1,000,000 in Philippines Medical Benefits, and covering further medical treatment in Hong Kong up to HK$ 100,000 (US$ 12,820).
Under a typical Chartis/AIU travel policy, the victim’s family would only be able to claim up to HK$ 500,000 (US$ 64,102) due to the fact that all the victims were on a tour, organized by a tour agency. Under the Chartis policy, “Accidents while in a Common Carrier” can be indemnified up to HK$ 1,000,000. However the policy wording states:
The Benefit will be payable to the Insured Person who suffers an Injury while riding as a fare paying passenger, and not as pilot, operator or crew member in or on, boarding or alighting from any Common Carrier, or the carrier as arranged by a travel agent, or while the Insured Person is riding in an automobile at the time of Injury during the insured Journey outside Hong Kong which, directly and independently of all other causes shall result in any Event provided in the Benefit Table…
In this case, as the victims were on a tour, they would normally be excluded from coverage under the “Accidents while in a Common Carrier” benefit, and covered under the policy’s “Other Accidents Benefit;” where the company is only liable for up to HK$ 500,000 in compensation. However, Chartis, recognizing the extremity of the situation has doubled the total amount for which families of the victims can claim.
This affair only serves to highlight the need for comprehensive travel insurance coverage. As we have previously illustrated, travel insurance is one key component of a vacation which often goes overlooked. However, in the event of a serious situation, such as the hostage taking incident, it is important that coverage is in place. The differences between the compensation being received by the families who had insurance coverage in place and those who did not is HK$ 1,000,000 (US$ 128,205); and should serve to highlight the importance of adequate insurance coverage while overseas.
The last victim of the Philippines Hostage crisis was the Hong Thai Travel tour guide, Masa Tse Ting-Chunn, who has been widely praised in Hong Kong for phoning colleagues in Hong Kong and alerting them to the crisis. Tse’s family will receive the HK$ 320,000 accident benefit and death gratuity from Hong Thai Travel, in addition to his annual travel insurance benefits and labor insurance coverage.