InterGlobal has been a leader in the health insurance industry for over a decade now and despite experiencing some difficulties in recent years, the insurer has had a positive 2012 and is set for another strong financial year. Globalsurance has seen a number of improvements made to several areas by InterGlobal, allowing the insurer to gain an increased share of the market in the increasingly competitive health insurance industry. Read more
Dubai roads were obscured with fog and heavy rain on the 17th of December 2012. The hazardous conditions affected drivers and caused as many as 330 motor accidents within a seven hour period.
The havoc caused by the traffic sparked predictions that the insurance industry could see premium rises in car coverage across the UAE at the start of the 2013 renewal season. Current average annual insurance rates for the UAE have been relatively low at 3 percent (0.5-1.5 percent less than other countries within the Gulf Cooperation Council) resulting in many motor portfolios from major insurance providers suffering massive losses, some reaching into millions of dirhams.Read the rest of the Premium Increases for UAE Drivers insurance article.
Insurance giant Willis Re have released a report revealing that as of the Jan 1st 2013 (the renewal date for reinsurance rates), reinsurance rates have remained flat compared with 2012. This means that reinsurers have managed to avoid an increase to their rates despite the catastrophes suffered to property, amongst other things, in the wake of Superstorm Sandy that terrorised East coast of the United States last October.
Hong Kong’s economic development over the last few decades has led to improved measures for dealing with natural disasters. With the installation of the Hong Kong Observatory in 1883, early storm warnings and procedures were gradually established to handle the region’s seasonal typhoons. The numbered Signal System, ‘T1, T3, T8 & T10’, promoted public awareness of typhoons and arranged a platform to notify residents of each storm’s potential severity. (When T8 is hoisted workers are released and encouraged to go home.) Now Hong Kong residents handle five or six typhoons annually, but there are growing concerns that many of them are severely underinsured for the long term effects of a natural catastrophe.
Imagine for a moment that you are Mrs. Ida Jones. You are 68 years old and live with your husband in Tampa, Florida. Like many seniors in the area, you are enrolled as a member of the Medicare Advantage insurance plan through the company UnitedHealthcare, also known as the operating division of the single largest health carrier in the United States. UnitedHealthcare allows you to seek treatment and services at any hospital or physician’s group associated with BayCare, the largest hospital group in the Tampa Bay area, which is quite convenient. If you, Mrs. Ida Jones of Tampa, Florida, are in need of a hip replacement surgery, the logistics of care and insurance is simple – you are covered financially by a health carrier that’s supported and trusted by 7 million Americans, and your doctor belongs to a network of not-for-profit hospitals and outpatient services with more than 200 locations throughout Tampa Bay. Easy.
At least, it used to be easy. That smooth, behind-the-scenes networking between hospital and insurer came into an ugly spotlight earlier this year when UnitedHealthcare and the BayCare hospital group embarked on a very public dispute over money, care and financial transparency. The dispute came to a head just this week, when on Monday the 26th of November neither BayCare nor United had taken steps to resolve the argument, meaning that effective immediately, the contract between insurer and hospital has been terminated. United is no longer covering patients in the BayCare system.
The autumn of 2012 has been a significant and celebratory one for Cigna, with October marking 50 years for the Cigna Foundation, the recognition of some of Cigna’s leadership in a national magazine and the honor of receiving the International Benefits Provider of the year award at the Expatriate Management and Mobility Awards.
First, the Cigna Foundation celebrated its 50th birthday in October. The Cigna Foundation is a private foundation, funded by Cigna Corporation and their subsidiaries, that is committed to improving the health and well-being of people in the community, especially those communities where Cigna employees reside. To mark the occasion, the company held searches for the healthiest workplaces in the world and a “Go Volunteer” campaign to encourage employees to be more active in their communities.
Globalsurance can confirm that Bupa International’s medical inflation rate has come in below long term average which is good news for clients. Global medical inflation in the international Private Medical insurance (iPMI) market has been running at 10.8 percent on average for the past 5 years so although Bupa’s increase looks high by most inflation measures, it is actually typical within the iPMI sector.
Bupa International is unique as an insurer in that it has a bi-annual premium rate increase for individual international private health insurance policies and it changes its premiums twice per year – on the 1st of April and the 1st October. Earlier this year, Bupa adjusted its premiums by 6 percent and then by 4.3 percent this October meaning an effective rate of yearly medical inflation of 10.3 percent.
These changes relate to all of the company’s Worldwide Health Options (WHO) and Lifeline health insurance products.
While the attention of the financial world is fixated on the unfolding European crisis, there is a sleeping dragon some 5,000 kilometers away about to wreak chaos around the world. The dragon is China, the world’s most populous country and the world’s second largest economy. The problem has been festering for years and has been somewhat controlled through governmental stimulus money but this problem can no longer be delayed – the slowdown in the economy is becoming a pressing concern for people around the world. The effects of this recession could be disastrous and would affect healthcare and international health insurance worldwide.
The Chinese government is reporting 7% – 8% Gross Domestic Product (GDP) growth this year, so how could the Chinese economy be in a recession? Many experts agree that China could be deceptive about their GDP numbers. As reported by Reuters, WikiLeaks revealed that in 2007, during discussions with Clark Randt, the US Ambassador to China at the time, Li Keqiang (head of the Communist Party in 2007) hinted at the fact that China’s GDP figures were not necessarily based on real data.
This should not come as a surprise. The country is a totalitarian state controlled by the Communist Party of China. To the government of China, maintaining a strong public image to both its own citizens and the rest of the world is very important. Fortunately, investors and citizens can turn to more reliable data which can also confirm whether or not China’s economy is slowing down or entering a recession.
Many economists and investors use other sets of data to help determine the strength of an economy, aside from the GDP. Even if there was truth behind China’s GDP growth numbers, GDP itself may not be a good indicator of economic health in the sense that it does not take into account the general financial state of the typical citizen.
One data set that other financial analysts look towards is the Purchasing Managers’ Index (PMI). The PMI is an index composed of five indicators which come from purchasing managers in a given country. This gives diversified results and provides a good sample of the economic industries. The indicators included are; production levels, new orders, supplier deliveries, inventories and employment level, with each indicator having a different weight. Purchasing managers will indicate whether their indicators are better, worse, or the same than the previous month. The index is then reported on a scale of 0 to 100, with anything higher than 50 indicating that the economy is in growth, and anything lower indicating the economy is slowing down in growth or is in recession. A number lower than 42 indicates that a recession is either occurring or is close to doing so.
The index focuses on manufacturing, and while the Chinese economy may not be solely based on manufacturing, a large portion of it is, and recessions traditionally affect manufacturing first. Even more so, factory output is significant in China because the economy has used its cost effective labour to become the world’s factory, accounting for a large portion of China’s overall GDP.
For China, there are two PMI numbers: one released by HSBC, conducted by Markit, and one that is sponsored by the state and is the official figure released by China. Both numbers are within tenths of percentage points of each other and it is important to note that the difference between the two numbers is due to the composition of the surveys – China’s numbers focus on larger corporations, while HSBC’s numbers take into account small and medium sized enterprises (SME). As SME’s may be more representative of the general population, it seems wiser to take these into consideration. Despite their differences, both figures indicate a below 50 reading, indicating that the industry is contracting, but not yet in a recession.
Another indicator is the amount of loans being granted or applied for. China’s banks recently indicated that they may miss their loan targets for 2012, something that has never been missed in the past seven years. Banks have a heavy dependency on the SME market for loans, not because of their loan amounts, but because of their volume. This points to a slowdown in China’s economy as the fact that businesses do not require loans may indicate that there is no need to expand, or an incapability to expand. It could also indicate a business’s inability to acquire the loan due to its poor financial standing. SME’s health is crucial to the financial health of China’s citizens as SMEs make up the vast majority of the total contribution to GDP and employment. Poor SME health could therefore indicate that the overall state of the economy is in a terrible condition.
Electricity consumption could also be used as an economic barometer. If GDP increases, then electricity consumption should follow as electricity use will generally increase in from higher productivity. However, China’s electricity consumption and demand has slowed over the past few months, which seems to contradict China’s picture of continuing high GDP growth. It does, however, coincide with the PMI indication that things in China may be slowing down. China is actively spending to reduce its energy consumption in spite of this, and analysts still agree that factory consumption of power is slowing.
Finally, rail cargo volume can also point to changes in actual production. Rail cargo volume for China has been declining and while there are many seasonal highs and lows, the lows for the past few months have been significantly lower than historical values. Moreover, analysts have indicated that the decrease in rail cargo volume is comparable to the amount of decrease that happened during the 2008 financial crisis, which causes alarm for many who are monitoring these stats.
There are some significant consequences that can arise if China were to enter a recession. The effects of its recession could be comparable to those of America’s recession as China is the second largest economy in the world. Although a weakened Chinese Yuan as a result of the recession may encourage foreigners to outsource from China, the lowered demand from foreign companies is what contributed to the Chinese downturn – the deepening Global Recession may continue to produce lower demand for Chinese products even after the Yuan is lowered.
While the Yuan lowers, imports will decrease, compounding the effect of lowered imports due to lowered production levels. This can have significant effects around the world as China is one of the largest importers for many different minerals and raw materials, used often in their manufacturing industries.
As the Chinese economy worsens, general prices in China may increase due to lower demand and lower quantities will be sold as a result. Moreover, prices may increase because imports could become more expensive due to the weakened Chinese Yuan. Businesses may exit the market because profits are not as high anymore and may reach an unsustainable state.
In recessions, government spending is cut in order to maintain proper budgets for more essential and important aspects. As such, subsidized healthcare is usually one of the first departments to receive cuts. China currently offers a progressive subsidized healthcare system whereby the small and local clinics / hospitals receive a sizable subsidization and larger more specialized hospitals receive significantly less subsidization.
Once cuts are put in place, healthcare receives cuts, and the chances of people not being able to pay for their healthcare needs increases; costs of healthcare in emergency situations can represent significant amounts. Due to the higher relative costs of healthcare, health insurance in turn could end up costing more. This is because of the way health insurance premiums are calculated: what are the chances of a certain person requiring healthcare and how much would it cost if they do? A recession can push up the cost of healthcare and the cost of health insurance.
After the recession, because of citizens’ poor financial health, demand for health insurance will be lowered. As such, many small local health insurance companies may be forced to exit the industry as well, which could see some people at loss because of lack of coverage.
Acquiring an international health insurance policy in China now, before the recession takes place, is much more attractive. If you currently have health insurance, it is a safe way to hedge your bets against the Chinese recession since your plan will remain at its current price for rest of the term, as well as any financial problems which might occur in the future.
How long might this recession go on for and just how deep into the economy could it reach? This is a difficult question to answer. If the 2007/2008 recession is anything to go by, a recession in China could pull the world into a depression. The Global Recession still hasn’t concluded yet and is on the brink of further collapse.
As a sort of safety net, the Chinese government has set aside hundreds of billions of dollars in stimulus money in the event that action is required. This money will go towards cost saving measures for both the government and the average citizen, such as incentives for purchasing energy saving air-conditioners.
The real question at hand is not about the possibility of China going into an economic downturn – the real question is whether it will be a soft landing or a hard one. Some analysts think that it will be soft and that China is well equipped and large enough to absorb some of the loss. Some analysts, however, feel that their recovery from the previous 2007/2008 recession was too manufactured and that it wasn’t a sustained recovery – they are afraid that there will be widespread damage across the globe especially with the European crisis still unfolding. Whether it is a soft of a hard landing, many feel that this downturn is inevitable and fast on its way.
Following a tribute in the London 2012 Olympics that was broadcast to the world, the NHS is encouraging its member trusts to do the same and expand globally in a bid aimed at funding health services in the United Kingdom. The idea originated in the Labour Party and is now gaining speed to expand the National Health Service beyond the UK’s borders. However, will this idea affect the costs and quality of care for current residents of the UK?
The government is supporting a recommendation for large private hospitals, such as the Great Ormond Street, Royal Marsden, and Guy’s and St. Thomas’. Following the model set by Moorfields Eye Hospital in London which has set up shop in Dubai, the UK hopes to emulate the success which Moorfields’ Dubai branch has seen since its establishment overseas in 2007.
Governmental officials say that these large hospitals and entities should utilize their profits derived from their private practices and use them to develop healthcare assets overseas. After the overseas operations are established, profits from the entity should be rerouted back to the NHS to fund ongoing improvements to the UK healthcare system.
The NHS aims to make itself a global leader in providing healthcare by marketing itself as a recognizable name worldwide. By setting up hospitals overseas, it can market its services and create a demand for it.
“The NHS will be bringing together the Department of Health, the UK Trade, the National Commission Board, and form an organization that will help healthcare providers in [the UK] and develop those skills and sell them abroad for the benefit of the patients in [the UK],” says Health Minister Anne Milton, a Member of Parliament of Britain. Any kind of profits will have to be redirected back to the benefit of NHS patients, in a scheme which Ms. Milton says is a, “Win-win.”
The government is currently eyeing hospitals and institutions with great international reputations, allowing for an easier uptake of the program. Once the program becomes more successful, the government should open it up to smaller private healthcare providers.
What’s unclear at the moment is exactly where the doctors and medical practitioners will be sourced from. There are two possibilities: The NHS could source the staff from their own current employees – after all, they are the world’s fifth largest employer. Alternatively, the NHS could source the staff internationally, which could also be feasible because of the vast number of readily available professionals around the world. However, there are possible negative effects of both methods of sourcing which need to be taken into consideration.
First, if the NHS proceeds with sourcing from existing NHS staff, skilled workers in the UK may be less readily available. With workers being asked to work abroad, there could be a premium added to their salary, as well as other fringe benefits which compensate workers for their move. In addition, as these workers will be a direct foreign representation of the organization itself, there is a high chance that highly skilled workers will be recruited to move overseas first. More skilled workers may also be more adept at adapting to challenging situations, further making them a target for recruitment overseas. However, this will draw the UK’s more skilled healthcare workers away from the UK system, potentially lowering the standard of care in the country. This also represents a costlier decision because of the need to incentivize doctors to go abroad by adding benefits to their compensation packages.
What if the NHS decides to hire internationally? The goal of the NHS is to export the “brand names” of the NHS that have international and esteemed reputations. As such, it could be contradictory to start a new branch with staff who do not previous history with the NHS in essential, and especially management, roles. It would make most sense for the NHS to at least fill higher level roles with skilled medical practitioners from the NHS in order to preserve the level of service. Moreover, an international hire may not inspire as much confidence in local patients who are seeking high quality international care based on the NHS brand name. Why would they need to go to the potentially more expensive NHS which features a local hire if they can receive the same type of treatment at a potentially lower cost? Furthermore, hiring the best doctors available locally in the oversea hospital’s area might cause issues for the local healthcare system, especially if there is already an ongoing shortage of doctors in the region. If the NHS doesn’t hire in the target area but still recruits internationally, it may still represent a higher cost because of relocation packages and expatriate salaries that they may need to attract international hires.
Will the costs of healthcare increase because of the expansion? As mentioned earlier, highly skilled workers may be incentivized to take up positions in the new hospital developments overseas. As such the ability to properly provision healthcare for the nation may be reduced if the NHS does not replenish or properly account for the departure of some of its staff. Moreover, the NHS has been widely reported to be experiencing a significant shortage of workers, despite being the world’s 5th largest employer. Shortages of nurses and doctors are, in some cases, extreme, as data from the Department of Health indicates that some family doctors may be responsible for as many as 9000 patients. A new development requiring skilled practice may hinder the system, preventing patients in the UK from having adequate access to much needed healthcare services.
The demand for medical practitioners is high in the UK. There is a general shortage for the medical field, vastly due to the amount of doctors leaving the UK for better packages worldwide. In a recent report by the Policy Research Programme in the Department of Health, UK doctors are being offered attractive benefits packages, better living standards, higher control of their work, and in places with better living conditions than the UK. This incentivizes many highly trained doctors to move abroad, resulting in a shortage of doctors able to provide important healthcare services. Some of the doctors surveyed also indicated that they were disillusioned by the NHS, stating that it was bureaucratic and limiting.
This expansion overseas will not affect the highly specialized private hospitals which have a well-recognized name brand – in fact it may be quite easy bring in profits as foreigners may be attracted to these brand names. However, whether smaller hospitals will be capable of following suit or willing to remains to be seen. Many hospitals in the UK are currently designed to be providing an essential service to the community and gearing them towards acting as for-profit multinational companies may cause them to lose focus on providing quality care within the UK. If managed poorly, the implementation of this program could cause shortages and cuts to existing services as hospitals direct their attentions and funds overseas. This could affect prices negatively for the patients they service locally in the UK. With the significant burden that many general practitioners already face – upwards of 3,000 patients per doctor, some even 9,000 – and in the middle of a large scale reorganization of the NHS, the main focus should be improving these services and ensuring that the new system provides the benefits its supposed to.
This leads to a discussion about the focus of the NHS – should this really be what they are redirecting resources towards? The NHS is asking for their hospitals and entities to redirect profits from private health practice to fund their international developments. While the NHS does provide quality services to UK citizens, waiting times for both scheduled treatment and A&E care are a serious problem due to a lack of beds and medical professionals.
Could this expansion affect healthcare costs and insurance premiums? There is a possibility this could happen if the private hospitals which are establishing hospitals overseas increase charges on private care in order to raise funds to start the overseas ventures. Similarly, if the overseas private hospital programs lead to increased brain-drain on UK doctors, it could drive up the costs of private care further. Both of these possibilities could have knock on effects on the private health insurance system in the UK, which is already trying to avoid large premium rises to avoid off putting customers.
Given the NHS budget freezes and cost savings put in place as part of QIPP (Quality, Innovation, Productivity and Prevention) policies in the UK, it is understandable that new sources of income are being investigated and considered. However, it is of the utmost importance that these efforts do not come at the expense of local capabilities, especially during the largest reorganization of the NHS system in years.
Reliance Life Insurance, India’s largest private insurance company, has announced that they will be going through with an expansionary move that will see over 55,000 staff added to their force. This move is in anticipation to its future plans to move into different marketing channels.
Reliance Life Insurance is a business unit of Reliance Capital and led by Anil Ambani. Despite being one of India’s larger life insurance companies, Reliance only controls a staggering 5 percent market share. The reason for this is due to the LIC – the Life Insurance Company of India. The LIC is a government-controlled corporation which dominates the market, consuming 70 percent of the market. Reliance’s aim is to become the main alternative to the LIC.
Currently, Reliance is recruiting over 55,000 agents to join its sales force. However, not all agents will be on a commission basis – roughly 5,500 agents will be admitted to full time status with a base salary, in addition to incentives for performance, such as commissions. The rest of the hiring, over 50,000 agents, will be on a purely commission basis.
Reliance is seeking to bolster its workforce to 150,000 by the end of the current financial year, up from 120,000 which it has now. The company experiences high turnover due to the nature of the business – it is vastly pure commission so the stability of income and performance of individuals forces them to leave the business. As such, Reliance sees high attrition rates, which it hopes will not be the case with the 5,500 that they are hiring full time.
This increase in agents is aimed at replacing the 30,000 agents that left the firm during the April – June 2012 quarter. In addition, it appears that the move is in anticipation for a strategic business move that it is making.
Reliance Life Insurance is in talks with many banks in both the public and private sectors, seeking to add its products into the banks offerings. They are looking to get into bancassurance, which is a form of distribution for insurance companies by way of distributing insurance products through banks (also known as a bank insurance model or BIM).
Alternatively, Reliance can distribute its insurance products via its own agents, which it has been doing so historically. This business model is known as a tradition insurance model (TIM) whereas Reliance’s new strategy is known as a Hybrid Insurance Model.
Reliance Life Insurance’s latest move is an attempt to gain more traction in the market space not taken up by the government-run LIC. Excluding the LIC, there are 20 firms competing for 30 percent of the market share and 5 percent belongs to Reliance. Competing with Reliance are companies such as SBI Life, Metlife, ICICI Prudential, Bajaj Allianz, Max New York, and Sahara Life. Much of Reliance’s business originates from the rural markets, including over 34 percent of its new business. Moreover, Malay Ghosh, President and Executive Director of Reliance Insurance, stated that only 15 percent of the company’s business is from Tier-1 cities. With that in mind, Reliance’s new approach via bancassurance channels should allow Reliance to gain more momentum and volume throughout Tier-1 cities.
However, with Reliance’s late entry into the bankassurance market, the availability of suitable and preferred partners is low due to existing contracts and relationships in place. Reliance is in talks with many different banks, including some banks in the public sector. Currently, the Insurance Regulatory and Development Authority has regulations whereby every bank can only represent one partner for selling insurance products. To negate this reality, Reliance may be offering a small equity stake of up to five percent for banks who choose to partner with them. This incentive represents a large investment as Reliance Life has over Rs. 18,700 crore ($3.36 billion USD) assets under management and the company itself has a valuation of Rs. 11,500 crore ($2.06 billion USD).
This move by Reliance represents a significant decision with regards to its long term strategy. To be offering up to 5 percent to incentivize a partnership, Reliance is willing to further dilute its current shareholder percentages through this new direction. This isn’t the first time that Reliance had given up equity for a significant partnership.
In addition to the expansion in to bancassurance, Reliance is looking to facilitate more market penetration by its business partner Nippon Life. Official since October 2011, Nippon had acquired a 26 percent stake in Reliance for Rs. 3062 crore (US$ 551 million) and this investment represents Nippon’s faith and commitment to the Indian market. Reliance Capital, the parent company of Reliance Life Insurance, wants Nippon to bring its AUM products to the Indian market. Nippon has over US$600 billion in its management but very few of those assets are in India. Reliance is aiming to bring their assets into India in order to gain a higher market share.
Over 60 percent of Reliance’s policies are sold through their strong workforce. Their distribution networks include brokers, corporate agents, and commission-based agents. With the inclusion of their bank network, it is unsure whether their commission force will suffer due to the introduction of the new channel. Since it represents such a large percentage of business and commitment from the company, Reliance will need to be careful in how it deploys its bancassurance in a way that it doesn’t cannibalize or encroach on the commissioned agent’s territory.
While American farmers are struggling to deal with widespread losses due to the sustained period of drought this summer, a second menace is thriving in the unusually dry climate. The USA is now facing its worst year of the annual West Nile Virus outbreak since the virus was first identified in the USA in 1999.
To date, there have been 26 deaths and 693 confirmed cases of the virus in 32 states, according to the U.S. Centers for Disease Control and Prevention.
The West Nile Virus is transmitted to people by infected mosquitoence no symptoms, while roughly 1 in 5 people will develop symptoms such as fever, headachs. The virus can infect people of all ages, however most people who become infected will experiee, body aches, joint pains, vomiting, diarrhea, muscle tremors, dizziness, or skin rashes. Fewer than 1 percent will develop more serious illnesses, such as West Nile encephalitis or meningitis.
Children generally have very mild illnesses associated with the West Nile Virus, but adults, especially those over 50 or those suffering from conditions that suppress the immune system, diabetes, or hypertension face the highest risk of developing a serious illness due to WNV infection.
There are no specific drugs used for treating WNV infection; medical care is mostly supportive while the person’s own immune system fights the disease. Most people who get the milder form of disease called “West Nile Fever” recover fully within a couple of weeks. However, those who develop the severe neurological disease associated with WNV often face weeks of rehabilitation and may never return to their normal level of activity.
Health officials say this summer’s dry weather has made people less concerned about mosquitoes, normally associated with wetter weather, and become less conscientious in applying the usual anti mosquito measures. Unfortunately, the type of mosquito that carries the virus does well in dry weather with occasional rain, and so the current drought has proved to be a very favourable breeding environment.
Mayor Mike Rawlings declared a state of emergency in Dallas and announced the city’s first aerial spraying of insecticide since 1966. More than 200 cases of the virus have been reported in Dallas County and 10 people have died in the state this season. Mayor Rawlings said that Dallas County accounts for 25 percent of all reported West Nile virus cases in the United States. Public health officials decided that increased measures, such as aerial spraying, are necessary because of increased findings of West Nile Virus in mosquitoes captured in traps.
The West Nile Virus is primarily an avian disease often resulting in the death of infected birds. In the Western Hemisphere, the American Crow and the American Robin are the most common carriers. The disease is spread by mosquitoes and can also infect some mammals including humans, horses and pets. Human cases of the WNV were first documented in Uganda in 1937, but it is now widespread in Africa, India, southern Europe, Australia and south west Asia. It was first detected in the USA in 1999, in New York, but infections have now been reported all over the United States, Canada, Mexico, the Caribbean and Central America.
In the USA, most infections occur between June and September with a peak in August, according to the CDC. “It is not clear why we are seeing more activity than in recent years,” CDC medical epidemiologist Marc Fischer announced on Friday. “Regardless of the reasons for the increase, people should be aware of the West Nile Virus activity in their area and take action to protect themselves and their family.”
The single most effective anti-mosquito measure is eliminating the standing water where larvae grow into adults. The proper disposal of used tires, cleaning out rain gutters, bird baths, empty flower pots and unused swimming pools greatly reduces the mosquito population in an area.
Individuals are advised to take proper precautions against mosquito bites. These include wearing light coloured, long sleeve clothing, using insect repellent containing DEET and staying indoors between dusk and dawn when mosquitoes are most active.
As the European financial situation becomes more uncertain with each day passing, Vhi Healthcare, Ireland’s largest health insurance company must raise €300 million (US $368.55 million) which could affect the premiums of over 2.2 million Vhi policyholders.
Vhi, short for Voluntary Health Insurance, is generally referred to as “The VHI” by residents of Ireland and is traded under the brand Vhi Healthcare. With headquarters in Dublin, Ireland, VHI is a state-controlled corporation which has been accused of being given preferential treatment above its primary competitors. It is regulated by the Health Insurance Authority which is the private health insurance regulatory board, monitoring activities in Ireland.
The issue at hand is that Vhi Heathcare is guaranteed by the State, meaning that it is not required to keep specific reserve amounts on hand in the event there is a spike in the number of claims. In addition to the guarantee, it cannot be declared bankrupt.
Competition experts and analysts say that preferential treatment towards Vhi needs to end in order to restore balance to the private healthcare market.
The preferred status for Vhi has allowed to it borrow funds at advantageous rates, in addition to the lack of need to keep a reserve balance. Lenders are happy to oblige to Vhi’s requests as the loans were essentially risk free due to the fact that the government would pick up the bill if Vhi defaults. However, the likelihood of Vhi defaulting and going bankrupt is almost impossible as it is a statutory body.
The European Commission has called for an end to the preferred status of the company, and has proposed that the government end the guarantee by the end of 2013. Vhi Healthcare was receptive to the proposal; however it made note that a risk-equalization plan will need to be implemented.
Initially, there had been plans to privatize Vhi Healthcare back in 2010. However, the new coalition government decided to retain Vhi when it entered office, making it a pillar of the universal health insurance system which is scheduled to be rolled out in 2016. Under this plan, all citizens will be required to purchase health insurance from an insurance provider, not exclusively Vhi, and the government would provide a subsidy of some sort for those who meet the low income criteria.
Currently, Vhi is required to raise €300 million (US $368.55 million) in capitalization and one of their options to do so include raising the premiums of its 2.2 million clients. This €300 million (US $368.55 million) is to increase the solvency ratio of Vhi, ensuring the insurance company has enough money on hand to cover any unexpected spike in claims. Should Vhi decide this is the best way for it to raise capital, clients of Vhi can expect to see their premiums to be raised by up to €135 (US $165.85) this year. Moving forward, Vhi will have to retain 40 cents to the euro in income to safeguard itself as per regulations.
Meanwhile, competitors welcomed and encouraged the move to abolish the guarantees and preferential treatment for Vhi. Specifically, Aviva stated that the clients of Vhi should not be negatively affected by the increase in premiums due to an external cause from the government. Aviva called on the government to provide more details as to how it plans to handle the solvency requirements of Aviva.
In related news, the government of Ireland has recently hired a new CEO for Vhi. The coalition government, however, breached the salary limitations which are imposed on maximum salary limits for new CEO’s of Vhi. Vhi’s new chief is John O’Dwyer, and his annual income will be €238,727 (US $293,276.12); this represents almost €50,000 (US $61,425) more than the limit.
Despite the limits in place, Minister Brendan Howlin stated the need for exceptions in specific cases, especially in the case of Vhi due to some of the substantial changes that are about to take place.
This comes at a time full of volatility for the European financial industry. With Euro prices falling and shrinking, or failing, economies, Vhi’s deregulation will need to be handled with care. If safeguards are not in place, many individuals who hold policies may no longer be able to afford their current plans. If they choose to move away from their current plans, they may not receive adequate coverage as competitors may not want to offer the same plan for the same price, which could cause greater uncertainty into the lead up to the introduction of the universal health insurance system.
Insurance Companies Mentioned:
In recent announcements, AXA, the Industrial and Commercial Bank of China Co Ltd (ICBC) and Minmetals declared the launch of their foray into the China insurance market for life insurance. Officially branded as ICBC-AXA Life, the company recently received official approval from China’s State Council and all other relevant governing bodies to do business in the country. This follows the acquisition of 60 percent of the equity stake in AXA-Minmetals by ICBC.
ICBC-AXA Life represents AXA’s long term commitment to the Chinese market, according to Henri de Castries, Chairman and CEO of AXA. By partnering with ICBC, AXA stands to gain significantly in terms of expertise and experience, bringing diversified and comprehensive insurance coverage for the Chinese market.
Prior to the partnership, AXA and Minmetals formed the venture known as AXA-Minmetals and was established in 1999. In October of 2010, ICBC acquired a 60 percent equity stake in AXA-Minmetals, resulting in an equity split of 60 percent ICBC, 27.5 percent AXA, and 12.5 percent Minmetals. The equity stake was purchased for 1.2 billion yuan by ICBC and prior to the acquisition, the equity split was 51 percent-50 percent AXA-Minmetals.
With headquarters in Shanghai and operations in over 20 major cities and provinces, ICBC-AXA intends to service a vast majority of China. Beijing, Shanghai, and Guangzhou will serve as major service hubs. Some of the products which ICBC-AXA will offer include education, family protection, wealth management, and retirement insurance advice and services.
ICBC-AXA will be leveraging ICBC’s 282 million clients and expertise in the Chinese financial industry. The strategic move on both parties should prove to set a new precedent as China’s power player teams up with Europe’s largest insurer. Ambitious plans are in place as ICBC-AXA strives to be the leading provider for insurance in China.
In recent statements, Mr. Castries was quoted as saying that Europe looks like Chernobyl before the explosion, indicating forecasts of tumultuous times ahead. The development of ICBC-AXA represents a diversified move for AXA and a new area of opportunity for ICBC. As financial woes continue to haunt the financial industry, the insurance industry represents a stable move despite the large gains that can be achieved through it.
The Chinese market is difficult to penetrate due to strict Chinese government oversight and regulation. As such, China represents a significant opportunity due to its sheer size of population. Previously, AXA utilized Minmetals’ network and Chinese state-controlled status to break into the Chinese market. However, as Minmetals is a mineral and metal company, AXA stands to gain much more through the help of ICBC’s broad reach within the relevant sector.
The Chinese market is expected to grow at an average rate of 12 percent per year between 2010 and 2020, according to analysts. Chinese national companies maintained a 95 percent market share on life insurance and 99 percent in damage products, while more than 50 foreign players were struggling to win more of the market for general lines. AXA aims to bypass regulatory brakes which have restricted the company’s ability to compete in the past. ICBC has agreed to distribute AXA’s product in over 16,000 branches. AXA remains dedicated to the Chinese market and is actively trying to withdraw from activities within Australia and New Zealand.
Appointed as the Chairman of the Board of ICBC-AXA Life is Mr. Sun Chiping and President Mr. Jamie McCarry will oversee the day-to-day business operations of the newly formed joint venture.
While AXA is attempting to significantly increase market share in China, ICBC is actively trying to increase their market share in Europe. It is understood that ICBC will leverage AXA’s connections and expertise within the European market to help ICBC expand.
ICBC is the world’s largest bank by market capitalization and is looking to diversify its holdings outside of banking. ICBC is one of China’s four state-owned commercial banks and was initially founded as a limited company in 1984. It entered two stock markets simultaneously, Hong Kong and Shanghai, in the world’s biggest initial public offering at the time, featuring $21.9 billion US in public funding.
As Europe’s second largest insurer, AXA Group is a worldwide leader in insurance and asset management. With over 101 million clients in 57 different countries, AXA boasts revenues of over 86 billion euro and earnings of over 3.9 billion.
Minmetals, officially China Minmetals Corp, is China’s largest metal trader. Minmetals specializes in the production and trading of metals and minerals, namely copper, aluminum, tungsten, tin, antimony, lead, zinc, and nickel. As a state-owned enterprise, Minmetals is under the jurisdiction and laws of China.
Insurance Companies Mentioned:
AXA the global insurance group in Paris
A vote planned for October by EU lawmakers will most probably be postponed following the failure to reach an agreement on a final draft of the strict new set of rules proposed for regulating the insurance industry, known as Solvency II.
EU officials and lawmakers failed to come to an agreement before the beginning of the European Parliament’s annual summer break, and will now have to try and squeeze even more into the already busy post-break timetable in September.
The likelihood of making the original deadline will be “very challenging, to say the least,” according to Olav Jones, the Deputy Director General of Insurance Europe.
Solvency II deals mainly with new rules governing the level of capital insurers must have to cover their risks, largely increasing the current requirements. As negotiations continue to drag on, insurers are facing uncertainty over their future capital requirements, and prolonging this uncertainty is having a negative effect on the confidence of potential investors. The industry is frustrated by the delays, and are doing their utmost to help the talks reach a conclusion as soon as possible. However, no one wants an unacceptable compromise passed into law. “Nobody amongst the parties negotiating wants a delay but at the same time we do not want to deliver something that is wrong,” stated European Parliament Economic and Monetary Affairs Committee Chair, Sharon Bowles.
Originally planned to come into force later this year, the current start date of January 2014 for Solvency II will most probably be pushed back again, unless an agreement can be reached in order for it to be voted on in October. This will then give national governments until June 2013 to adopt the legislation, and giving insurers 6 month to comply, before the deadline of January 2014.
Differences between EU member states regarding the methodology for calculating the required capital buffer for long-term life insurance contracts have repeatedly served to frustrate any attempts at reaching a deal. Thursday’s round of talks were no different, after Germany insisted on wider testing of some proposed calculation methods.
A proposed solution to the delays, which is gaining more support all the time, is to implement the new regulations in phases, with the parts that are agreed upon being implemented while elements that require further discussion and modification would be implemented when finalized.
Solvency II regulations have been under consideration for 10 years, and will lead towards higher capital requirements and other more stringent regulatory requirements for insurers. Most of the bigger insurers are thought to be well prepared for this, but there have been fears expressed about the possible negative effect on overseas competitiveness.
Meanwhile, Oracle has announced the availability of Oracle Insurance Solvency II Analytics, software aimed at helping insurers quickly understand how best to make their businesses compliant with Solvency II requirements, as well as to more accurately assess and manage risk using a single, unified platform. The software comes with a host of out-of-the-box reports designed specifically to aid compliance with the proposed new legislation. While the entirety of Solvency II has not been set out, many companies, whether in the insurance industry or those providing services to insurers, have long been trying to be prepared for the new requirements. However, with the current atmosphere of uncertainty they need to be prepared to respond to new developments as well.
Price Reduction With Insurance Competition
As a direct result of competition and strategic partnerships, prices for insurance in multiple areas are decreasing throughout the world. Originating out of public outcry for lower prices, or companies aiming to provide better services to their clients, insurance seekers are experiencing lower prices and are contributing to increased profits for companies.
In New Zealand, two insurance companies have engaged into a partnership which will lower insurance costs in the building trade industries. The companies under discussion are HazardCo, a provider of health and safety insurance in the construction industry, and Plus4 Insurance Solutions (Plus4), an insurance brokerage and financial advisory group, who are working together to lower the costs of accidental insurance and to provide protection of income for self-employed workers in the building trade.
HazardCo has been in operation since 2006 and operates out of New Zealand and it boasts over 7,500 construction business clients. Plus4 has been established since 2008 and now operates out from 10 different locations and has over 25 advisors. Both have expanded significantly over the recent years, bringing innovation to the industry, such as HazardCo’s online training system, Learner Management System.
Utilizing the expertise of both of these companies, building trade workers are able to reduce the average cost of their premiums. Premiums in this industry are required under regulation and can be a significant cost to workers.
Due to Plus4′s knowledge in financial advisory, this agreement allows the insured to have direct access to Plus4′s financial advisors to review compensations and insurance coverage levels. As a result, insurees have experienced substantial savings and increased coverage. Workers in the building trade are required to have insurance, protecting workers from illness or when accidents strike.
Some workers are eligible for a 10% discount on their ACC Work Place Cover Levy with HazardCo, which represents significant costs savings. Under the partnership with Plus4, HazardCo’s clients are able to restructure their insurance coverage, tailoring it to their specific needs which suit their current situation and requirements.
HazardCo’s Mark Potter states that “The partnership with Plus4 has meant that many of our clients have made substantial savings on the cost of their ACC and, as a result, now have in place more comprehensive and appropriate insurance cover.”
In a separate case of lower insurance costs, competition is the main driver of lowering car insurance for residents of the United Kingdom, with price reductions in almost £100 (US$100) on average.
Utilizing the Confused.com and Towers Watson car insurance index, it is shown that prices are decreasing as a result of competition within the industry. A reduction of 7.1% is reflected within the index between Q2 of 2011 and Q2 of 2012.
The car insurance index receives a substantial amount of quotes, allowing for an accurate depiction of the market’s current condition. The index is comprised of over four million quotes, making it one of the most comprehensive indicies in the world for car insurance.
Due to historical statistics, car insurance companies have been offering asymmetries in insurance premiums. However, the European Union have decided that this type of price discrimination is not desirable and have decided to ban this practice. This order is to be enacted later this year and will see that women pay more for their premiums and men will see their premiums reduced.
Despite the EU gender directive soon to be enacted, United Kingdom is still seeing a disparity between price quotes, with men paying on average £110 (US$171) more than women.
Part of the outcry from the gender discriminatory prices had contributed to lower prices. However, sites like Confused.com have also contributed significantly to the lowering of insurance premiums. These sites amalgamate prices from various insurers, allowing competition to force prices lower. Customers have access to various providers, causing no one provider to have a domineering selling power.
In addition to lower prices, online insurance comparison sites have witnessed increase in profits due to higher competition. With higher prices, consumers look elsewhere to find alternatives that suit their budgetary needs, and they find their solutions online. As a result, online comparison sites such as GoCompare have seen double digit profit increases because of their wide array of offerings from various companies. This level of competition has allowed both companies and consumers to benefit, as well as allowed the insurers to service consumers they would have lost without pricing changes.
Both GoCompare and Confused.com offer quotes and showcase insurance policies to consumers from various insurance providers. Like many comparison sites, GoCompare and Confused.com are able to offer lower, on average, insurance premiums because of direct competition that is clearly visible to the seeker.
Consumers will experience progressively lower prices as competition continues to emphasize the need for companies lower their prices as a response.
Insurance Companies Mentioned
HazardCo provides health and safety resources, in addition to systems and support to the New Zealand residential construction trade. HazardCo has expanded significantly since it’s creation in 2006, with over 7,500 construction business clients. Many of HazardCo’s clients are top performing housing companies. HazardCo also provides online training for heath, safety and compliance related subjects.
Plus4 Insurance Solutions operates on a national level in New Zealand as an insurance brokerage and a financial advisory group. Since 2008, Plus4 have grown to 10 locations throughout New Zealand and has over 25 professionals servicing top clients. Plus4 offers an unbiased consultation to small and medium sized enterprises, as well as individual and small business clients.
German insurance company Talanx has recently scaled Poland’s insurer rankings to sit comfortably as the second largest German insurance company.
Within the past month, Talanx has made several core acquisitions that helped it expand in size and quality. After cooperating with Japanese insurer Meiji Yasuda to acquire Wroclaw-based Europa Group, Talanx went on to complete the acquisition of Belgium-based KBC Bank subsidiary, TUiR Warta, no more than a few weeks later, securing its position among Poland’s top insurers.
Talanx has a history of providing comprehensive insurance services in Poland with its two subsidiaries, HDI-Gerling Zycie and HDI-Asekuracja.
The Europa Group experienced a solid 2011 business year, with a a net profit of EURO42 million (USD51.5 million) from premiums totaling EURO173 million (USD212.2 million).
Also, the acquisition of Warta contributed an additional Zloty649 million (USD194.4 milion) of non-life premiums, and Zloty599 million (USD175.14 million) of life premiums to Talanx during quarter one 2012, amounting to an overall premium increase of 8% at EURO7.6 billion (USD9.32 billion). Meiji-Yasuda Life is set to by 30 percent of Warta’s shares from Talanx.
Compared to last year, Talanx almost tripled its first quarter results, earning a net profit of EURO211 million (USD268.3 million), as opposed to only EURO77 million (USD85.87 million) for the first quarter of 2011.
Currently, Talanx is the 11th largest insurance group in Europe. It is already moving several of its insurance lines and retail to the international market. Therefore, judging from the successful year Talanx has had so far, it should come as no surprise that the insurance group is close to having its initial public offering (IPO).
Originally, its IPO was unofficially due for June or at the latest, early July. Though this date has been postponed because of the European debt crisis and stock market developments, everything is in place for the big change.
Talanx has already confirmed Citigroup, JP Morgan Chase, and Deutsche Bank as bookrunners, switched to quarterly reporting, and formed an investor relations department.
The German insurance giant apparently worries about receving a low valuation at its IPO, as the majority of German insurance companies are currently being traded at 20 percent less than book value.
Although Talanx is fully owned by mutual HDI-V.a.G., which is intent on maintaining a majority of the firm, plans to go public will not change as the extra financing is crucial to the Talanx’s international expansion. During the past year, the group already made 5 global acquisitions.
Talanx plans to offer no more than 25 percent of its capital to the stock exchange at first, valuing roughly EURO1.4 billion. Meiji-Yasuda, which has partnered with Talanx before, already bought EURO300 million in convertible bonds for the German insurer.
In addition to its own IPO, one of Talanx’s subsidiaries, Hannover Re, had its IPO in 1994, which was the largest insurance IPO in Germany to date. At the moment,Talanx holds 50.2 percent of Hannover Re, and is also restructuring its entire reinsurance service.
By solely using HDI Reinsurance (Ireland) as a major internal reinsurer, Talanx is attempting to bring up its retention rates, a part of its new strategy to improve profitability. However, Hannover Re, Talanx’s largest reinsurer, will not supply retrocession to HDI Reinsurance (Ireland).
Overall, significantly improved results so far this year are partly because of the good claims development, which suffered greatly last year. Additionally, Talanx managed to increase its investment income to EURO961 million (USD1.18 billion), a 15 percent jump. This was largely due to sales of assets.
Herbert K. Haas, CEO of Talanx, said that the group was able to come out of the year 2011 in good health, and is only continuing the positive progress it began last year. Haas ended with confirmation that Talanx’s premium growth in the global market is a clear signal that their strategy is working well.
German Insurance Companies Mentioned
Meiji Yasuda Life
Established in 1881, Meiji Yasuda Life Insurance was the first life insurance company established in Japan. Headquartered in Tokyo, Meiji Yasuda Life now has over 40,000 employees in Japan, as well as 81 regional offices, 22 group marketing offices and over 1,000 agency offices. The company also has 8 subsidiaries or representative offices oveseas.
Europa Insurance Group
Based in Poland, the Europa Insurance Group is a leading provider of bancassurance and all finance related insurance products. For nearly 17 years, Europa has been actively influencing the Polish financial market, and creating innovative products to adapt to the needs of each customer.
Talanx Group and all of its subsidiaries are managed by the financial and management holding company Talanx AG, based in Hannover, Germany. Talanx Group is a multi-brand provider in many prominent lines of insurance and in the financial services industry. In the year 2011, Talanx Group earned over EUR23 billion in premium.
With history as far back as 1920, WARTA guarantees stability and experience in its services. WARTA Group provides motor, property, personal, and life insurance, and has been the recipient of many prestigious awards in theinsurance sector.
HDI-Gerling is one of the largest German property & casualty insurers, serving private customers to commercial and industrial clients. HDI-Gerling offers tailor-made insurance and retirement plans.
HDI-Asekuracja has operated in the Polish property & casualty market for over 20 years. HDI-Asekuracja TU SA, Poland is wholly owned by the management group Talanx AG based in Hannover, Germany.
Hannover Re is the third-largest reinsurer in the world, with a gross premium of EUR 12 billion. It has branches on all continents in the world, supporting roughly 2,200 staff. Hannover Re maintains very strong financial strength ratings (S&P “AA-” and A.M. Best “A”).
Moody’s Japan K.K., a Japanese based ratings agency, recently upped the outlook of Japan’s property & casualty insurance industry from negative to stable.
The established ratings company predicts that ongoing restructurings within the industry will lead to increased earnings within the next year or two.
Last year, according to Swiss Re sigma data, Japanese non-life insurers earned a 2.8 percent growth in premiums at USD131 billion, while life insurers earned a 6.5 percent increase in premiums at USD525 billion.
See the full article here .
With the International Insurance Society’s (IIS) 48th annual seminar now at a close, the insurance sector is set to take on new direction with several ambitious plans. The IIS seminar allows senior executives from insurance companies worldwide to share original research by leading academics, participate in idea exchange and debate on critical issues, and discuss current and future prospects for the global insurance industry. This year, 500 delegates from 50 nations gathered in Rio de Janeiro from June 17-20 to implement sustainable development goals, share main concerns about the insurance industry, and determine the future role of insurance companies in emerging markets, among others.
The topic of “sustainable insurance” has been hot in recent months, as environmental issues are increasingly prevalent worldwide. Sustainable development acknowledges that business create social costs (such as pollution), not covered in product costs, that may negatively influence future business opportunities. Sustainable insurance includes this concept, but has potential influence extending far past the insurance business. Insurance provides businesses with a secure foundation for economic activity by taking into account a variety of risk factors.
The 48th IIS seminar reached a historic landmark with the launching of the Principles for Sustainable Insurance (PSI) after 6 years of planning by insurance companies and the United Nations Environment Programme (UNEP). 27 insurance companies, representing 10 percent of worldwide insurance premiums, took the initiative as initial signatories on the PSI, along with 7 supporting institutions. The timing of the PSI’s inception within days of the Rio20+ Earth Summit is no coincidence either.
PSI contains 4 primary principles; First, to embed in decision making environmental, social, and governance issues related to the insurance business; Second, to work with clients and partners to raise awareness of these issues, as well as risk management, and form solutions; Third, to work with governments and regulators to encourage public action on these issues; And fourth, to demonstrate responsibility and honesty in disclosing regular reports of their progress in implementing the four principles.
A second topic discussed at the 48th IIS seminar was current pressing issues within the industry. Based on a poll conducted during the conference, competitive prices and adequate profitability were the main concerns of one third of IIS members present in Rio, and risk management second with 19 percent of the votes.
In terms of threats, regulatory changes were seen as the most critical with 38 percent of the votes indicating that this was a worry, and immeasurable risks came in second with 20 percent of the responses. Within regulatory concerns, anticipating new rules troubled 28 percent of attendees the most, while inconsistent standards across jurisdictions gained over 25 percent of the votes.
Regarding human capital issues, 34 percent of the delegates voted retaining talent as the number one problem, and 24 percent encountered more trouble finding new talent.
Non-life insurance companies struggled most with risk management (24 percent), followed by inadequate premium rates (22 percent). On the other hand, life insurance companies found locating investment opportunities to meet benefit requirements the most pressing issue (28 percent).
Apart from present troubles, Brazil based Patrick de Larragoiti Lucas, among others, shared their visions of future industry growth and direction.
Lucas believes that the recent influx of middle class Brazilians will be the driving force of the country’s market in the near future. Within the past eight years, over 30 million Brazilians entered the country’s middle class. Insurance protection of their family members and assets is a luxury readily available to all in such a position on the social ladder. Lucas plans to develop wealth protection products so that these middle class citizens have incomes when they retire.
Additionally, Brazil’s motor market is also enjoying upward trends. Although over 90 percent of brand new cars are insured for their first year of use, many customers don’t renew, leaving roughly one third of Brazil’s car owners unprotected from such risk.
Brazil’s own secretary of state for economic activity, Julio Bueno, also voiced his opinions, pertaining to Rio de Janeiro specifically.
“Rio is a wonderful market for the insurance and reinsurance industry,” he said.
Bueno’s evident enthusiasm for Rio has, in fact, more than adequate substantiation.
The next few years mark a period of unprecedented growth for Rio, as the country will be hosting the 2014 FIFA World Cup, and the 2016 Olympics, on top of the annual Earth Summit, known as the Rio20+, this year.
Also, Rio de Janeiro is the third-smallest state out of the 27 states in Brazil, yet, maintains the second largest GDP. The metropolitan area alone has over 10 million inhabitants, and a well established industrial economy. Rio has 80 percent of Brazil’s oil production, is the second-largest steel producer, and has a promising petrochemicals industry.
Of course, with emerging markets such as Brazil, the role and effective implementation of microinsurance is of ever rising importance. Populations of less developed countries are especially prone to health risks and natural disasters, however, only a small percentage of these populations have access to insurance.
Brian Duperreault, CEO Marsh & McLennan Cos. Inc. said at the IIS seminar that effective penetration of microinsurance into developing countries would require insurers to take on a collaborative approach. By combining resources and sharing information, the industry would be able to tap into a market with the potential to produce over 1 trillion in annual premiums, and provide protection to billions.
Duperrault strongly suggested a comprehensive, adaptive facility of wide-spread application to each developing nation’s individual government regulations and culture. The first market to have access, in his opinion, should be Brazil, as the country has the ability to generate over 100 million microinsurance policies and generate 1.7 to 4 billion in annual premiums.
Overall, the 48th annual IIS seminar showed much promise for the future of the industry. Stances from hundreds of delegates proved how willing and eager insurance companies are attempting to take new risks, and adapt to a changing world. Out of all the emerging markets, it will be interesting to track the first steps and successes of insurance companies in Brazil. If anything, the state of the insurance market will only improve as companies cooperate with each other and regulators to find new, innovative methods to supply and apply their product worldwide.
The Asian insurance markets continue to witness positive changes in the insurance industry in the form of Swiss giants Ace finalizing agreements for an Indonesian acquisition and the Aetna group expanding its products within the Singaporean market.
Zurich based Ace Group was established in 1985 when it was created by its policyholders to provide excess liability and directors and officers coverage. It has constantly evolved and expanded since then and now offers global public insurance to all corners of the globe.Read the rest of the Indonesia and Singapore: hot spots for latest health insurance developments article.
As Europe remains to be a place of economic uncertainty, Asia continues to provide Health insurers opportunities for investment and expansion.
Asia is home to the largest number of high net worth individuals and with 3.3 million people now owning liquid assets worth at least USD $1 million, the continent has overtaken Europe and is second only to North America in terms of wealth.
Several of the less developed countries in Asia in particular though, are showing significant amounts of promise and could be the escape route established international companies need to avoid the financial quagmire in much of Europe and the USA.
A survey carried out by economic consulting firm, Nathan India, has indicated that one in 10 people living in India could end up buying health insurance products by 2015, inevitably increasing the existing 2 percent of the entire population to 10 percent.
As greater numbers of the country’s population are becoming increasingly aware about health insurance and the benefits it can bring, it is predicted that the industry will grow from USD $1.6 billion to $7.6 billion by 2015; the Indian health insurance industry witnessed a growth of 36.9 percent in 2011.
Those considered most likely to purchase health insurance products are those who are married, have a graduate degree and have a steady income. As India continues to bloom in business, these sectors of the population will surely continue to grow alongside the nation’s GDP.
The Indian health insurance industry has already been experiencing a steady growth over the past 6 years and so far, growth has mainly been concentrated within the public sector of the market where companies such as New India, United India Insurance, National Insurance and Oriental Insurance have all played significant roles.
Improvements in Information Technology have played their part too, and more companies have developed e-platforms which have enabled individuals to understand more about insurance coverage and compare different plans and policies.
Some international insurance giants have honed in on the vast potential in the Indian market and companies such as Star Health, Apollo Munich and Max Bupa already have a strong foothold in the private sector and are witnessing a growth in the number of Indian hospitals registering with them.
In the meantime however, the Joint venture of ICICI Lombard between India’s ICICI Bank Limited and Canadian Fairfax Financial Holdings Limited still hold the title of largest providers of general insurance in the private sector.
Sri Lanka has experienced similar growth patterns in the insurance industry recently and also shows great promise for growth.
According to the Insurance Board of Sri Lanka (IBSL), the gross written premium of the country’s insurance sector rose 18.5 percent last year to USD $464.4 million dollars with general and life insurance sectors recording the most substantial growth.
The IBSL regulates 21 insurance companies which are separated into the combined general and life insurance, and life insurance. The total assets of these companies was USD 2.3 billion last year and this is a marked improvement from the USD $1.7 billion they witnessed in 2010.
May 2009 marked the end of the 26-year armed conflict in Sri Lanka, and since then the nation has been on the right path to becoming a middle income country. To ensure it continues on in this direction, Sri Lanka is focusing on long-term solutions and is looking towards international markets more frequently.
Several international insurance names have sought out such investment opportunities in Sri Lanka and even though British Aviva has had to put its share in Sri Lankan based Eagle Insurance on the auction block, other insurance giants such as Manulife financial and Prudential are likely to be among potential bidders and could continue to inject the industry with the financial boost it requires.
The Asian market in general, whilst offering great promise, is a tricky arena to enter. One reason is as previously mentioned; very wealthy individuals live alongside those who are not so fortunate. As a result, it is a challenge for insurance companies to reach all audiences and experience sufficient growth which could explain why some international companies are less inclined to experiment with Asia and concentrate on maintaining their existing performance levels instead.
When trying to target those in the higher end of the personal wealth scale though, many local insurers in Asia struggle as they do not appear to have the underwriting experience and expertise required when dealing with the higher level claims that are expected by individuals with a large net worth.
This is where acquisitions and mergers with global companies are much appreciated and where great opportunities lie for foreign investors.
It has taken a few years to really get going, but the market for insurance products targeted at high net worth individuals is certainly growing and some life insurers are flagging this area in particular as their focus area for significant growth.
AXA in particular hopes to develop substantially in this area after its acquisition of HSBC’s general insurance business in both Hong Kong and Singapore while AIA has already proved it has a good grip on the high end market situation and is moving in a positive direction.
Asia appears to be continuously developing at both ends of the wealth spectrum, more so than other continents it would seem and it therefore remains to offer great opportunities to both local and international insurance companies alike who are looking to experience expansion and significant growth levels.