Apr
29
Australia Insurance Powers Object to Independent Online Pricing Evaluations
Filed Under Auto Insurance | 2 Comments
Major players in the Australian insurance industry are fighting tooth and nail to halt the rise of price comparison services for customers seeking to better evaluate their coverage options in the country.
Two of Australia’s predominant insurance companies, Insurance Australia Group (IAG) and Suncorp Insurance, have sent letters to several domestic insurance comparison websites, demanding they remove information and references about their companies’ car insurance products and to terminate all links referring back to their brand’s websites. The insurers allege such action was necessary because premium comparison web services cannot provide the most accurate pricing data for their brand’s products as they don’t have the most pertinent coverage information available.
IAG and Suncorp have a combined market share of almost 70 percent of Australia’s insurance business. The two companies have been undergoing substantial legal efforts to fend off the increased competition that has resulted from the modern surge in choice in retail insurance products and assessment services. The most efficient mechanism by which to do this has been to obstruct the business models of comparison websites. The two insurers have also developed alternative brands to promote alongside those supported by challengers such as Hollard and Auto & General.
An internal report issued from global investment bank JP Morgan is being cited as evidence supporting the Australian insurers’ concerns about new price comparison modules. The report claims that millions of dollars could be lost in revenues for the country’s largest insurance groups if the mechanisms involving price control and evaluation were altered and made arguably more accessible to brokers and consumers.
The report condemns the growth of online comparison and prices aggregating services as a significant threat to established insurer’s commercial premiums. Enabling customers to focus only on rates could have a debilitating effect on the overall product catalogue, some insurers argue.
JP Morgan’s research calculated that QBE Insurance, Australia’s largest international insurer, could lose up to $414 million in commercial premiums, and that Suncorp and IAG might forgo $378 million and $244 million in revenues respectively. A further $800 million could be lost in home and vehicle premiums, according to the report.
JP Morgan concluded that $1.8 billion of commercial and personal insurance premiums would be “at risk” from the alleged “contestable platforms” that allow both brokers and customers to compare and analyze prices of products.
According to JP Morgan, Australian insurers should use their current position as leverage to better control the concentrated structure of the market, refusing to license out their services arbitrarily to prevent private comparison websites from gaining a presence amongst consumers. Insurance companies would therefore stop undercutting each other and become involved with price comparison systems run through established brokers rather than anomalous internet services.
Operators of online independent insurance evaluation services claim these Australian insurance giants have long tried to prevent their customer-friendly premium rate comparison websites from gaining a foothold in the market.
The recent demand for a removal of certain product-lines is an indication that certain insurers remain uncomfortable with online firms estimating their premiums. If these companies do not make their quotes more available on the internet however, ultimately many potential customers will not factor their products into a purchasing decision, online comparison services claim. There is already a problem of underinsurance in Australia, and this development, blocking adequate premium price discovery, would not alleviate that issue.
Within the United Kingdom, the comparison industry asserts that it has made a significant impact in reducing premium prices for insurance services across the board for customers, particularly in auto coverage. By providing more readily available information about insurance costs, the UK industry has been forced to innovate and develop more comprehensive services for a customer base’s previously unmet needs.
Insurers feel that the growth of the price aggregator industry in the United Kingdom is responsible for limiting their margins in the country and would not want a similar development to take place in Australia. Independent internet insurance evaluation services maintain that the industry’s paranoia ignores the success and increased customer base that these online assessment services can and have already provided. The diverse access to necessary insurance information will enable both customers and brokers to provide valuable feedback on the further progress of the insurance industry in Australia.
Insurance Companies Mentioned
IAG
Insurance Australia Group (IAG) is the largest general insurer for Australia and New Zealand. The company provides personal and corporate insurance policies under several different brands, including NRMA Insurance, CGU, SGIC, SGIO and Swann Insurance.
QBE
QBE Insurance Group Limited is one of the top 25 insurers and reinsurers worldwide. Headquartered in Sydney, Australia, QBE operates out of 49 countries around the globe, with a presence in every key insurance market. The Americas Division, headquartered in New York, conducts business through various property and casualty insurance subsidiaries in eight countries.
Suncorp
Suncorp-Metway Ltd (SUN) is an Australian financial services corporation offering general insurance, banking, and wealth management services. The Suncorp-Metway Group was formed on 1 December 1996. Suncorp’s acquisition of Promina has made it the second largest domestic general insurer in Australia and now serves over 3.5 million general insurance customers throughout the country.
Apr
28
Insurance Groups Lobby Brazilian Government for Reinsurance Rules Change
Filed Under Uncategorized | 4 Comments
A coalition of 18 international insurance associations from Europe, Asia and the Americas have drafted a letter to the Brazilian government, petitioning them to reconsider two recently enacted reinsurance regulations that could threaten the market and severely reduce the availability of insurance in Brazil, including coverage for the upcoming 2016 Olympics and 2014 FIFA World Cup being held in the country.
The letter follows joint calls made by both the Federation of European Risk Management Associations (FERMA) and International Federation of Risk Management Associations (IFRIMA) on Brazil’s CNSP (National Board of Private Insurance) to revoke Resolution 225 and 232 and the checks now placed on the Brazilian reinsurance business.
Brazil’s insurance industry has undergone significant evolution in recent years and has been experiencing healthy growth as a result of improving economic conditions and the loosening of market regulations in the country. The background of the dispute between the CNSP and private insurers springs from 2007 reforms the Brazilian government implemented to update and restructure its laws governing the insurance sector in the country, namely Complementary Law 126/07 which eliminated the previously existing state monopoly on the reinsurance trade. The goal of these reforms has been to open the local markets to increased competition and improve the availability of insurance coverage and lower the costs to Brazilian citizens.
Multinational insurance associations were pleased with these initial developments, as IFIRMA notes in a recent statement: “With the opening of the national market to other Brazilian and foreign reinsurance players, within less than three years, insurers could offer very good products to meet the needs of society and companies of all sizes. The result of that appropriate and necessary opening was the reshaping of the insurance sector, with companies focused on various fields of activity to offer products of high quality, substance and reliance to all buyers.”
However, two new resolutions that came into force March 31st are seen as undermining these previous reforms and attempting to rollback the liberalization of the Brazil’s reinsurance market by means of an unexpected executive order from the CNSP.
Resolution 225 and 232 will require 40 percent of all reinsurance business to be allocated to Brazilian companies, rather than the current ruling granting them the right of first refusal. The legislation would further prohibit local insurers from ceding more than 20 percent of premium, related to coverage provided, to affiliated intracompany reinsurers located abroad.
In a prior statement, FERMA President Peter den Dekker said that his association believed that these regulations would “damage the interests of our members and the development of the insurance and reinsurance market in Brazil. We, therefore, ask the Brazilian government to rescind them.”
The Brazilian authority’s attempt to restrict insurance and reinsurance capacity in the largest South American market is seen as one of the most significant issues facing the global insurance industry. In the letter, the 18 multinational organizations agree that both CNSP regulations represent a marked departure from international regulatory standards and would “dramatically restrict the ability of private insurers and reinsurers—both Brazilian and foreign—to do business in Brazil.”
The letter asserts that international insurance groups would no longer be able to utilize globally accepted prudent risk management strategies to meet the greater insurance capacity requirements that will prove critical to the development of the Brazilian economy. The new resolutions expose existing Brazilian policyholders to greater risk and would also impair local job creation and tax collection. Reducing foreign insurance capacity for handling large commercial risks in Brazil will drive up prices as it will be become more difficult and expensive for Brazilian insurers to access foreign reinsurers. “The benefits of diversification of risk into the global insurance market will be lost and, as a result, insurance likely will cost more for Brazilian consumers,” the letter said.
Many international companies have significant interests in Brazil and are calling into question the need to jeopardize global investment in Brazilian insurance and reinsurance operations at this time. Those of which operate in captive insurance are concerned that the new regulations will mean that arranging reinsurance for the captive will mean more intermediaries, added transactions, and thus greater cost. An open and competitive insurance market helps create a favorable business environment overall. The letter agrees that changing the rules is not necessary: “the local market currently does not have the capacity to bear the significant risk required for economic growth…which once again demonstrates the total incompatibility of the new Resolutions with the reality of the domestic market.”
The letter further maintains that if applied to current foreign license holders in Brazil, the regulations would constitute an abrogation of contract terms and be declared illegal under Brazilian law. Multinational insurers stress that such drastic moves could call into question Brazil’s ability to provide sufficient insurance and reinsurance for the Olympic Games and World Cup.
Insurance groups are now looking to work with the Brazilian authorities to examine and reassess the consequences of these resolutions and to better develop new regulations that will allow for the growth and sustainable development of a healthy and dynamic insurance market in Brazil.
“We hope to work with the Brazilian government to expand the insurance and reinsurance markets, maintain adequate capacity and provide people and businesses in Brazil with a wide array of innovative insurance products. Leaders in Brazil had been working for many years to remove unnecessary restrictions and open the market to more competition. A more open and competitive market will benefit consumers and businesses alike,” said Dirk Kempthorne, president and CEO of The American Council of Life Insurers (ACLI), one of the signatories to the letter, in a statement.
The Brazilian insurance market is the largest in South America, and offers the potential to become a more prominent international insurance market across all disciplines. Recent economic stability, positive credit trends, and regulatory reforms that have stabilized the currency and promoted domestic savings, have all contributed to continued growth across the insurance industry in Brazil. In spite of continued regulatory hurdles, large multinational insurers cannot ignore the market’s size and growth potential and will be looking to invest themselves further in Brazil, and other emerging economies, to offset the continued static performance of the established North American and Western European markets.
The full list of signatories includes:
American Council on Life Insurers
American Insurance Association
America’s Health Insurance Plans
Association of Bermuda Insurers and Reinsurers
Association of British Insurers
Asociacion Mexicana de Instituciones de Seguros
Brazil US Business Council—US Chamber of Commerce
European Insurance and Reinsurance Federation (CEA)
Coalition of Service Industries
Council of Insurance Agents and Brokers
Dublin International Insurance & Management Association
European Federation of Insurance Intermediaries
Federacion Interamericana de Empresas de Seguros
International Engineering Insurance Association
International Underwriting Association
General Insurance Association of Japan
Property and Casualty Insurers Association of America
Reinsurance Association of America
Organizations Mentioned
ACLI
The American Council of Life Insurers (ACLI) represents over 300 life insurance and assorted financial service companies operating in the United States. ACLI member companies deal in pensions and other retirement plans, 401k, long-term care and disability compensation insurance, as well as reinsurance.
IFRIMA
The International Federation of Risk and Insurance Management Associations (IFRIMA) is an international umbrella organization representing 23 risk management associations in over 30 countries around the world.
FERMA
Federation of European Risk Management Associations (FERMA) is comprised of 19 European Risk Management Associations, representing over 4800 individual members and a wide range of industries, including manufacturing, financial services, health organizations and government.
Apr
27
Aviva: Half of UK Staff Want to Emigrate, Quarter Fear Worse Benefits When They Do
Filed Under Aviva, United Kingdom | 2 Comments
A new study conducted by Great Britain’s second largest insurer, Aviva PLC, reveals interesting developments on the changing attitudes of British workers when considering possible emigration from the UK.
The study, facilitated by market researchers OnePoll, surveyed 1,000 British employees nationwide aged 18 to 45 from 31 March to 5 April 2011, and found that over half (54%) of respondents would now contemplate leaving the United Kingdom and moving abroad.
While short respites outside of the UK have become more common, Aviva was surprised by the number of people contemplating better long-term prospects outside the country. Almost half (46%) of the respondents would consider a permanent move abroad compared to only 39 percent of those surveyed last year. One in five polled (21%) indicated however, that they would remain more cautious and only be prepared to move overseas for between one to three years.
The unconvincing forecast for the British economy has been the primary factor in the growth of these figures. Aviva’s survey discovered that 89 percent of respondents believed that the UK job market has been in perpetual decline for the last 3 years. More than half (54%) further admitted that government cuts have had a negative impact on their standard of living. Many of those surveyed claimed that the current culture of austerity and cost-cutting initiatives in Britain were now playing a key role in driving them to consider a move abroad.
More traditional reasons for emigration from Britain were also represented in the report. Almost half (45%) of respondents indicated that they were motivated to move abroad in pursuit of a better year-round climate. A further third of those polled (31%) believed that a move overseas could offer a healthier, less demanding and more varied lifestyle, with a better balance of work and family time available.
Aviva’s research showed that the same five countries first identified in the company’s 2010 study remained the principal re-location destinations of choice: Australia, Canada, Spain, New Zealand and the US. Other countries mentioned as popular destinations included: France, Germany, Italy, Switzerland and the UAE.
Addressing the UK study, Teresa Rogers, business lead for international private medical insurance at Aviva, said: “When times are tough, it might seem natural to set one’s sights on moving abroad. But our survey shows that there are certainly pros and cons to moving and people need to plan carefully if they are considering making their dream a reality.”
Indeed, the research highlighted that a quarter (25%) of British respondents worried that they might have worse benefits if they moved out of the country. More than a third (37%) acknowledged that they may have fewer state-funded privileges in their new foreign location.
Mrs. Rogers further highlighted that uncertainty regarding quality of medical service in a new country remained a chief going concern for expatriates. “Health is clearly a primary concern for people and whether you’re thinking of moving abroad for a short time or on a more permanent basis you need to take care to ensure you and your family are always properly protected,” she added.
Healthcare has been an increasing concern for Britons when considering a move abroad. Almost half (46%) of those polled believe the UK has superior health benefits to other countries worldwide. Over a third of respondents claimed the National Health Service (NHS) would be one of the British institutions they would miss the most if they left. This is an increase on last year’s results which indicated only a quarter (25%) felt the same way about the NHS.
Speaking for Aviva, Mrs. Rogers understood British concerns with regard to foreign healthcare services: “Healthcare provision varies greatly around the world and even routine medical care can prove costly in countries that don’t offer a similar service to the NHS.”
Anxiety about medical services overseas, prompted six in ten (59%) responders to declare that they would factor heath insurance into their travel planning. In contrast, 38 percent of those polled, claimed they would not arrange any sort of health insurance prior to moving.
Mrs. Rogers summarized Aviva’s assessment of these figures: “Although it’s very encouraging that over half of the people we spoke to would consider taking out international health insurance, over a third (39%) would sort their health insurance out only once they’ve arrived,” she said, adding, “this could leave them in a difficult position should the worst happen.”
To better meet the needs of their expanding base of globally mobile clients, Aviva has been upgrading its international private medical insurance products. These upgrades range from structural adjustments in the application and claims handling processes to minor changes in global group coverage policies.
Aviva has also been very proactive in expanding its operations to attract more potential clients worldwide. The company has established a presence in many of the increasingly lucrative Asian insurance markets through joint ventures with locally based insurance companies in order to capitalize on the rising demand for insurance products and services in the region.
In Asia, Aviva currently operates out of China, India, Malaysia, Sri Lanka, Singapore and Hong Kong, and recently agreed to acquire a 60 percentage stake in Asuransi Winterthur Life of Indonesia. Although Aviva has announced its intentions to pull out of its joint venture with First Financial in Taiwan, pending regulatory approval, the company remains otherwise committed to concentrating on both the Indian and Chinese key markets in the Asia-Pacific region and it’s well established client base in Western Europe and North America.
Insurance Company Mentioned
Aviva
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.
Apr
27
As Medical Insurance Premiums Rise in the UAE, Many Local Insurers Turn To Takaful to Remain Competitive
Filed Under Health Insurance, Insurance Company, Medical Insurance, Middle East, UAE Insurance | 1 Comment
Medical insurance annual premiums are expected to increase by around 10 to 20 percent this year to catch up with rising healthcare costs in the UAE. This annual increase is expected to continue for years to come.
Many factors have contributed to this price hike, including ones caused by insurers, healthcare personnel, impending legislation, and from individual medical insurance policyholders themselves.
One leading reason is that many hospitals and physicians often prescribe treatments that are not always necessary. A healthcare insurance official commented, “It’s fair to say the local health-care industry has not lagged in prescribing all manners of treatments…even when they are not required. They know that if the patient is covered, it’s more or less a given that the insurer would pay up. Most healthcare operators assume that health insurers are there to facilitate their operating cash flows.”
Although the cost of drugs have decreased or been held in place by authorities, local healthcare personnel may not necessarily prescribe these cheaper alternatives. One insurer expressed his opinion about how lower cost drugs do not necessarily translate to savings, “There is definitely a misuse by certain doctors—and the institutions they represent—by prescribing expensive brands even if cheaper generic drugs are available for the same treatment and with the same results.”
However, local hospitals and physicians are not the only ones to blame for rising costs. Many patients with medical insurance often abuse their policies. A significant number of insurance policyholders go to the doctor for the slightest medical concerns. Since many insurers calculate applicants’ and renewing policyholders’ annual premiums based on the community they live in and their age, as more and more people make claims in an area, the overall premium for everyone in that community will also rise. Insurers hope to check this behavior by raising insurance premiums.
Another reason for the increase in premiums, especially for insurers in Dubai, may have to do with the move to make medical insurance mandatory for all employees in Dubai. Although this proposal has been discussed for several years, it seems highly likely that it will happen this year.
Abu Dhabi is currently the only emirate that has a law that mandates health insurance coverage for all employees. Insurers stand to benefit from this legislation if the premium hikes are made before Dubai passes a similar law.
Dubai insurers, especially, need to find a method of managing their portfolios. Without the government subsidies that Abu Dhabi insurance firms enjoy, it is even more difficult for Dubai insurers to make the business profitable.
The increase also comes as a consequence of years of adopting a low-premium strategy by insurers in order to remain competitive and win business. In the past 4 years, while in- and out-patient treatment costs have increased by 30 to 40 percent, annual health insurance premiums have not reflected this trend.
Often, it is not unusual for an insurer to offer the lowest possible rates in order to secure a large group insurance contract. This strategy may have worked in the past, but now it is no longer feasible.
“Medical insurance has never been a highly profitable line in the UAE and in recent years insurers have been feeling the pinch from substantial—and ever growing—claims outgo, so when the time comes for medical policy renewals, insurers have to rationalize their expenses. The proposed increases in premium is a testament to that,” said Abdul Khader Panakkat, the Nasco Karaoglan’s senior director of claims.
Local UAE insurance firms, which already have trouble competing with more experienced and stable international insurers, suffer the most from these price increases. According to the Business Monitor International (BMI) report, local insurers cannot be competitive with multinational giants of the insurance industry outside of the UAE. Instead of trying to compete in conventional insurance, local firms are now looking towards Takaful, a concept of insurance that is compliant with Islamic law.
BMI reported, “These local firms have little economy of scale and limited access to the resources and skills required to be competitive internationally. Where there is more opportunity for growth is in the development of Islamic financial products. Takaful is a particular area where the UAE could lead the way. It will have to battle through structural problems that still exist, however, such as the general lack of popular understanding of Shariah-complaint products and the shortage of suitably qualified Shariah scholars.”
The UAE Takaful insurance sector looks very different from that of the western world. Instead of a few large multinational giants, the UAE Takaful insurance industry is made up of small, local companies that are often listed affiliates of larger firms, and founded by affluent, well-networked families, as many businesses in the region are.
According to data from the Abu Dhabi and Dubai stock exchanges, the Oman Insurance Company (OIC) is currently the largest local insurer, making up 14 percent of total premiums. The next largest is the Abu Dhabi National Insurance Company (Adnic) and the Islamic Arab Insurance Company.
The UAE insurance market is extremely competitive. There are around nine companies that provide Takaful insurance, and over 50 companies offering conventional medical insurance.
How much the premium rate hikes will be remains to be seen, although it depends at least in part on whether there will be changes in legislation. However, it seems likely that this trend will continue for the next few years.
Apr
26
Malaysia Takaful Positioned to Grow
Filed Under Uncategorized | 2 Comments
A new report issued by Bank Negara Malaysia (BNM), Malaysia’s central bank, demonstrates the continued growth in demand for takaful products and the country’s overall continued prominence in the global Islamic insurance industry.
The takaful industry in Malaysia was established in 1985 after the enactment of the Takaful Act 1984. The Malaysian government has played a prominent role in supporting the development of the takaful insurance sector by actively encouraging insurers to accelerate their expansion across the country to meet the coverage needs of both the growing urban and rural Muslim population. The Government’s support for both foreign and local takaful insurers in the market resulted from deficiencies within the Islamic insurance industry in previously developing insurance products to adequately meet the Malaysian market’s specific demands. According to BNM, Malaysia has become the largest takaful market in the world with over one quarter of total international takaful assets being held in the country, and valued at 12,445.5 million ringgit (US $4.15 billion) in 2009.
Bank Negara Malaysia’s 2010 Financial Stability Report, a supplementary study attached to the bank’s annual report, revealed that total income from family takaful policies increased nearly 20 percent on 2009’s figures, from 3,381.6 million ringgit (US $1.13 billion) up to 4,030.2 million ringgit (US $1.35 billion) for 2010. This data includes the increase in net contributions for family Takaful, which rose to 3,326.9 million ringgit (US $1.1 billion), and net investment income which similarly grew from 354.8 million ringgit ($118 million) to 451.6 million ringgit ($150 million) in 2010.
For general takaful, the underwriting profit in 2010 experienced a slight decline from 170.1 million ringgit (US $ 57 million) to 145.8 million ringgit (US $48.6 million), although the overall operating profit for takaful providers in Malaysia improved from 247.5 million ringgit ($82.6 million) to 272.4 million ringgit ($90.92 million) over the same period. Additionally, investment income for general takaful enjoyed an increase from 57.7 million ringgit ($19.3 million) to 67.9 million ringgit ($22.66 million).
According to the BNM report, both the standard insurance and takaful sectors have sustained domestic demand for savings and protection products in Malaysia. In the past 5 years, the Malaysian insurance industry has experienced a compound average growth rate of 27 percent per anum in terms of net premium contributions, with family takaful policies leading the way. Family takaful grew 28 percent annually over the last 5 years and now represents more than 80 percent of Malaysia’s total Takaful market. The improved performance of the local equity market has also supported stronger results for the year.
Growth has been driven by a strong post-2009 recovery in demand for investment-linked products as well as rising per capita GDP and increased Malay consumer capacity for common life and non-life protection insurance services. Payout of benefits and claims as a percentage of premiums in 2010 increased marginally up to 58 percent for life insurance business and 62.3 percent in general insurance. Demand for coverage products is only expected to rise as the market still remains largely untapped with only 54 percent of the Malaysian population currently holding a life insurance or family takaful policy.
The promising forecast for the domestic insurance industry has coincided with the arrival of several new takaful companies in Malaysia. The latest is ING Public Takaful, launched in April 2011 as a joint venture between the Malaysian subsidiary of ING, the Dutch financial services group, and the local banks Public Bank Bhd and Public Islamic Bank Berhad.
Speaking at the launch of ING Public Takaful Ehsan, Bank Negara Deputy Govenor Mohd Razif bin Abd Kadir remarked that this new international joint venture marked an important milestone in Malaysia’s economic evolution. “With this strategic alliance between two financial groups of such caliber, Bank Negara Malaysia looks forward to strong management stewardship, innovative product offerings, wide distribution channels, operational and service excellence as well as breakthrough business strategies that are well-matched by robust risk management capabilities,” the deputy governor said. Malaysia remains determined to put forth a great effort in providing a sufficient financial safety net and proactive investment opportunities for its growing Muslim population
Industry analysts have outlined several key indicators that could further drive the growth of the takaful industry in Malaysia. The first is to take advantage of the relative low penetration rate of certain takaful insurance services in the market, particularly medical and health takaful, which accounted for only 9 percent of new business in family takaful for 2010. The transformation of Malaysia from a middle to high income country will also present continued growth opportunities. The takaful industry will need to take advantage of their more affluent customer base by broadening their services and offering more sophisticated investment-linked and wealth management products. Designing products that can appeal to both Muslims and non-Muslims while retaining Shariah compliance in business operations could also present a challenge.
Another key factor to takaful development will be the Malaysia International Islamic Financial Centre (MIFC) initiative, which originated from the Malay government in 2006 as a way to enhance the international position of Malaysia’s Islamic finance operations. Deputy Gov. Mohd Razif explained the importance of stimulating the Islamic financial services industry: “This presents a huge window of opportunity for our Takaful operators to accelerate their regional and global orientation and move up the global value chains. It is therefore important for strategic international partners such as ING to explore all possible avenues to elevate the business potential of Takaful internationally,” he said.
Further global and regional Takaful partnerships are planned to develop and enter the market in upcoming years. The Malaysian Government has been committed to the gradual financial liberalization of its Islamic finance sector with four new takaful licenses being granted to international insurers by the central bank in 2010. Notable companies that have entered the Malaysian takaful industry under this recent legislation include: AIA AFG Takaful Berhad, a 70:30 joint venture between AIA Berhad and Alliance Bank Malaysia Berhad, the previously mentioned ING Public Takaful Ehsan, and a partnership between AMMB Holdings Berhad and Friends Provident Group plc, UK. A joint venture featuring Koperasi Angkatan Tentera Malaysia Berhad and Great Eastern Life Assurance Company Limited and has been granted a takaful license but has yet to commence operations in the country.
These entrants bring the total number of takaful providers in Malaysia up to 12. These other Malaysian takaful operators include HSBC Amanah Takaful Sdn Bhd, CIMB Aviva Takaful Berhad, Prudential BSN Takaful Berhad, Hong Leong Tokio Marine Takaful Berhad, Etiqa Takaful Berhad, Syarikat Takaful Berhad, MAA Takaful Berhad, and Takaful Ikhlas Sdn.Bhd.
The takaful insurance market has become an important market for multinational insurance companies searching for new sectors and opportunities for growth. While the outlook in more established international markets remains quite static, demand for takaful insurance products, targeted towards Muslim populations prominent in Middle-East, North Africa and South Asia, has grown significantly, particularly in Indonesia, Qatar, Saudi Arabia, the UAE and Malaysia.
Companies Mentioned
AIA AFG Takaful Bhd
AIA AFG Takaful Bhd is a joint-venture company between American International Assurance Bhd. and Alliance Bank Malaysia Berhad, a wholly owned subsidiary of Alliance Financial Group Berhad.. AIA AFG Takaful Bhd. aims to create and introduce innovative and competitive Shariah-compliant solutions respecting the needs of the Muslim community and service quality demands of all Malaysians.
ING
ING provides banking, investments, life insurance and retirement services and operates in more than 50 countries. It serves more than 85 million private, corporate and institutional customers in Europe, North and Latin America, Asia and Australia.
Bank Negara Malaysia
Bank Negara Malaysia is Malaysia’s central bank, tasked with overseeing the nation’s economic and financial systems.
Apr
21
Obama Not Keen On Medical Tourism as Solution to National Healthcare Issues
Filed Under Uncategorized | 2 Comments
US President Barack Obama has expressed an interest in curbing the amount of Americans looking to go abroad and receive medical treatment. Through the 2010 US health reform law, the President’s administration has planned to tackle spiraling healthcare costs and ensure medical services remain competitive and affordable in the United States.
Addressing questions on America’s healthcare options at Northern Virginia Community College, president Obama said, “My preference would be that you don’t have to travel to Mexico or India to get cheap healthcare.” On why US health insurance does not cover medical expenses incurred abroad, The President added: “I’d like you to be able to get [inexpensive treatment] right here in the United States of America that’s high quality.”
Obama was also adamant that prescription drug prices would need to be brought under control “One of the things that we want to do as part of our health care reform package is let’s start doing a better job of negotiating better prices for prescription drugs here in the United States, so that you don’t feel like you’re getting cheated because you’re paying 30 per cent or 20 per cent more than prescription drugs in Canada or Mexico.”
In response to another question on handling rising medical costs in the US, Obama said: “Before we went on the path of ‘you can go somewhere else to get your health care’, let’s work to see if we can reduce the costs of health care here in the United States of America. That’s going to make a big difference.”
President Obama was speaking of the growing phenomenon of citizens choosing to cross borders and shop for elective health procedures, a practice known as medical tourism. The substantial development of the global economy coupled with the falling costs of travel and communication has enabled world class healthcare practices to establish themselves all around the world. International clients seeking alternative healthcare solutions to what is available in their home countries at competitive prices now are presented with many opportunities.
Popular locations for medical travel include countries in South East Asia and Latin America, where many surgery procedures, including transplants, cost a fraction of the price they would do in North America or Western Europe and usually can offer shorter waiting times for treatment. The convenience and efficiency of pursuing international healthcare options is something to be considered for patients seeking to fully evaluate their future health procedures.
The Indian medical industry in particular has emerged as a major market for medical tourism, drawing thousands of international patients by meeting the global demand for modern, high quality, healthcare treatment available through internationally recognized private hospitals at affordable prices. Estimates have the Indian medical tourism industry generating over $2 billion in revenues by 2012.
Medical tourism clients visiting the subcontinent had previously tended to be travelling from Africa, Asia or other countries without access to certain medical procedures. Now with a relatively static economic outlook in the West, patients from countries like the US have turned to India for complex procedures such as cardiac surgery, orthopedic operations, and neurosurgery as well as dental treatment. Cardiac bypass surgery performed in the US might cost upwards of $60,000, but a patient who chooses to get the procedure in India might have to pay only $10,000 for the operation, including travel and accommodation.
Members of India’s leading private hospital chains have responded to Obama’s statements and assert that it is not just low prices that have lured international patients to India. Anupam Sibal, Medical Director at Apollo Indraprastha Hospital, New Delhi, explained: “No one travels for reasons of costs alone. It is the relatively low costs coupled with high quality care.” Delhi’s Apollo Hospital alone has treated over ten thousand foreign patients in the past two years.
According to Sangita Reddy, executive director of operations at Apollo Hospitals, American private insurance companies themselves have recommended medical treatment in India to some of their clients. “Healthcare costs have not come down in the US and Obama’s statement may not have much impact out here,” she said.
Dr. Naresh Trehan, chairman of Medanta, the Medicity, confirmed that the Indian healthcare industry had nothing to worry about. “For the president of a country to admit that healthcare is cheaper elsewhere shows the deficiency of that country. But India is not about cheap healthcare but affordable high quality healthcare. The success rate of heart surgeries in some top Indian hospitals is 99.8 per cent. Indian doctors are skilled.”
Dr. Trehan commented further that a significant proportion of American patients who had sought treatment in Indian hospitals did not have prior health insurance in the States. “We are fulfilling a need of people who are out of the health care net in the US,” he said. Data from the US Census Bureau reveal that around 50.7 million Americans, or about 16.7 percent of the country’s population, do not currently have health insurance. The new US healthcare reform law will reduce the number of uninsured but the true effects of this legislation have yet to be realized.
The United States’s healthcare system must become more cost-effective if it wishes to maintain and attract the increasing number of globally mobile patients. Healthcare in America has remained very expensive and will be a hot topic in the run up to the US midterm elections in November.
Meanwhile in the United Kingdom, efforts could be underway to promote medical tourism and drive prospective international patients towards the nation’s private health facilities. While the government is looking to deter excess foreign access to the NHS, independent medical institutions are actively looking for overseas clientele. London & Partners, a comprehensive marketing, investment and tourism agency, has been appointed to encourage visitors to engage with private industry in England’s capital city.
Many British private hospitals already attract a substantial amount of medical tourists as private patients. International clients choose London due to its convenient central location and the plurality of high quality medical treatment offered in the city. Private medical institutions such as Spire and HCA International specialize in catering to patients from all over the world with an array of services. These companies cooperate closely with global medical referrers and sponsors including country embassies, health offices and private corporate companies in handling efficient international medical care.
Companies Mentioned
Apollo Hospitals Group
Apollo Hospitals is the largest healthcare provider in Asia, third largest in the world. The company operates 53 hospitals, a total capacity of 8500 beds, across Asia. The company also offers medical consultancy and pharmacy services. Apollo Hospitals was founded in 1983 and is based in Chennai, India
Medanta – The Medicity
Medanta is one of India’s largest multi-specialty institutes located in Gurgaon, in the National Capital Region. The institute includes research centers and medical and nursing schools. Medanta has 1250 beds and 45 operation theatres catering to over 20 different specialties.
Spire Healthcare
Spire Healthcare is a private hospital network in the UK whose mission is to be the best private provider of quality healthcare. Spire Healthcare has 26 year heritage in the private healthcare sector.
The Hospital Corporation of America (HCA)
The Hospital Corporation of America (HCA) is the largest private operator of healthcare facilities in the world. HCA operates some 170 acute care, psychiatric, and rehabilitation hospitals in the worldwide.
Apr
20
As the climate of political discontent spreads across North Africa and the Middle East, insurers are reviewing their coverage capabilities against such situations. According to a new report issued by global insurance broker Willis Group, companies operating in volatile parts of the world may soon be unable to provide sufficient insurance coverage for their staff and assets. These firms may also find that their existing policies do not necessarily provide cover against the turmoil being felt in these regions.
In Willis Group’s report, entitled ‘Political Risk Insurance: Mind The Gap,’ the insurance broker warns of the risks of going global and that while “companies may be able to assess and manage technical and even commercial risks, it is extremely difficult to deal with or indeed predict political events.”
Traditionally, ‘political risk’ has been associated with governmental interference actions such as expropriation. However, Willis notes that national governments are now not the only source of political risk. Local governments, community groups, NGO’s or other factions advancing political objectives can also be sources of political risk. Additionally, social issues such as poverty, human rights and labor disputes also fuel civil unrest and conflict. The report highlights that: “the situation in the Middle East and North Africa is a prime example of where the original touch point was not due to any direct intervention on the part of the government, but was ostensibly a populous movement driven by high food prices.”
Companies operating in emerging markets need to identify and monitor threats to business and to develop a comprehensive risk management strategy. This strategy should identify the necessary measures required to adequately mitigate these exposures, including the purchase of suitable insurance coverage with the capacity to respond effectively in the event of a loss.
The Willis Group report details the three major types of insurance service that businesses concerned about political insecurity should consider: Strikes, Riots and Civil Commotions (SRCC) insurance, Terrorism coverage and full Political Violence cover. In the past, it has been a widespread practice for companies working in unstable territories to purchase SRCC or Terrorism cover as an extension on their property insurance and other policies. Willis warns however that these extensions would not necessarily protect against populous violence or other adverse current events. The report concludes that full political violence insurance is the most comprehensive coverage for the type of unrest North Africa and the Middle East is currently facing.
Full political violence insurance is much broader than traditional terrorism policies, protecting against financial loss dealing with a wide array of civil problems including politically motivated sabotage, riots, armed insurrection and civil war. Premiums for full political violence cover are traditionally fixed at inception and will cover abandonment of property without physical damage.
Coverage for the evacuation of staff from politically unstable situations is available under most corporate Kidnap and Ransom insurance (K&R) policies. The report cites incidences in Kuwait in 1991 and Lebanon in 2006, when it became necessary to evacuate staff. In these circumstances, many clients were simply not aware they had K&R coverage until it was brought to their attention. Emergency evacuation coverage can also be provided through group personal accident and business travel insurance policies, though the degree of coverage through these services varies considerably and has been typically focused on business travelers rather than expatriate staff members. Evacuation in times of strife can be an arduous process and Willis advises companies to plan and prepare in advance of an emergency.
Companies concerned with supply chain vulnerability are advised to consider purchasing alternative options to political violence cover. Trade Disruption Insurance can cover an importer’s financial losses resulting from confiscation, import embargo or port blockage, supplier insolvency, or war. In some cases, Marine Cargo insurance can also be used as an extension to protect against the risks of strikes, riots and other acts of civil strife.
Insurance markets meanwhile are responding in a number of different ways. Willis warns that some insurance companies, particularly those more exposed to the now unstable territories, are actively reviewing their initial plans and current capacity to continue offering even the most basic SRCC policies to clients in these afflicted regions. Insurers have been communicating with their policyholders, making it abundantly clear that the turmoil currently enveloping North Africa is not addressed by SRCC extensions. Insurers may plan to re-evaluate the terms and prices of said policies or simply withdraw that precarious element of coverage all together.
Specialist insurance markets, principally Lloyd’s of London, are continuing to offer both terrorism and full political violence coverage. These dedicated insurers will be reviewing their own exposures and aggregations as well. The rating structure for insurance has become more stringent to reflect the overall perceived increase in risk.
Global business continues to expand and explore new market opportunities. The Willis Group report acknowledges that with commodity prices projected to remain strong for the foreseeable future, there is significant potential for foreign investors to continue operating in emerging markets. Access to these resource-rich markets however comes with real and inherent risks to business. Tenuous political and socio-economic situations in these countries often combined with inadequate macroeconomic and civil infrastructure can impede development. Willis notes however that the widespread political demonstrations across Europe demonstrate that the tumultuous desire to overthrow incumbent governments is not unique to any specific part of the world.
Commenting at the launch event for the report, Willis Group President, Grahame Millwater summarized the company’s outlook: “Exposure to political unrest will only grow as global business continues to expand into new and often hostile territories where the threat of resource nationalism, creeping expropriation and supply chain vulnerability is increasing. Our message to companies around the world is to use their brokers to navigate the insurance options available for these risks and to identify any potential gaps in their coverage.”
Insurance Companies Mentioned
Willis Group
Willis Group Holdings plc is a leading global insurance broker. Through its subsidiaries, Willis develops and delivers professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of approximately 17,000 employees serving clients in virtually every part of the world.
Apr
20
Bupa Arabia Announces that 52 percent of their Employees are Made Up of Saudi Nationals
Filed Under Uncategorized | 4 Comments
During the third Saudi Labor Market Exhibition at the Jeddah Exhibitions and Conferences Center, Zuhair Ibrahim Maghrabi, the chief HR officer from Bupa Arabia, announced that Bupa Arabia has reached a Saudisation level of 52 percent, which means that 52 percent of the Bupa Arabia workforce is currently made up of Saudi nationals. Bupa Arabia is a subsidiary of Bupa, and specializes in providing health insurance in Saudi Arabia.
The Saudi Labor Market Exhibition is a crucial event that is a critical part of Bupa Arabia’s business strategy. The CEO of Bupa Arabia, Tal Nazer, said, “Localizing our manpower is the core of our strategic planning for steady business growth and we are fully committed to train and recruit more young male and female employees in order to integrate them in the national workforce and enabling them to be a part of the Kingdon’s social and economic development.”
Maghrabi expresses Bupa Arabia’s success in Saudisation by saying, “We are proud that Bupa Arabia’s workforce has reached a Saudisation level of 52 percent of the total number of employees.” He goes on to add, “the Saudi Labor Market Exhibition is an important link between job seekers and the private sector, in recruiting Saudi male and female employees in order to integrate them in the national workforce and enabling them to be a part of the Kingdom’s social and economic development.”
Last year, Bupa Arabia began a partnership with the Human Resources Development Fund (HRDF), which was valued at $693,331 USD. The partnership was formed with the goal of recruiting and training 94 male and female employees in a variety of roles within Bupa Arabia.
The deal was signed by Abdul Rahman Al Zahrani, who said at the signing ceremony, “Our partnership with Bupa Arabia is very strong as the company is one of the pioneers in recruiting and training Saudi employees and has excellent training resources and the capabilities to offer rewarding career opportunities.”
Bupa Arabia has a good reputation in the Kingdom, and has won the Best Working Environment Award in 2007, 2008, and 2009. Bupa Arabia is also seen as a pioneer in employing females, winning the Best Working Environment Award for Women in 2008, and recruiting the first all female team in 2001.
Insurance Companies Mentioned:
Bupa
Bupa was established more than 60 years ago in the UK and now has ten million customers in over 190 countries, and over 52,000 employees around the world. Bupa is a leading international healthcare provider, offering personal and corporate health insurance, workplace health services and health assessments. As a provident association Bupa has no shareholders, because of this it uses its profits to invest in healthcare and medical facilities around the world. Bupa has operations around the world, principally in the UK, Australia, Spain, New Zealand and the US, as well as Hong Kong, Thailand, Saudi Arabia, India, China and across Latin America.
Apr
19
The Indian insurance industry will continue to outpace the country’s economic growth and is projected to reach US$ 350 to 400 billion in premium income by 2020. These figures will put India amongst the top three life insurance and top fifteen non-life markets in the world within the next nine years, according to a new report.
At present, the insurance sector in India comprises of 23 different life and 24 non-life companies, and is cumulatively valued at over US$ 66 billion. The development opportunity for life and non-life insurance coverage is being driven by the continued growth of India’s population and economy. This increase in prosperity has been combined with stringent regulation and unique product development in the domestic insurance industry, which has helped develop the business to meet the changing coverage needs of India’s fast-moving society.
Released on April 11th 2011, a study by the Federation of Indian Chamber of Commerce and Industry (FICCI) and the US-based Boston Consulting Group (BCG) titled ‘India Insurance, Turning 10, Going on 20′, reveals that awareness and total penetration of insurance services (premiums as a percentage of GDP) in India have increased from 2.3 percent of the population in 2001 to 5.2 percent in 2011.
In addition, there has been a substantial increase in coverage. The report detailed that the number of life insurance policies now in force had increased almost 12 times over the past decade and the number of people receiving health insurance had also risen nearly 25 fold.
“This massive growth will have a significant impact on India’s ranking in the global insurance industry and is based on strong fundamentals,” remarked FICCI Director General Rajiv Kumar.
The FICCI report primarily attributes better terms and the surge in availability of a wide variety of modern insurance products, including unit-linked products, whole life coverage, automobile assistance, auto pay per km motor insurance, maximum net asset value (NAV) guarantee, disease management and wellness services, to having boosted the development and growth of the industry in India. Progress has also been made through improvements in operations and systems management in the industry, with the establishment of five distinct service channels, including bancassurance, corporate, auto and direct dealers, to accompany the existing third party agency and domestic salaried sales staff. Alongside the emergence of these multiple channels, the distribution reach had increased nearly six fold for life and one-a-half times for non life, marking a shift in the gradual evolution of the Indian insurance market from a state monopoly into a truly competitive system.
Even though Indian life and general insurance companies have been performing well over the past decade and are projected to grow through to 2020, the industry has yet to find a solution to its mounting profitability problems. The non-life insurance industry incurred cumulative underwriting losses of Rs 300 billion (US$ 6.7 billion) and the private life insurers reported losses of Rs 160 billion (US$ 3.6 billion) through Mach 2010
Underwriting loss is measured as the difference between premium income and claims paid out. Non-life insurers report a net profit or loss after taking into account their investment income. Many Indian non-life insurers remain profitable on net basis. The report cites several reasons for non-life insurer’s continued operating losses, including high claims cost of third party liability polices, health loss ratios, fraud in the auto and health insurance sectors and lack of sufficient management. For life insurers, the report claims last year’s customer-friendly regulations regarding unit linked policies as the reason they have tightened their operating margins.
The report is critical of Indian insurance companies, whose pursuit of top line growth at any cost has led to inefficient business models and inferior operating margins in comparison to international benchmarks in both the life and non-life insurance sector. Overall, there has been a limited focus on the end customer, with intermediaries given a more prominent role among Indian insurers. Companies have been criticized for not maximizing value from existing customers.
To achieve sustainable profitability FICCI suggests that domestic life insurers need to fix their agency operating model, build long-term strategic non-agency partnerships, invest and develop alternative channels and products, and most importantly to better incorporate an innovative customer-centric operating model. For non-life insurers, the report outlined similar objectives: develop an optimal product portfolio, move towards risk based pricing, develop innovative claims management systems and establish alternate distribution channels and retail products.
The national government and insurance regulators will also have an important role in enabling Indian insurers to sustain profitability. FICCI outlines several items that should be on the authorities’ agenda, including regulation to relax Indian ownership and investment norms, defining IPO standards in the country, permitting banks to sell policies from multiple insurers, standardize electronic insurance statements and to enable Indian insurers to more easily expand internationally.
A bill to raise the foreign direct investment (FDI) cap in the private insurance market from the current 26 percent up to 49 percent is currently pending in Parliament. This legislation will be important in attracting the necessary capital and international expertise towards the Indian insurance sector. India has tremendous economic potential due to its large labor force and rapidly expanding middle class. The projected increase in per-capita GDP will correlate with an increasing demand for a wide range of insurance and investment products. International insurance companies and domestic Indian insurers have been gaining increased market penetration through providing insurance protection products and financial services to meet the emerging demands of this more prosperous population but, with a population exceeding a billion people, the potential for further business appears infinite.
Companies Mentioned
The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and one of the world’s leading advisors on business strategy. BCG partners with clients in all sectors and regions to identify opportunities, address critical challenges, and transform their businesses. Founded in 1963, BCG is a private company that operates through 71 offices in 41 different countries.
FICCI
Federation of Indian Chambers of Commerce and Industry (FICCI) is India’s head chamber representing over 500 industry associations and business units employing over 20 million people. FICCI works closely with the Indian Central and State governments and regulatory bodies to research and implement policy change.
Apr
19
AETNA Partners with Huatai Insurance
Filed Under Aetna, China, China insurance, Health Insurance, Medical Insurance | 1 Comment
AETNA, one of the world’s oldest insurance companies, has partnered with Huatai Insurance in the People’s Republic of China in order to provide a comprehensive individual international private medical insurance policy within the Chinese insurance market.
The AETNA offering is thought to be extremely similar to the company’s existing individual international health insurance products, and is designed to offer medical protection throughout the Greater China Region.
AETNA entered the Chinese insurance market in 1997 through a joint venture with China Pacific Life Insurance Company; the companies formed Pacific An-Tai Life Insurance Company, although AETNA later sold its stake in the venture to ING during 2000.
However, it was not until 2008 when AETNA officially established a presence in the China, opening a representative office in Shanghai in order to explore the growth potential offered by the world’s second largest economy. With the interest from a number of global insurance leaders towards China, the partnership with local insurance provider Huatai places AETNA in good stead to capitalize on the rapid growth of the burgeoning Chinese middle class.
Huatai insurance company has been active in the Chinese insurance market since 1996, when the company was created by a group of 63 large-scale enterprises. Huatai specializes in the provision of Accident and Health, Property, and Liability insurance.
With more than a decade of experience working within the Chinese healthcare system, the Huatai partnership presents significant opportunities to AETNA as the company seeks to develop the future of its business in China.
The AETNA Huatai health insurance offering is expected to be available to purchase within China by the end of Q2 2011. However, actual details of the policy, and its expected deployment date, remain uncertain at this time.
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