The number of Australian citizens choosing to venture abroad for medical care is increasing steadily. Some health experts warn however that patients receiving more complex surgeries overseas are putting both themselves and the Australian health system at risk of spreading hazardous foreign viruses upon their return.
The relatively high cost of healthcare and insurance in Australia, coupled with the waiting lists present in the country’s public health system, have driven many people to look abroad for solutions to their individual health problems. This behavior is by no means unique to Australia, merely part of the growing worldwide phenomenon of citizens electing to cross borders and shop for more affordable healthcare procedures, a practice now 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.
Anita Medhekar, economist lecturer at Central Queensland University, explained in an interview that Australians with disposable income were making modern consumer decisions based on a now unrestrained global medical marketplace. “Medical tourism is international economics in action. It is an economic activity that involves trade in services from two distinct sectors of the economy: medicine and tourism. While worth a lot of money to destination countries, it also means savings for people in Australia seeking affordable medical procedures without having to wait.”
Top private hospital chains in Thailand and India have been at the forefront in attracting international clients. Both countries’ governments are actively involved in promoting medical tourism and whole medical cities are now being developed, complete with research centers and luxurious hotels to lure foreign patients. However, the main draw of these private facilities has been the ability to offer surgery and medical treatment at between a third and a tenth of the costs charged in most Western countries.
Mrs. Medhekar lauded the progress these countries have made in providing exceptional healthcare services. “Internationally approved hospitals in India and Thailand match some of the best medical facilities in the world, and their staff is second to none. Many of the doctors employed at these facilities are trained in western countries and are all English speaking. In some cases, what we are seeing is high rise, state-of-the-art hospitals combining with five-star accommodation. The first few floors are for diagnosis, surgery and medical suites, and the remainder is similar to any top-end resort.”
Medical tourism agencies have confirmed that the continued development of these high quality foreign health centers has increased the reputation and popularity of the medical tourism industry globally. More people are now choosing to have serious surgery overseas, which is a marked shift from the cheap aesthetic procedures the industry had traditionally performed in the past.
Cassandra Italia, managing director at Global Health Travel, revealed that her agency currently flies about 40 Australian patients a month to India, Thailand and South Korea, among others, for advanced treatments such as spinal, orthopedic and bariatric surgery.
“In the last year and half, we’ve seen about a 70 per cent increase in people coming to us just because they don’t want to sit on waiting lists,” she said, adding “some people are accessing their superannuation or re-mortgaging their houses to get their surgery done.”
Thailand’s private hospitals in particular have proven popular with Australian medical tourists, especially for gender-selection IVF procedures that are banned in Australia for non-medical reasons. Australians who are not prepared to wait six to 12 months in their public hospital system have also flocked to the country en mass for knee and hip replacement procedures. The Thai government is delighted by this, as it views Australia as a key market to help achieve its ambitious goals of raising medical tourism revenues in the country to US$3.3 billion by 2015.
The rise in medical tourism, however, has alarmed Australian health experts and prompted vigorous debate between medical professionals over the risks this practice brings to Australia’s isolated health ecosystem. Professor Lindsay Grayson, director of infectious diseases at Melbourne’s Austin Hospital, worried that many Australians had already returned from overseas surgery “extremely ill because they received poor care and picked up foreign superbugs – organisms resistant to antibiotics.”
Professor Grayson was speaking of a new complex virus, which originated in India, known as NDM-1. The bug was recently found in several Australian patients who had traveled overseas and is, according to Grayson, “genuinely scary” due to its unprecedented abilities to adapt and become resistant to antibiotics.
“This is an incredible threat to the way we practice medicine at the moment, because the NDM-1 gene is resistant to everything except for two drugs, one of which is extremely old and toxic for the kidneys and another which is a very new drug but not very effective,” he said, adding “So this is making us very alert to any return traveler, let alone a medical tourist.”
Peter Collignon, director of the infectious diseases and microbiology unit at Australian National University, asserted that the threat from NDM-1 was very serious and that Australian hospitals should be made ready to isolate returning medical tourists until they can determine that they are not carrying superbugs and do not pose a contamination risk to hospitals or the general public.
“These people are risking bringing superbugs into our hospitals and that increases the risks for everyone else,” he said.
Peter Davison, manager of international services at Phuket International Hospital, hit back at superbug fears, saying that the isolation proposal did not relate directly to medical tourism and it wasn’t fair to tar the industry. “The quarantine factor could be applied to ‘every tourist from any nationality who has been to an Indian hospital because of an accident, as well as every Indian national who has also had recent surgery…. That is a lot of people to identify and isolate, and the majority are not medical tourists at all.”
However Australia decide to proceed from here to tackle this superbug risk, they will ultimately need their healthcare system to become more cost-effective and efficient to encourage jet-setting patients to come back home for treatment.
Air travelers worldwide were relieved this past week by the news that no further disruptions to air traffic control would be expected from Iceland’s latest volcanic eruption. However, with the memories of Eyjafjallajokull’s eruption last year and the mass delays it caused fresh in people’s minds, Allianz has announced it will roll out business cover for volcano-related disruptions in the near future.
Iceland is home to many active volcanic mountains. On May 21st, Grimsvotn, Iceland’s most active volcano, started erupting and throwing large quantities of ash into the sky off the southeast coast of the country. This has been Grimsvotn’s fifth eruption since 1993.
Fearing that ash clouds would soon migrate to the continent and impair pilot visibility and flight equipment, European aviation authorities initially forced airport closures and hundreds of flight cancellations in Britain, Germany and several other countries in northwestern Europe.
However, ash production from the volcano declined sharply and the following Thursday, Brussels-based air traffic agency Eurocontrol reported that no further disruptions to air traffic would be expected in Europe as a result of volcanic activity.
Brian Flynn, head of network operations for Eurocontrol, confirmed that the ash cloud created from Grimsvotn was relatively minor and “as a result, there are no areas of high concentrations predicted or observed over Europe today,” he said, adding “There are no flight restrictions anywhere.”
Some ash buildup was still projected to linger over a few parts of northern Scandinavia and Russia on Thursday before eventually dispersing. Other clouds would drift between Iceland and Greenland.
But Flynn assured reporters that the remaining ash plumes would not disrupt air traffic. “Any significant ash concentrations are far out over the sea, at very low altitudes and well away from the air routes or airports,” he said. “The expectation for the next couple of days is that there will be no disturbances to air traffic whatsoever.”
The response to Grimsvotn has been a marked contrast to the events surrounding another Icelandic volcano that erupted last year. On April 14 2010, European aviation authorities reacted to the eruption at Iceland’s Eyjafjallajokul volcano, and ensuing ash pollution, by closing most sections of the continent’s airspace for five straight days. As a result, over 100,000 flights were grounded, stranding an estimated 10 million travelers worldwide. According to the International Air Transport Association, the total cost of the turmoil on both international airlines, insurers and economies surpassed US$1.7 billion.
While Grimsvotn led to the cancellation of some 500 flights, the scale of the disruption this year has been minuscule compared to 2010. European airlines, air traffic controllers, and governments appear to have learned some valuable lessons from the chaos surrounding Eyjafjallajokull last year. Some airline executives have argued the flight bans this year have in fact been a massive overreaction by now overly-worried safety regulators.
Typically, insurance companies have not covered claims related to distant volcano eruptions and the effects their traveling remnants could have on a policyholder’s assets, as property damage would not be the cause of the claim.
In response to these recent tumultuous volcano-related delays however, Allianz SE, Europe’s largest insurer, is planning to now provide coverage to businesses for disruption to transport and logistics that has been specifically caused by volcanic ash or snow.
Andreas Shell, head of energy, property and marine claims for Allianz’s industrial insurance unit, explained in a recent interview that the demand for such a product is readily apparent. “Customers are asking us to help them with coverage that also includes business interruption when volcanic ash or snow brings traffic to an extended halt and as a result affects their supply chains,” he said.
Mr. Shell further detailed what services Allianz would be looking to provide. “We will offer coverage for business interruption damages from events such as volcanic eruptions and snow to customers such as airports and companies dependent on just-in-time deliveries. What’s currently on the market only covers part of the risks that customers want to have addressed.”
Allianz expect to have volcanic ash and snow coverage policies available by 2012.
Those that have been inconvenienced and missed a flight due to Grimsvotn should have travel insurance options available. If you have purchased travel insurance that covers delays or cancellations due to volcanic ash before the current situation unfolded you will be covered. Make sure to check your policy wording, however as different insurers have different interpretations. After last year’s events, some travel insurers have introduced separate or ‘bolt-on’ cover for volcanic ash delays and cancellations, which means that customers traveling on a basic policy under the same insurer may not be covered for the Grimsvotn eruption.
Insurance Company Mentioned
Allianz Group is one of the leading global services providers in insurance and asset management. With approximately 153,000 employees worldwide, the Allianz Group serves approximately 75 million customers in about 70 countries. On the insurance side, Allianz is the market leader in the German market and has a strong international presence.
The devastating natural catastrophes, including tornadoes, floods and global earthquakes that have already hit in 2011 have US insurance companies bracing for heavy losses. These insurers are now eyeing rate increases to restore their reserves as the busy Atlantic hurricane season approaches.
The US Hurricane season lasts from June 1st to November 30th, when violent storms usually can gather off the southeast US coastline and batter populous and heavily insured properties in the region. This year’s hurricane activity could prove a tipping point for the property and casualty insurance industry, which has been forced by heavy competition and excess capacity to cut or hold cover prices since 2008.
International insurance and reinsurance companies have already absorbed an unprecedented US$55 billion in catastrophe claims from the first quarter of 2011, more than they paid out in all of 2010. The exceptional frequency of natural disasters, foremost of which is the March 11 Japanese earthquake and tsunami, has been the predominant news item for insurers this year. Global catastrophe costs are trending upwards.
The insurance industry has taken a further multi billion dollar hit from the recent US tornadoes in April and May. Market analysts estimate that additional sizeable hurricane losses could be the final straw that would force insurers to hike prices in an attempt to preserve capital and rebuild their balance sheet. This could ultimately result in a ‘hard’ reinsurance market, whereby reinsurers are able to charge more for the risk cover they provide to their insurance company clients.
In an interview, Amit Kumar, analyst at Macquarie in New York, agreed that another substantial loss in America could turn the market: “It’s only a large U.S. event that can turn things around. The U.S. is the biggest insurance market with the biggest exposures,” he said
As a result of the Japanese quake and other international natural disasters, the directly-affected markets, such as catastrophe reinsurance, have already responded and the average cost of cover for such events has risen by between 10 and 15 percent.
Now, given the industry’s weakened financials, analysts predict any substantial hurricane loss this summer could move the market and trigger a broader rise in cover prices, across multiple insurance sectors, than has been seen in previous years.
Ben Cohen, analyst at stockbroker Collins Stewart in London, suggested that the loss threshold that would necessitate a rise in prices for the upcoming hurricane season could be half the US$40 billion estimates from last year.
“Maybe as low as $20 billion would be enough. You’ve got fairly marginal profitability in a lot of the U.S. industry and quite a lot of reinsurers that are somewhat impaired,” he told reporters.
A study from Swiss Re noted that a US$20 billion hurricane would be the third-most destructive on record.
Most established insurers and reinsurers have weathered the first quarter catastrophe losses with their earnings hurt but remain well capitalized, with the ability to raise supplemental funds if necessary. This leads other analysts to predict that a loss of US$50 billion or more would actually be required to impact the market convincingly,
Storm forecasters have been unanimously predicting a more active than usual summer hurricane season. Tropical Storm Risk announced on Tuesday that it expected at least four major hurricanes to occur this year, compared with the average of three. The forecaster gave a 59 percent chance of an above average amount of storms hitting the Southern US coast this year.
“At present, all main climate indicators point to the 2011 hurricane season being above norm but less active for basin activity than 2010, and more active for U.S. landfalling activity than 2010,” said Mark Saunders, Head of Tropical Storm Risk, in a statement.
“If a major hurricane does not strike the United States in 2011, it will be the first occasion going back to at least 1900 where six consecutive years have passed without such an event,” he added.
Hurricane losses over the past two years have been negligible. None of the anticipated storms that formed over the western Atlantic in 2009 or 2010 ever made landfall. According to Weather Services International, there has not been an unbroken run of three straight hurricane-free summers in the United State since the 19th century. Meteorologists are skeptical that insurers’ luck will be likely to hold out for a third year.
Fervent tornado activity, the second largest source of insured losses behind hurricanes, is also predicted to continue in the short term. Already, 1,151 tornadoes have occurred this year, nearing the 1,282 reported in all of 2010, but below the all-time US high of 1,820 in 2004. A tornado watch, a federal warning that the deadly storms may develop, has been posted from Mississippi to Ohio. So far, tornadoes and thunderstorms have caused at least US$3 billion in insured losses this season.
The increase in storms has insurers preparing for the worst.
The global insurance industry has faced a tumultuous year thus far. Many companies have had their annual claims budgets overwhelmed by the cost of a series of unprecedented natural disasters in the Asia Pacific region. One mitigating factor that should placate investors in the industry is that the current turbulent climate will enable reinsurers to exact higher rates in areas where claims will remain high
Manulife Financial Corp, Canada’s largest insurance company, plans to increase sales of its insurance policies for low-income customers in Vietnam by expanding its microinsurance operations into more regions of the Southeast Asian country.
Microinsurance products provide basic, inexpensive insurance coverage to individuals on low incomes who require protection for typical risks including the affects of severe weather conditions, healthcare, crop, life and non-life products. Microinsurance offers vital security options for individuals who need insurance protection but until now have been unable, or even aware of, the ability to afford the relatively high cost of coverage. For insurers, microinsurance presents an opportunity, with a high volume of potential policyholders coupled with low cost margins. The global microinsurance market is estimated to be worth over US$40 billion
In 2009, Manulife partnered with Vietnam’s Women Union to introduce simple microinsurance life products, covering accidental death and hospitalization costs, to nine Vietnamese provinces. The policies cost clients roughly US$15 a year for coverage with monthly premiums payable via SMS or text message for those in more remote parts of the country. To date Manulife has already sold about 80,000 microinsurance policies in Vietnam, far exceeding the company’s expectations. Microinsurance alone made up 6 percent of Manulife’s total sales in Vietnam last year.
Manulife Vietnam Chief Executive Officer Carl Gustini said in an interview that the company was taken aback by its success among low-income earners in Vietnam: “The microinsurance sales actually made a significant contribution to our top line, which was a surprise because we didn’t go into this for top-line at all, we went into it not expecting to make any significant money on this. We really just expected to break even and spread the word.”
Manulife now expects to sell at least another 50,000 micro-insurance policies this year if they are granted regulatory approval by the Vietnamese authorities to operate in an additional 12 provinces. The company is also considering new products, such as policies that cover a whole family. And, in addition to SMS messages, Manulife is looking at providing customers with a mechanism to pay their microinsurance premiums over the Internet.
According to Manulife’s research, microinsurance products could be an attractive proposition to about 70 percent of the Vietnam population who currently can not afford a standard US$400-a-year life insurance policy in the country. The Toronto-based insurer plans to build on its initial customer base and attract even more clients who could become more affluent as Vietnam’s economy steadily improves.
Mr. Gustini, who has been head of Manulife’s operations in Vietnam since January 2010, insisted that getting into this emerging market early has been critical, and that improving awareness about insurance services is an ongoing project for the company. “The underlying principle is to form a lifelong relationship with these people, there’s also the word of mouth and indirect impact to our brand out in the provinces.” Mr. Gustini commented further that for many Vietnamese “the very concept of insurance, the concept of paying a premium and providing a savings benefit, is actually foreign.”
Enabling low-income policyholders to pay their premiums with their cell phones has proven to be a very effective innovation for Manulife, one which it may roll out for its more profitable standard customers later. Roughly one-quarter of the company’s microinsurance customers in Vietnam are making their payments by text message. Mr. Gustini predicted that this number would grow. “The cellphone penetration in the rural areas is very high, upwards of 70 per cent in some provinces,” he said. While most Vietnamese families can’t afford home computers, internet cafes are popular.
Manulife was the first company to offer microinsurance policies in Vietnam but now it finds itself competing with 11 established multinational life insurers including AIA Group Ltd. and Prudential Plc. A further four new players have been granted permission to enter the insurance market later this year and the Vietnamese government has indicated that it will allow more to follow.
According to Mr. Gustini, the government will also soon rule on whether to allow asset-management products, including mutual fund services, to be sold in the country.
Manulife increased their market share in Vietnam to 12.4 percent in 2010, up from 11.4 percent in 2009. In the first quarter of 2011, about 36 percent of Manulife’s US$965-million reported profit came from Asia, with about 1 percent of all Asian earnings coming from Vietnam.
“We would expect over time that as a percentage, that will ramp up,” said Mr. Gustini, adding: “Countries like Vietnam are not short-term profit players for us.”
Manulife wants to build on its success and is currently in discussion with industry regulators from several other Asian countries about selling coverage options to the low income segments of their populations in the near future. This month, Manulife released its first microinsurance product in the Phillipines, titled FirstProtect, which provides life and accident protection for 10 years, with premiums as low as P471(US$10) per month. The Canadian insurer has also intimated that it may look into developing family insurance policies under the same design.
As a number of challenges confront its US business, Manulife recognizes Asia as the most important market for the company’s future growth. This market will clearly be a focus for activity in 2011 in order to improve upon 2010’s overall loss of US$ 395 million, due to poor results in the first half of the year, and develop the company back into a platform of sustained profitability.
Competition within the Asian insurance markets has become more intense than ever, with European and American multinational insurers gaining access to the region through acquisitions, joint-venture partnerships or self-started new businesses. These developments are initiating the development of innovative insurance and investment products in order to achieve greater market penetration.
Insurance Company Mentioned
Manulife (International) Limited is a member of the Manulife Financial group of companies. Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 22 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners.
Manulife in Vietnam
Manulife Vietnam was the first 100 per cent foreign-owned life insurance company in Vietnam, being its operation in September 1999 as a joint-venture called Chinfon-Manulife Insurance Company (CMIC). Manulife in Vietnam has grown rapidly to become a world class company providing a competitive array of financial protection products and services to Vietnamese customers. Since commencing operations, Manulife has helped more than 300,000 middle to upper-income Vietnamese plan right for their life.
On Tuesday, American International Group Inc. (AIG) sold its first new stock offering since its near-collapse and ensuing United States government bailout in 2008, moving 300 million shares priced at US$29 each, to raise a total of US$8.7 billion for the insurance giant.
The AIG sale included 200 million shares held by the US Treasury, which picked up US$5.8 billion for the Federal Government, lowering American taxpayers’ stake in AIG to 77 percent from a previous 92 percent. AIG’s other 100 million shares, sold for US$2.9 billion, according to a company statement.
Treasury Secretary Timothy F. Geithner said that the offering was “an important milestone” for the Obama Administration in its efforts to sell its stake in AIG and recover bailout capital.
“The decision to provide this assistance was exceptionally difficult, but it’s clear today that it was essential to stopping a financial panic, preventing a severe economic collapse and helping save American jobs,” Geithner added.
The US Federal Government turned a small profit of around US$60 million from the sale. That amount could rise if the underwriters from the stock offering exercise their option within the next month to purchase up to an additional 45 million shares from the government’s AIG holdings.
AIG was left devastated by the global economic crisis. Fueled by risky bets on subprime-mortgage securities, the insurer reported the largest quarterly losses in US corporate history in the fall of 2008 and posted almost US$100 billion in net losses for the entire year.
A Federal bailout effort was necessitated after international trading partners demanded payment on derivates contracts. AIG was declared a “systemically significant failing institution” by the US Treasury and was the only company to receive bailouts through a special facility created for such classified firms.
Starting in September 2008, AIG was rescued by the US taxpayer to the tune of US$182 billion through a complex, multi-step bailout package issued by the US Treasury Department and the Federal Reserve. Governmental assistance came through a US$60 billion Federal credit facility, a Treasury investment of up to US$69.8 billion and a further US$52.5 billion limit to buy mortgage-linked assets held or backed by AIG.
The New York-based insurer has been gradually repaying the Fed as it restructures its operations and sells off some of its global assets, chiefly its large non-U.S. life insurance companies, including Japanese insurance arms AIG Star Life Insurance and AIG Edison Life Insurance to US insurance rival, Prudential Financial. However, while AIG continues its streamlining, it has retained its profitable Asian arm, the American International Assurance Group (AIA), which has remained the leading life insurer in the lucrative Asia-Pacific region.
AIG has also sold off some of its domestic holdings, such as its Alico subsidiary to US rival Metlife for US$16.2 billion and 21st Century Insurance Co., an auto insurance arm that AIG sold to Farmers Insurance Group in Los Angeles two years ago for US$1.9 billion.
AIG still owes the Treasury Department US$53.1 billion. In addition, the Federal Reserve holds US$23.6 billion in loans tied to the AIG bailout, which is backed by the company’s remaining assets. The Treasury plan to continue selling stock to eventually recoup all the money given to AIG but have agreed not to trade any additional shares for the next 120 days. The remaining shares need to sell at an average of about US$28.73 apiece to break-even on the remaining US$47.5 billion investment.
In November last year, the Congressional Budget Office projected that the Treasury Department could lose up to US$14 billion from the AIG bailout. Obama Administration officials, however, remain optimistic that taxpayers would eventually break even.
Tim Massad, the Treasury Department’s acting assistant secretary for financial stability, told reporters there was no “specific timetable” for disposing of the rest of AIG’s shares. The official remained confident that taxpayers’ investment will be recovered. “Two and a half years ago, nobody thought we’d get a dime back, so we’re very happy,” Massad said. “We didn’t make these investments to make a profit in the first place.… We’re hopeful we can recover all the investment we made, but whether we can will depend on market conditions going forward.”
“We’re going to sell in a way to maximize value to the taxpayer,” Massad added.
The rebounding US economy has enabled The Treasury Department to unwind bailouts from 2008 and 2009 that were neccesary to rescue the banking sector and protect American jobs. The government has already cut its stake in auto-manufacturers GM and Chrysler and sold its remaining Citigroup stock for US$10.5 billion in December, making over US$12 billion on its investment in the New York-based bank, counting dividends. AIG has thus far been the only insurer that hasn’t repaid its government bailout.
In January, Treasury Department concluded a deal with AIG to begin unwinding the US government’s tenure of ownership over the insurer. The agreement involved converting most preferred shares the Treasury received as part of the bailout package into nearly 1.7 billion shares of common stock.
That move helped recapitalize AIG so it could begin repaying the US$47 billion it owed to the Federal Reserve Bank of New York. The Treasury Department is now left with US$20.3 billion in preferred stock and an additional US$47.5 billion worth of common stock. Before Tuesday’s share sale, AIG had already redeemed US$9 billion of its preferred stock.
AIG Chief Executive Officer Robert Benmosche told shareholders at the company’s annual meeting on May 11 that the insurer may begin to repurchase stock as early as next year. AIG, once the world’s largest insurer, delivered improved results for 2010 and could ultimately emerge from its government rescue in a sound state.
Insurance Companies Mentioned
AIA is a Hong Kong-based life insurance company doing business across Asia that has been in business since 1919. They service over 20 million policies through 23,000 employees and 300,000 agents throughout markets in Asia, including; Vietnam, Thailand, Taiwan, South Korea, Singapore, Philippines, New Zealand, Malaysia, Macau, Indonesia, India, Hong Kong, Mainland China, Brunei and Australia.
Possessing over 140 years of insurance expertise, MetLife aims to be an innovator in the field of international Life insurance. Globally, MetLife is able to offer its clients accident and health insurance, life insurance, disability income protection, and retirement and savings products.
Alico provides a broad and innovative range of insurance and savings products to individual customers, corporate clients and high net worth customers. With products to support every aspect of their customers’ lives, and provide comprehensive cover for the employees and commercial needs of their business clients.
Prudential has been in the insurance and financial services business since 1848. Today they operate throughout the UK, US and Asia offering international health insurance and retirement planning services, supported by 27,000 employees worldwide.
Morgan Price International Healthcare has become the latest international private medical insurance provider to respond to rising broker demand and offer full medical underwriting options for individual policyholders.
Morgan Price International Healthcare (Morgan Price) was established in 1999 to offer specialist international health insurance to expatriates working all over the world. Depending on location, Morgan Price plans are underwritten by Europ Assistance Holdings Irish Branch or Generali Worldwide Insurance Company Limited.
Full medical underwriting (FMU) options are now available through Morgan Price’s individual GlobalHealth and ExpatHealth insurance plans. These updates are the result of ongoing product development meetings with participating reinsurers as well as extensive feedback on expatriate health policy from the global intermediary market.
The announcement follows Aviva PLC’s plans, released earlier this month, to upgrade its international private medical insurance products to better meet the needs of their expanding base of international clients. Aviva’s ‘International Solutions’ modular private health insurance products now offer flexible coverage options to handle the large discrepancies in cost and quality of healthcare available when living overseas. A recent study conducted by Aviva confirmed that medical coverage issues continue to be a key concern in customers’ travel planning.
Most international private medical insurance underwriters have historically sided against providing medical cover for pre-existing conditions because expatriate clients usually will not have access to or the support of the state healthcare system in their new country of residence and employment to fall back on. While group coverage schemes above a certain size can often be underwritten irregardless of a particular group member’s medical history, individuals with pre-existing conditions have been left with few options when looking for coverage, either a policy with those conditions excluded altogether or one which is accepted but only on a moratorium basis.
Morgan Price is now one of a number of international private health insurance providers to offer comprehensive underwriting options. Last year, Bupa International announced plans to offer a similar service, initially through its direct sales channel and then on to licensed intermediaries. Other companies that feature full medical underwriting include DKV Globality and IHI Bupa, the Danish subsidiary Bupa acquired in 2005.
Speaking at the launch of Morgan Price’s full medical underwriting options, Jon Carpenter, Managing Director of Morgan Price, detailed how policyholders would be able to access the new service. Morgan Price customers will fill out a medical declaration (either online or in print), which will either result in coverage being confirmed at the normal terms or with the inclusion of a modified benefit or exclusion policy rider. The whole analytical underwriting process is expected to take no more than 1 working day in the majority of cases and “only a little longer” when auxiliary medical information is required.
According to Mr. Carpenter, the addition of full medical underwriting options will provide Morgan Price customers with “much greater certainty” about limits on coverage for any pre-existing conditions at the onset of the policy rather than at the critical claims stage.
Mr. Carpenter further stated that the move to implement more inclusive actuarial processes was a necessary development for Morgan Price. “Moratorium underwriting has worked well for us over the past 10 years, but in these days of greater clarity and transparency in all insurance matters FMU seemed like a natural progression,” he said, adding that the conventional practice for the entire expatriate health insurance industry may need to evolve. “Traditionally individual international business has been sold via the moratorium route as it is an immediate sell, but increasingly this is causing issues at the back end where customers expect fast claims turnarounds and payments. If a moratorium policy is being administered properly, then claims stage investigation is common, and this inevitably delays processing and payments while you track back through an expatriate’s medical history.”
“Underwriting up front might take a little longer but the benefits are in the claims process,” Mr. Carpenter concluded.
Insurance Companies Mentioned
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.
Morgan Price is a UK-based specialist international and expatriate health insurance provider for clients around the world with special focus on the Middle East. The company was founded in 1999 as a managing general agent who acts on behalf of international insurers in product design, administration, premium collection and claims handling.
Aging populations will cause global spending on long-term care to double or even triple by 2050, according to a new analysis report issued by the Organization for Economic Cooperation and Development (OECD), which will be presented in Paris this week.
The report, titled “Help Wanted?: Providing and Paying for Long-Term Care” reveals that half of all people who require long term care are those over 80 years old. The share of the population in this age group throughout the 34 OECD member countries is projected to reach nearly one in ten by 2050, a sharp rise from the one in 25 average measured in 2010 and less than 1 percent in 1950. This percentage of elderly citizens by 2050 will be highest in Japan and Germany, with 17 and 15 percent of their populations respectively.
Spending on long-term care, currently 1.5 percent of GDP on average across the OECD, will rise in conjunction with the ageing population. Currently Sweden and the Netherlands spend the most, at 3.5 and 3.6 percent respectively of their GDP, while Portugal, the Czech Republic and the Slovak Republic spend the least.
Angel Gurría, OECD Secretary-General, remarked on the findings: “With costs rising fast, countries must get better value for money from their spending on long-term care.”
“The piecemeal policies in place in many countries must be overhauled in order to boost productivity and support family carers who are the backbone of long-term care systems,” she added.
Edward Whitehouse, OECD head of pension policy analysis, singled out the UK as a country projected to have “among the highest long-term care expenditures by 2050”, saying “I don’t think that future governments will be able to afford that, which brings us on to how we are going to pay for that system,”. Mr. Whitehouse continued, “The money has got to be found from somewhere. It is going to have to be higher taxes or cuts in public spending on other programs.”
The significant ageing of all OECD nations comes as traditional family ties and social support structures are breaking down. The pool of potential family carers will continue to shrink as families become smaller and more women enter the work force. Furthermore, most social policies will no longer support early retirement, meaning the elderly will have to stay in work longer and save more towards their own private pensions. The need for community involvement and resources to care for frail and disabled senior citizens is growing and will continue to do so more rapidly in OECD countries
OECD governments have a difficult task on their hands: finding a balance between providing accesses to good-quality healthcare and ensuring their systems remain financially sustainable. The report presents several opportunities to begin a transition towards a more cost-effective system. For example, around 70 percent of long-term care patients currently receive their services at home, but spending in institutional care takes in 62 percent of total long term healthcare expenditure. Correcting this inefficiency, encouraging part-time work for the elderly, and paying benefits to family care workers can all be productive policies, helping to reduce the demand for expensive institutional care.
The report further claims that major reforms will be needed to ensure there are enough qualified care workers in the future to meet demand. Currently, less than 2 percent of the total OECD workforce is employed in long term care provision. The OECD report suggests that countries should look be looking to attract more migrant labor as they have thus far supplied a substantial share of long-term care workers in many countries. Around one in four long term care workers in Australia, the UK and US have migrant roots while the ratio is as high as one in two in Austria, Greece, Israel and Italy. The report further claims that there is not only a need for more long-term care workers, but to increase their salaries; as the current low wage environment generates excessive turnover in vital care workers.
Private insurance schemes could be used to ameliorate long-term healthcare expenses in some countries but, according to the report, they are more likely to remain a niche market product unless made compulsory. In the largest private insurance markets in the OECD, the United States and France, currently only 5 and 15 percent respectively of people aged over 40 have long-term care policies in force.
The report concludes that in the face of rising costs, seeking better value for money in long-term care will be a priority. Efficiency discussions regarding long-term care expenses have thus far received relatively little attention and better evidence and proactive action based upon what works and under what conditions is urgently required..
Starting in September, U.S. health insurance companies that want to increase premiums by 10 percent or more are going to face tougher government scrutiny from state or national regulators, according to new federal regulation issued Thursday from the Obama administration.
The average cost of health insurance in the United States has more than doubled over the past decade. Federal officials hope that better oversight tools will enable state governments to curb substantial rate proposals and generate savings for millions of individual insurance customers and small businesses.
Right now, regulation over insurance prices varies considerably from state to state, ranging from stringent to nonexistent market oversight. More than 30 states and the District of Columbia now have some authority to oversee and block rate increases if they find them unjustified, but many in the federal government remain concerned as both the premiums and profits in the health insurance industry continue to soar.
Kathleen Sebelius, the secretary of health and human services, told reporters that insurance companies should have to justify rate increases in an environment in which they have continued to do well financially “Health insurance companies have recently reported some of their highest profits in years and are holding record reserves,” Ms. Sebelius said, adding: “Insurers are seeing lower medical costs as people put off care and treatment in a recovering economy, but many insurance companies continue to raise their rates. Often, these increases come without any explanation or justification.”
Discussion regarding an expansion in government oversight on insurance rates was partly prompted by events last year when a California subsidiary of Wellpoint, the nation’s largest health insurer, wanted to raise premium levels on its policyholders by as much as 39 percent. California’s insurance commissioner, a state where regulators already had the power to review rates, examined WellPoint’s underlying calculations for justifying a rate increase and found them to be incorrect. WellPoint was then forced to cut the proposed increase in half, according to the Department of Health and Human Services. This victory for consumer advocates would not have been possible or even encouraged in many parts of the country.
The new rules, part of the Obama Administration’s 2010 Health Care Reform Bill, will require insurers who want double-digit premium hikes to explain and justify their rate increases to state or federal officials, who will then examine their proposal and decide whether or not they are unreasonable.
At the onset of the proposed requirements in December last year, the administration clarified: “Such increases are not presumed unreasonable, but will be analyzed to determine whether they are unreasonable.” The new rules dictate that a rate increase is termed unreasonable if it proves to be excessive, unjustified or “unfairly discriminatory.” An excessive premium increase is defined as “unreasonably high in relation to the benefits provided.”
Congressional Democrats originally wanted the federal government to have power to block carriers from issuing what it considered unjustified premium increases. But the final regulation as passed has left the directive up to state governments, who will now review rate hikes that hit or exceed 10 percent in their jurisdiction. The federal government has pledged an additional US$250 million to states to strengthen their rate review capacity. Several states who are opposed to the federal health care law have thus far turned down the money.
The 10 percent rate hike threshold will only be in effect for one year. By September 2012, states will set their own limits that more closely reflect trends in insurance and health care costs in their individual markets. States that do not conduct their own “effective rate review systems” will have the federal government step in and do it for them.
Insurance companies nationwide will now be required to post information online that justifies rate increases and to provide state regulators with sufficient underwriting data to explain the reasoning for increasing premiums. States that carry out rate reviews must also hold public forums to address concerns on proposed increases.
These oversight regulations will apply to insurance policies dealing with individuals and small businesses. Federal regulators have stipulated that large group coverage policies offered by large employers won’t require similar scrutiny as the buyers who design these products are more sophisticated and have more leverage in negotiating with insurers. Health insurance plans obtained before the health law passed on March 23, 2010 will also be excluded.
The US insurance industry has been critical of these new disclosure requirements, citing the 10 percent threshold as an arbitrary standard that could tar a majority of premium increases as supposedly unreasonable. Any review of rates will be flawed if it fails take into consideration the effect of government mandates and the impact felt when healthy younger people leave insurance markets and leave behind older, sicker and more costly policyholders. The regulations furthermore, do little to address the principal factor causing double-digit premium increases, the country’s spiraling healthcare costs.
Karen Ignagni, chief executive officer of America’s Health Insurance Plan, the industry’s main Washington lobbying group, argued that US health policy should instead be focused on reducing underlying medical costs such as hospitals, doctors, technology, and pharmaceutical prices.
“Health plans are doing their part to restrain health-care cost growth by partnering with providers across the country to change payment models to promote and reward safe, high-quality, cost-effective care…“Focusing on premiums diverts attention from that debate.” Mrs. Ignagni said in a statement.
Consumer advocate groups, meanwhile, have largely welcomed the move. Ethan S. Rome, executive director of Health Care for America Now, commented “The days of insurance companies running roughshod over consumers and jacking up rates whenever they want are over.” With more information revealed, consumers will be able to make informed decisions affecting the health insurance coverage of those most near and dear to them.
Allstate Corporation, the largest publicly traded U.S. home and auto insurer, announced Wednesday that it had agreed to purchase auto insurer Esurance and Answer Financial, an affiliated online insurance agency, from White Mountains Insurance Group for about US$1 billion. The boards from both companies approved the deal, which is expected to close later in the fall this year.
The purchase price at closing will be a combined total of US$700 million for the two companies, plus the tangible book value of Esurance and Answer Financial when the deal is completed. Allstate will fund the deal entirely with available cash and has expected the transaction’s total price tag to be about US$1 billion.
Through the acquisition of White Mountains’ two holdings, Allstate is looking to broaden its business model and expand sales of coverage through direct channels such as the Internet. Allstate has largely relied on captive agents for sales and has been consistently losing auto-insurance policyholders over the past three years as online customers opt for coverage sold through their more web-savvy rivals Progressive and Geico, the two market leaders in online auto-insurance sales in the United States.
Allstate’s 2011 first-quarter results revealed that their number of overall standard auto policies in force dropped 0.7 percent in the 12 months ending March 31. Exceptional catastrophe costs have further weighed on Allstate’s recent financials. Earlier this month, the company warned investors that it had almost US$1.4 billion in catastrophe losses recorded for April, making the second quarter of 2011 Allstate’s costliest period for disaster claims since hurricane-hit 2008.
By picking up San Francisco-based Esurance, Allstate acquires the third-largest provider of online auto insurance quotes in America with 545,000 policyholders, and a company whose premium volume has grown 20 percent on average over the past five years, totaling US$836 million in premiums for 2010. Allstate also obtains Esurance’s exclusive web-based technology resources that have been specifically developed to meet the needs of self-directed online consumers.
Currently Allstate and Esurance each control around 2 percent of the market share in direct channel auto insurance sales. In comparison, market leader GEICO maintains a 38 percent market share with over 10 million policyholders throughout the United States.
Esurance was one of the first companies to begin selling car insurance online but has now found itself spending more money on claims and expenses than it has been able to bring in through premiums. According to Allstate, the acquisition will enable them to share market expertise that could limit Esurance’s claims costs and make their underwriting profitable once again.
Answer Financial, meanwhile, is an online broker that links insurers to self-directed customers who are seeking a choice among auto or property insurance. Customers are provided with quote comparisons and support with Answer Financial collecting a commission on every successful match it makes. The company has around 350,000 customers.
Speaking at the announcement of the deal with Esurance and Answer Financial, Allstate’s President, Chairman and CEO Thomas J. Wilson recognized that the shifting consumer preferences for premium online insurance shopping options have necessitated this transaction. “Consumers today expect to have their specific needs met by their insurance companies. Our strategy is to focus on individual preferences and utilize different value propositions for distinct consumer segments,” Wilson said.
Wilson went further on to explain each company’s unique attributes and how they would continue to function under Allstate’s management. “Our Allstate agencies do an outstanding job of serving customers who want a local personal touch and prefer to purchase a branded product. Esurance will expand our ability to serve customers that are more self-directed but still prefer a branded product. Answer Financial will strengthen our offering to individuals who want to be offered a choice between insurance carriers and are brand-neutral.”
Allstate will maintain both acquisitions as separate functioning businesses and utilize their brands to promote synergy and growth across different consumer segments. Esurance has traditionally been more successful in attracting the young driver demographic. Allstate, meanwhile, has generally appealed to customers who require more than just auto coverage and who want to speak with an agent to plan their insurance options. Allstate management is confident the two companies can now share expertise moving forward and will be able to develop a solid growth platform across multiple market disciplines.
“Our strategy is to focus on individual preferences and utilize different value propositions for distinct consumer segments…Esurance will expand our ability to serve customers that are more self-directed but still prefer a branded product,” Wilson said in a statement, adding that “This is a great opportunity to take what they’ve built, put the imprimatur of Allstate on it, and attack the market competitively from two sides.”
Allstate have planned to increase spending on Esurance’s marketing and promotion efforts to drive more customers to the website. Allstate will also institute its own macro claims-handling process for Esurance policyholders. Implementing more cost-effective intra-company operational advantages would be “substantial and worth a lot of money,” according to Wilson, and would go far in justifying the billion dollar purchase price.
“It’s economically attractive because we will improve the marketing effectiveness of the Esurance operation and then there are great benefits for Esurance from utilizing Allstate’s pricing and claims expertise,” Wilson concluded.
While establishing a greater presence online can significantly improve your business, it is not without risk. According to a new report issued by global insurance broker Lockton, online hackers are fast becoming the greatest threat to business today. As commerce continues to move online, the gap between technological innovation and the ability to protect data offers criminals an opening to launch attacks and steal sensitive industry information.
The warning comes in the aftermath of several recent high-profile security breaches. Last month, Marks & Spencer, Best Buy, and other clients of email marketing company Epsilon, had data on thousands of their customers stolen. Japanese electronics giant SONY has suffered a similar fate and is looking to its insurers to help cover the cost of cleaning up a continued data breach that has exposed the names and potentially even credit details of more than 100 million of its customers, an amount that analysts claim could exceed US$2 billion.
According to Lockon, fewer than 2 percent of all businesses in the UK are currently insured against losses resulting from hackers obtaining customer data and shutting down information networks. The insurer is expecting the proportion to rise to almost 50 percent within the next five years.
Indeed, despite its substantial investment in an internet direct-sales platform, Allstate also remains committed to its agency network.
In February, Allstate announced that it would open 140 agencies in Texas and 120 throughout California.
Allstate is the second largest personal lines insurer in the United States. Its Allstate Protection segment sells motor, property/casualty, home-owners, and life insurance products. Allstate Financial offers life insurance through its subsidiaries: Allstate Life, American Heritage Life, and Lincoln Benefit Life. Allstate customers can access Allstate products and services through more than 13,000 Allstate agencies and financial reps throughout the US and Canada.
Esurance offers quote comparisons and sells auto insurance policies through its website and pre-approved online agencies to customers in 30 US states, with California and Florida its leading markets.
Last week, the Dubai Islamic Insurance & Reinsurance Co. (also known as AMAN) announced the launch of two new medical coverage products in the UAE market through a partnership with ICICI Lombard General Insurance, the largest private sector general insurance company in India, and additional input from insurance and reinsurance broker J.B.Boda & Co. The partnership will see further collaborative insurance products developed for the Gulf market. The deal was formalized by Hussein Al Meeza, Chief Executive and Managing Director of Aman, and Hitesh Kotak, the Vice President of ICICI’s Strategic Planning Group.
The two new insurance products introduced were Rishtey (which means ‘relationships’ in Hindi) and Health on Return. These products were designed to better provide suitable coverage options for the substantial non-resident Indian (NRI) population now living and working in the UAE and across the MENA region.
Hitesh Kotak explained: “The products are aimed at Non-Resident Indians in the UAE and the region, in order to better cater to their health needs, and needs of their families back home.”
The Indian Diaspora makes up a considerable proportion of the working class in the Middle East. Many have moved, in particular, to the rich Gulf States since the oil boom to work as laborers, in clerical roles, and as well as in more specialized fields. The MENA region has presented an attractive opportunity for South Asian migrant labor due to the higher incomes available as well as the relative geographical proximity to India. In 2005, almost 40 percent of the population in the United Arab Emirates was estimated to be of Indian descent. As citizenship and permanent residency are not often granted to immigrants in these countries however, maintaining affordable access to necessary services like healthcare remains an issue for many non-resident immigrants.
These developments follow renewed efforts by India’s insurance regulator (IRDA) to liberalize the domestic insurance market and enable the rising middle-class Indian consumer to make more proactive choices with regard to health coverage options. From July 1st 2011, health insurance policy holders in India will be able to change insurance providers without fear of losing their benefits from their previous policy. ICICI Lombard have been proactive in expanding their services to meet this upcoming regulatory shift, including a recent partnership with Air India Express, which will provide exclusive travel insurance solutions towards international, domestic and student travelers.
According to ICICI Lombard, the new Rishtey policy will offer foreign workers in the Emirates comprehensive health insurance for their families back in India. The plan features an assortment of supplementary benefit options, such as medical travel and emergency evacuation compensation, all made available through a straightforward service structure with uncomplicated documentation for customers. The Heath on Return insurance service meanwhile will cover NRI health needs when they go back on leave to India. The product will also serve as a retirement health insurance package for when foreign workers ultimately decide to move home permanently.
Hussein Al Meeza confirmed that non-resident Indians in the Gulf would prove to be an important market to capitalize on in the Gulf: “The NRI segment of the market is increasing in volume. At the same time, there is greater awareness of the benefits of health insurance and the importance of planning ahead. We foresee these products doing exceptionally well in regional markets,” he said.
The collaboration between Aman and ICICI Lombard comes on the back of a successful year for the UAE insurer, one which has seen them improve market share and generate consistent earnings. Aman’s most recent company filings reveal a 32 percent increase in profits in the fourth quarter of 2010, with revenues topping AED157.9 million (US$43 million).
The insurer was also the recipient of the World Finance award for the Best Takaful Provider for 2011. Takaful, or Shariah-compliant, insurance products are one of the fastest growing insurance sectors in the world, particularly in the rising middle eastern and Indian subcontinent economies.
Aman Chief Executive Al Meeza concluded the event, restating the company’s intentions to continue developing its insurance services to meet the plurality of different clients in the region. “Aman is consistently looking for ways to improve its presence across various sectors, and diversifying its product portfolio. We are constantly revamping our products and offerings to ensure we can predict and cater to customer needs. Our partnership with ICICI Lombard will help ensure that we continue to offer innovative products that benefit our clients,” Al Meeza finished.
Insurance Companies Mentioned
Dubai Islamic Insurance & Reinsurance Company (AMAN) was founded in 2002 as a national public shareholders company focused on Islamic insurance in the UAE. Aman’s founding members included the Dubai Islamic Bank and The Dubai Group among other shareholders. The Company offers general insurance products, including engineering, general accident, fire, marine, and motor insurance products. Aman can also provide life and health takaful insurance products for individuals, groups, and corporate clients, as well as healthcare insurance products, investment securities and property services.
Founded in 2001, ICICI Lombard is a 74:26 joint venture between ICICI Bank Limited, India’s second largest bank, and Fairfax Financial Holdings Limited, a Canada based financial services company. ICICI Lombard is a general insurance company offering a wide range of insurance policies including, business, liability, motor, travel, rural and health insurance products.
Germany’s statutory health insurance system, the oldest in Europe, may soon raise premiums on its 72 million members by up to €840 (US$1,195) per year due to spiraling healthcare costs and other factors.
Health insurance in Germany is mandatory. Those residing in the country have three options when selecting a medical coverage plan: the government-regulated public system (Gesetzlichen Krankenversicherung or GKV), private health insurance purchased through local or international agents (referred to as Private Krankenversicherung or PKV), or an individual combination of public and private plans.
Most German residents are members of the public health insurance scheme. Around 15 percent of the population opts out of the state scheme, typically when they are younger as premiums are lower. Through the GKV, citizens pay into one of the 300 independent statutory state ‘sickness funds’ through either payroll deductions or their bank. In general, each sickness fund is governed jointly through employers and employees and operate through collective reimbursement mechanisms with hospitals and GPs. Since January 2011, insurance payments are capped at 15.5 percent of gross earnings by law. Citizens are free to compare rates and can switch between state health funds to save on premiums, pending government approval.
Germany, like many industrialized countries, has been challenged by ever-increasing healthcare costs, which now consume over 11 percent of the country’s GDP. Last year, public sector austerity measures were put in place to avoid a predicted €11 billion (US$13.2 billion) shortfall in German state healthcare finances. Under the new proposals, mandatory health insurance contributions rose by 0.6 percent from 14.9 percent to 15.5 percent of gross wages with any future planned increases in contribution to be borne solely by employers.
However, according to the head of the GKV, Doris Pfeiffer, these measures will not do enough to control spiraling healthcare and pharmaceutical expenses for participating insurance companies and that ultimately more of the cost burden must be passed onto consumers. Mrs. Phfeiffer put forward that members of the public health insurance scheme could be subject to additional surcharges, or Zusatzbeiträge, amounting to anything between €50 (US$ 70) and €70 (US$100) a month in the coming years.
“Such sums are conceivable and even required by government policy,” Mrs. Pfeiffer added.
The GKV head’s assessment comes in the controversial aftermath of prominent German insurer City BKK’s bankruptcy. Former BKK policyholders, many of them old and infirm, have since struggled to join other statutory insurers. Insurance companies in Germany’s system are trapped; they are struggling with increased healthcare costs but cannot raise contribution levels due to intense competition for customers within their market. Mrs. Pfeiffer believed that this belligerent environment would push more health insurance companies towards insolvency, like City BKK.
A recent study released by the University of Cologne confirmed that the financing gap in Germany’s health insurance system was unsustainable. However, researchers held that, if current costs structures hold, monthly premiums for statutory insurance would only need rise €33 (US$47) on average.
The German Health Ministry, meanwhile, has rejected such grim forecasts about the impact surging health insurance costs would have on the country and its citizens’ monthly insurance premiums. A Health Ministry spokesman commented that “an increase in additional contributions of this magnitude is not expected in the foreseeable future.” The German government has projected health insurance surcharges within the GKV to remain on average below €10 (US$14) per month going forward into the next year.
Germany’s healthcare system has thus far been able to maintain comprehensive and high quality medical treatment options for patients throughout the country. However, as mentioned previously, cost control has continued to be an issue for the statutory system. The government has developed numerous measures to mitigate rising expenses, raising revenues through increased contributions limits and reducing costs through strict limits on public hospital expenditure, services and salaries. Further reforms must continue to walk the tightrope of cost-effectiveness and quality care and to better address issues concerning the aging population and the shrinking German work force.
Many developed countries are facing similar problems to Germany, with the costs of healthcare growing steadily. In many nations this may be due to expensive pharmaceuticals, the population’s desire for new medical technology or even an aging population. The increasing rise of medical inflation may also have a knock on effect on medical insurance globally, having the potential to push up premiums whether they be from a national health insurance service such as Germany, or an international health insurance company.
Lloyd’s of London, the world’s oldest specialist insurance market, has revealed that losses from this year’s earthquakes in Japan and New Zealand, and floods in Australia will cost its members about US$3.8 billion, making it the costliest first quarter on record. Lloyd’s further warned that the cost of insurance worldwide is likely to rise as a result of these devastating catastrophes on the insurance industry.
In a statement on Friday, Lloyd’s calculated that the March 11 Japanese earthquake and tsunami alone generated estimated net pre-tax claims of US$1.95 billion, making it the fourth-largest single loss in the market’s history. Only the US$4.3 billion and US$2.1 billion in insured losses from Hurricanes Katrina and Ike in 2005 and 2008, and the US$3 billion lost from the terrorist attacks on September 11th in the United States were costlier, according to Lloyd’s.
Lloyd’s members declared that a further US$1.2 billion in claims may result from the New Zealand earthquake and insured loss estimates for the severe flooding in Australia were about US$650 million in total.
Lloyd’s published the estimated losses after its 87 competing syndicates, which underwrite insurance risks in over 200 countries, submitted their maximum exposure to the three catastrophic events in the Asia Pacific region. Lloyd’s maintained that their claims were consistent with the cumulative projected industry losses of US$30 billion in Japan, US$ 9 billion for the New Zealand earthquake and US$5 billion in regards to the unprecedented Australian floods.
The estimated catastrophe losses for the first three months of 2011 have exceeded the US$2.6 billion Lloyd’s paid out for the entirety of 2010, a year which featured higher-than-average catastrophes including the earthquake in Chile and the Gulf of Mexico oil spill. Industry analysts have commented that first quarter catastrophes may slash full-year profit for Lloyd’s insurers by up to 70 percent. The market’s insurers have already encountered extensive claims, even though they traditionally face their biggest losses during the second half of the year during the height of the United States hurricane season.
Despite the high volume of claims, Lloyd’s asserted that “there will not be a material impact on Lloyd’s capital and there is not expected to be any Central Fund exposure from these events, either individually or collectively.” The market’s capital reserves would remain largely unaffected alongside their £2.4 billion ($US 3.9 billion) emergency fund kept for bailouts, either individually or collectively. Overall, Lloyd’s believes that the insurance market’s total exposure has remained well within the bounds of their plans for worst case scenarios.
Richard Ward, Lloyd’s of London Chief Executive, confirmed that although the loss estimates are significant, the market remained in a sound position. “The beginning of 2011 has seen a series of tragic events that have had a major impact on communities in Australia, New Zealand and Japan. As ever, our priority remains to assess and settle valid claims as swiftly as we can to help these communities get back on their feet,” he said, further remarking that, “The Lloyd’s market is as well capitalized as it has ever been and, while claims from all three events could still evolve over time, the market’s total exposure is well within the worst-case scenarios we model and prepare for.”
Dr. Ward added that the first quarter catastrophes, as well as the recent tornadoes and flooding that have hit the southern US states, should lead to a “firming of rates” as insurance companies seek to recoup their losses.
Insurance market analysts claim that, in fact, a preponderance of sizeable natural disasters can be an earnings event rather than a capital event for insurers. A surge in claims triggers a rise in insurance rates to offset losses, forcing more exposed players to economize and enabling those still in the market to charge more for coverage.
The increased prevalence of global natural disasters since the start of 2010 have increased the cost of catastrophe insurance and reinsurance but prices have yet to adjust, remaining artificially low due to intense competition amongst insurers for customers. Analysts now claim the market will begin to amend itself, with the cost of catastrophe insurance and reinsurance expected to soon go up 10 percent. Prices in the broader insurance market are unlikely to be immediately effected, however much depends on the second half of the year and whether the upcoming US hurricane season causes substantial insured damage and further claims.
Catlin Group Ltd., the third largest insurer operating in the Lloyd’s market, said that rates for catastrophe-related insurance have already been increased and that a broad increase in coverage rates would be appropriate given the exceptional catastrophe losses already experienced this year.
Catlin Group Chief Executive, Stephen Catlin summarized the company’s market outlook: “The first quarter of 2011 will be remembered for the high incidence of catastrophe losses, arising from the Japanese earthquake and tsunami, the New Zealand earthquake and the floods in Australia. Taken together, we expect these three catastrophes to be an earnings event rather than a capital event. Rates for certain classes of business are already starting to rise.”
Insurance Companies Mentioned
Catlin Group Limited
Catlin is an international specialist property and casualty insurer and reinsurer, operating worldwide through four divisions: Catlin Syndicate, which operates at Lloyd’s of London; Catlin Bermuda; Catlin UK and Catlin US. Catlin operates through six underwriting hubs in London, Bermuda, United States, Asia-Pacific, Europe and Canada. Catlin writes a range of product groups, including property, casualty, energy, marine, catastrophe and motor reinsurance business.
Lloyd’s of London
Lloyd’s is the world’s leading specialist insurance market and occupies fifth place in terms of global reinsurance premium income, and is the second largest surplus lines insurer in the US. In 2009, 74 syndicates are underwriting insurance at Lloyd’s, covering all classes of business from more than 200 countries and territories worldwide. Lloyd’s is regulated by the Financial Service Authority.
In spite of recent political turmoil and the impact of the world financial crisis on foreign investment, Thailand’s insurance industry continues to demonstrate strong growth indices. Insurance companies in Thailand have been busy expanding distribution channels over the past year, improving their underwriting standards and introducing new products to the market.
A new report issued by Thailand’s Office of Insurance Commission (OIC) (formerly known as the Department of Insurance) reveals that insurance business in the first quarter of 2011 grew by 13.52 percent on last years quarterly figures, with total direct premium in the country now worth 111.783 billion baht (US$ 3.7 billion).
Read the rest of the Thailand Insurance Compagnies Grows 13% in First Quarter article
The Indian government is looking to develop public-private partnerships in hospitals to improve and expand healthcare access towards the more remote and impoverished areas of the country. However, the success of an existing government health insurance scheme designed for the poor has already begun to meet these objectives.
The Rashtriya Swasthya Bima Yojana (RSBY) scheme was launched on April 1st 2008 by the Indian Ministry of Labour and Employment to provide sufficient health insurance coverage for families living Below Poverty Line (BPL), and to better protect them from the financial liabilities that arise out of health shocks involving hospitalization.
Enrolled BPL families under the RSBY are entitled to hospitalization coverage up to a Rs 30,000 (US$670) limit per anum for most maladies that require inpatient services. Transportation charges are also covered up to a maximum of Rs 1,000 (US$22) per year. The beneficiaries of the RSBY initiative pay only Rs 30 (US$1) as an initial registration fee per enrolled family. After the registration fee has been paid, all medical transactions for enrolled individuals are cashless. The RSBY scheme involves cooperation between the Indian Central and State Governments working in tandem with private Indian health insurance companies. Companies offering RSBY coverage are pre selected by the State, and will administer the policies on behalf of the Indian government. Premiums, however, are handled by the Indian government with the Central and State organizations splitting costs 75 percent and 25 percent respectively.
Under the RSBY scheme, coverage extends to five direct family members, including the head of the household, a spouse and up to three dependants. There is no age limit on beneficiaries and pre-existing conditions are covered. Each beneficiary family is issued a biometric-enabled smart card, containing fingerprint and photographic data on each member. Health insurers manage the issuance of cards and, eventually, the payouts of any claims made under the scheme.
The smart card system is portable, enabling migrant labor to utilize the large scale medical IT network created specifically for the scheme. An RSBY policyholder who has been enrolled in a particular district will be able to use their smart card in any of RSBY’s 8,000 empanelled hospitals, both public and private, throughout India
Despite early administrative hiccups, the ambitious RSBY system is a pronounced success and has helped quadruple India’s overall health insurance penetration in the three years it has been in operation. The scheme now covers some 23 million poor families in 330 districts and 27 states across India. This performance has prompted the Labor Ministry to plan for the development of further extensions for the poor, including old age pension schemes and various labor related tie-ins for cover.
The RSBY’s achievements in extending health coverage has also presented an attractive opportunity for entrepreneurs interested in developing hospitals and clinics primarily targeted towards India’s rural poor.
Indian investors are being drawn to low-cost healthcare development due to RSBY’s financial design. RSBY premiums are paid out through a district-wide basis to insurance companies. Many districts, however, remain without accredited hospitals, leaving RSBY beneficiaries to travel to another district or state when medical issues occur. If investors come in and set up sufficient medical facilities in an underserved district, the RSBY can incorporate their services and substantial client-base into the operation straight away. With millions of RSBY smart cards issued and private health insurance premiums on the rise, there is potential to craft sustainable healthcare businesses in more remote parts of the country.
Harendra Singh, owner and CEO at Asarfi Hospital Limited, is an example of one such investor. Mr. Singh is constructing a 100-bed multi-specialty hospital in Baliya in eastern Uttar Pradesh, an area outside of most existing Indian healthcare networks. The state of healthcare around Baliya is currently very poor and he hopes to make a difference.
The first Asarfi Hospital was set up in Dhanbad, Jharkhand in 2007, a year before the RSBY launched. Once the scheme came into effect, Mr. Singh noted that many rural poor were coming in for an assortment of procedures, from gall bladder surgery to appendix removals. On average Mr. Singh estimated that 35 inpatients in his 130 bed hospital would be RSBY cardholders. He further believed that the RSBY’s effect on increasing demand for treatment would have a substantial impact on the healthcare system.
Other established healthcare providers are looking to augment their services around the RSBY. GV Meditech is developing an ambulatory service that travels periodically to distant villages, pools 20 to 30 RSBY cardholders with medical problems, and transports them to the nearest Meditech hospital. The company is also in talks with a prominent Bangalore-based cardiac hospital to set up a 100 bed hospital designed for RSBY patients.
Kolkata-based Glocal Healthcare is aiming to better regulate its rates on RSBY packages. The company is developing a new system that will standardize premium rates for over 750 medical procedures, which empanelled RSBY hospitals will comply with. Glocal hopes to use the success of the RSBY scheme to launch a range of innovative India medical insurance products which would aim to provide affordable healthcare for individuals and families who are not currently eligible to receive coverage under Rashtriya Swasthya Bima Yojana.
The RSBY has rapidly opened up an underdeveloped healthcare market in India. Most hospitals that now deal prominently with low-income families will have some relationship with the RSBY. The growth of this scheme demonstrates that the Indian government could have more success in moving from being a healthcare provider into primarily a healthcare financier.
The Indian government has long focused on supply-driven healthcare management through investments in public hospitals, resulting in an inefficient, centrally-concentrated state healthcare infrastructure. The growth of quality private hospitals in districts where there were no facilities before shows that through providing more citizens and business with the wherewithal to make decisions, the government can more easily satiate healthcare demand.
RSBY furthermore acts as grass-roots advertising for the health insurance industry in India. Every person who gets claim settled under RSBY makes another 5 people aware of the concept of health insurance, it is argued. This in turn has spurred a number of local and international health insurance providers into taking a renewed interest in the Indian health insurance market. The success of the RSBY scheme has proven that health insurance products and providers can achieve success in what was previously considered to be an unprofitable market.
In addition to the RSBY, state-sponsored schemes such Aarogyasri in Andhra Pradesh are having a similar positive impact. Bangalore’s Narayana Hrudayalya recently opened a 500-bed cardiac and specialist hospital in Hyderabad to cater to their state community health insurance system for BPL families.
Deviprasad Shetty, founder of Narayana Hrudayalya, spoke of the changes in low-income healthcare assistance: “We predicted ten years ago that it was a matter of time before government became a health insurance provider and not only a healthcare provider.”
Following the first quarterly reporting season of 2011, international credit rating and insurance information agencies have updated their company-specific economic forecasts. A.M. Best, Fitch Ratings and Standard & Poor’s (S&P) have all been releasing ratings updates. The following are a summary of some of the most recent credit reports dealing with the foremost multinational insurance funds operating today.
A.M. Best has declared a financial strength rating of A+ (Superior) for AEGON and issued credit ratings of AA- for its American life and health insurance subsidiaries (collectively referred to as AEGON USA). A.M. Best also affirmed AA- debt ratings on AEGON’s outstanding obligations. The outlook for all the Amsterdam-based insurer ratings is stable.
AEGON USA’s positive credit rating reflects its encouraging 2010 earnings performance. For year-end 2010, AEGON USA recorded net income of US$918 million compared to the $865 million earned in 2009. The IFRS (International Financial Reporting Standards) earnings for AEGON’s cumulative operations in the Americas were US$1.5 billion for 2010, compared to 2009’s year-end figures of US$697 million. A.M. Best projects IFRS earnings to become more consistent with 2009 results, caused by lower realized gains and a smaller amount of tax-related benefits. AEGON USA’s credit report draws upon many factors, including the group’s strong market position in several US life and annuity markets, a large distribution platform and a positive cash flow with a diversified sources of earnings. AEGON USA’s ratings have been further enhanced through A.M. Best’s assessment of the parent company, AEGON’s financial strength, and the commitment it has shown towards developing the strategic and financial importance of its US business.
S&P has revised its outlook on Aetna Inc. and its subsidiaries, upgrading the forecast from negative to stable. S&P also affirmed an A- credit rating for Aetna Inc. coupled with A+ counterparty credit and financial strength ratings for Aetna Life Insurance Co, Aetna’s core operating company. Additionally, S&P gave positive ratings for Aetna’s important subsidiaries.
S&P’s ratings upgrades were based upon Aetna’s improved earnings and projections that indicate the improvement will continue. Aetna’s pre-tax earnings rose considerably in 2010 to US$2.4 billion from the US$1.9 billion earned in 2009, which both fall short of the US$3.0 billion in earnings during 2008. S&P expects Aetna’s 2011 operating earnings to further improve to about US$2.7 billion, due to an expected decline in medical claims trends coupled with constructive regulatory adjustments in medical claims expenses.
S&P anticipate Aetna’s year-end revenue figures to total US$33.5 billion and the customer-base to decrease about 3.5% to 18 million policyholders. If Aetna meets S&P’s cash flow targets, S&P would expect the company’s debt leverage to be stable at about 35% by year end.
A.M. Best have confirmed that ratings for Aviva Plc., and its subsidiaries, have remain unchanged following Aviva’s decision to sell a portion of its stake in Delta Lloyd NV, from 58.2% of ordinary share capital down to 43.1%.
The partial disposal of shares is anticipated to net proceeds of GBP 370 million (US$ 605 million) for Aviva. A.M. Best reported that while Delta Lloyd made a considerable contribution to Aviva’s profitability, this performance has historically been more sensitive to overall market movements than the rest of Aviva’s holdings. The sale remains consistent with the partial IPO and Aviva’s adjusted business strategy of focusing on 12 core insurance markets.
Berkshire Hathaway Inc.
Fitch Ratings has affirmed the AA- Issuer Default Rating on Berkshire Hathaway and an AA+ rating for the company’s major insurance subsidiaries. The ratings outlook is stable.
Fitch’s positive ratings are due to Berkshire’s consistent ability to build book value at a rate exceeding the market indices as well as peer companies. Finch explains that this reliable growth has come from several sources, including investing the insurance float, which currently funds about US$66 billion in investments. Common stock investments, primarily in its insurance subsidiaries, appreciated over 70% through 2010, yielding net unrealized investment gains of US$26 billion. Going forward, Berkshire Hathaway’s strategy will increasingly focus on earnings from its 68 non-insurance operations.
Legal & General Group Plc.
A.M. Best Europe affirmed an issuer credit rating of A for Legal & General Group Plc. (L&G), as well as the financial strength rating of A+ (Superior) for Legal & General Assurance Society Ltd. The outlook for all ratings is stable.
A.M. Best’s encouraging ratings and the stable outlook are due to L&G’s strong level of risk-adjusted capitalization maintained by stable financials. This has resulted from a solid business profile and an improved diversification within the company, as L&G shifts away from a spread-based and towards a fee-based income strategy. A.M. Best notes that though its risk-adjusted capitalization is strong, it remains below pre-2008 levels.
Liberty Life Insurance Co.
A.M. Best downgraded the financial strength rating of Liberty Life Insurance Co. to B++ (Good) from A- (Excellent) and issuer credit ratings fell likewise to BBB+ from A-. Both ratings have been assigned a stable outlook.
The ratings downgrade follows the announced acquisition of Liberty Life by Athene Holding Ltd. from the Royal Bank of Canada. As a result of this transaction, Liberty Life’s life and health insurance businesses will be coinsured to Protective Life Insurance Co, and a share of their annuities will be covered through Athene Life Re. A.M. Best however believes that Athene Holding’s access to capital and investment expertise will enable Liberty Life to generate acceptable spreads on both new and in-force annuity business.
Munich Reinsurance Co.
Fitch Ratings has affirmed both Munich Re’s insurer financial strength rating and long-term issuer default rating at AA- with a stable outlook.
Fitch’s updated ratings reflect Munich Re’s continued strong market position and the superior franchise of the group’s reinsurance operations, among other factors. Munich Re’s ratings were affirmed despite the exceptional first quarter 2011 catastrophe losses. Fitch’s report noted that Munich Re was more exposed to the Australian floods and the earthquakes in New Zealand and Japan than some of its rival reinsurers, though losses were not out of line with their market share in the Asia Pacific region. Munich Re’s first quarter catastrophe losses amounted to 12% of shareholders’ funds, which is a little higher than the main European reinsurers but lower than most of its Bermuda-based peers.
Fitch actually expects Munich Re to ultimately benefit from the improved market conditions triggered by these recent events. Munich Re’s overall catastrophe risk is reasonable given the highly geographically diversified context of their catastrophe portfolio and the company’s strong capital position. Fitch notes that Munich Re continues to generate the bulk of its profits through P&C reinsurance operations, benefiting from the overall solid margins available within its catastrophe portfolio.
Fitch’s report considers the first quarter catastrophe losses as an earnings event rather than a capital event for Munich Re. However, Fitch explains that further severe catastrophic events or natural disasters might erode Munich Re’s capitalization and hurt their capacity to meet annual growth targets.
A.M. Best Europe affirmed both the financial strength rating and the issuer credit rating of SCOR SE at A (Excellent). The subordinated debt ratings on SCOR have also been affirmed. The outlook of all ratings is stable. A.M. Best is confident that SCOR’s capital position remains sufficient enough to absorb first quarter catastrophe losses arising from Australia, Japan and New Zealand.
A.M. Best notes that SCOR’s acquisition of Transamerica Re’s life reinsurance portfolio will likely strengthen the company’s global reinsurance presence and increase their prominence in the lucrative US life reinsurance market. The transaction will add complementary international portfolios to the French insurer’s existing profile, which has been focused on traditional life insurance and annuity businesses. A.M. Best adds that the acquisition will assist SCOR’s development and conforms to their continued performance targets.
Ratings Companies Mentioned
A.M Best Company was founded in 1899 and is a full-service credit rating organization dedicated to servicing the financial services industries, including the banking and insurance sectors.
Fitch Ratings is a global rating agency and provides ratings and analytical services for thousands of banks, financial institutions, insurance companies, corporations, and national governments. Fitch was founded in 1913 and now features dual headquarters in New York and London with over 50 offices worldwide,
Standard & Poor’s
Standard & Poor’s (commonly referred to as S&P) is a business branch of publishing house McGraw-Hill. Operating out of 20 countries, S&P provides the investment community with independent credit ratings on important financial vehicles such as stocks, municipal bonds, corporate bonds and mutual funds. In addition to its risk management, investment research and credit rating services, Standard & Poor’s is known for its indexes, in particular the S&P 500 index.
The unprecedented first quarter of 2011, with a prevalence of severe natural catastrophes hitting the Asia Pacific region, has impacted the global reinsurance industry substantially. More established players in the reinsurance market are set to release their quarterly accounts and reassess their capacity to now meet annual growth targets.
The world’s biggest reinsurance group, Munich Re, is soon expected to post negative results for the first quarter. The company has committed to an estimated €2.7 billion (US$3.9 billion) in natural catastrophe insurance claims resulting from recent natural disasters including the two earthquakes in Japan and New Zealand as well as the severe flooding in Australia. In lieu of extensive disaster claims, Munich Re has already abandoned its full-year €2.4 billion (US$3.45 billion) net profit targets.
These results will follow Munich Re’s big 39 percent decline in profits in the fourth quarter of 2010 due to the large claims for major floods in Australia and the September 2010 earthquake in New Zealand.
Last month, Nikolaus von Bomhard, chief executive of Munich Re, addressed company loss concerns in a statement: “The losses from natural catastrophes mean that the result for the first quarter will be clearly negative,” he said.
Industry analysts predict Munich Re will report a US$1.5 billion first quarter net loss. This would be the German reinsurer’s first net loss since the third quarter of 2008, when the company posted a €3 million (US$4.3 million) net loss in the middle of the global financial crisis. Industry forecasts further show Munich Re making a €1.2 billion (US$1.72 billion) operating loss, which would be the first operating loss reported since fourth quarter 2002, when the company was hurt by the crash of the technology bubble in the stock market.
Munich Re is not the only multinational reinsurer to feel the financial burden of large catastrophe payouts. Other major reinsurance companies have posted mixed results for the first quarter of 2011.
Swiss Re Group, the world’s second largest reinsurer, last week posted a US$665 million quarterly loss, which was ultimately less than the US$1 billion analysts had anticipated.
Hannover Re meanwhile, managed to turn a surprise first quarter profit largely on the back of a tax rebate, increases in investment returns and the freeing up of reserves once used to cover past claims. Despite remaining cost-effective so far, Hannover Re declared that it too would cut its net profit forecast from €650 million (US$912 million) down to €500 million (US$702 million) for the year. The German reinsurer confirmed that the previous profit targets would be no longer attainable because the full-year budget for major claims had already been exceeded due to first quarter catastrophe costs.
American International Group Inc. (AIG) suffered an 85 percent decrease in first-quarter profits primarily due to costs tied to claims from the earthquakes in Japan and New Zealand and to restructuring its bailout from the US government. Since receiving the government bailout, AIG has been restructuring its global operations, selling off international insurance subsidiaries to generate sufficient capital to repay the US taxpayer. AIG’s general insurance business subsidiary, Chartis International, notably incurred an operating loss of US$463 million compared to an operating income of US$879 million in the first quarter the previous year. The loss is attributed to large claims from the Japanese earthquake and 2011’s cumulative catastrophe losses of US$1.7 billion compared to US$0.5 billion during the same period a year ago.
AIG president and CEO Robert H. Benmosche remained positive despite Chartis’ quarterly results: “At Chartis, our worldwide property-casualty business, first quarter results were affected by significant catastrophe losses related to the Japan earthquake and subsequent tsunami, while overall net premiums increased, customer retention remained strong, pricing was stable, performing better than industry averages, and our reserve positions tracked our expectations,” he said in a statement.
The heavy catastrophe claims from the Asia Pacific region also impacted profits at Warren Buffett’s conglomerate Berkshire Hathaway Inc, which is also a major reinsurance player. Net earnings for the first quarter are estimated to be US$1.5 billion, down from the US$3.6 billion earned for the first quarter of 2010.
The frequency of natural disasters early this year has hurt global reinsurance companies’ ability to adequately provide a financial backstop to insurance companies facing heavy claims. Industry analysts have begun to speculate how much worse 2011 could become.
Reinsurance companies typically face their biggest catastrophe damage claims in the second half of the year, when the North Atlantic hurricane season is in full effect. 2010 was a relatively quiet year on the US coastlines; hurricanes remained largely offshore, sparing US coastal properties and captive insurers. This year could be different. Weather Service International forecasters have predicted an active 2011 Atlantic hurricane, with 15 named storms, eight of which are expected to become hurricanes.
The current tumultuous environment however is not entirely bad news for reinsurers and their insurance company clients. Big damage payouts combined with low interest rates and other factors enable reinsurance companies to justify and exact higher cover rates in areas where risk will remain high
Munich Re noted that the adjustments made since the Japan earthquake and tsunami may not be reflected in the annual reinsurance contracts renewed from April 1, but price increases should filter through in the rest of the year. Munich Re Chief Executive Nikolaus von Bomhard noted: “At any rate, we expect general price increases in the current financial year.”
Swiss Re confirmed that the pricing environment was now predicted to harden and turn to the reinsurance companies’ market advantage. “We expect the market hardening that we previously forecast for 2012-2013 to take place much sooner,” Swiss Re Chief Financial Officer George Quinn added in a statement.
The global reinsurance industry has faced a tumultuous year thus far. Many companies have had their annual claims budgets overwhelmed by the cost of a series of unprecedented natural disasters in the Asia Pacific region. The disaster in Japan alone is one of the costliest natural disasters in the history of the global insurance industry, having caused estimated insured losses of between US$12 billion and US$25 billion, according to catastrophe risk modeling firm Eqecat. In the aftermath of these disasters, reinsurance will continue to be in demand services to help minimize potential losses for companies operating in all regions across the globe.
Insurance Companies Mentioned
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
Berkshire Hathaway is a conglomerate holding company that oversees and manages a number of subsidiary companies worldwide. Its core insurance subsidiaries include GEICO, National Indemnity, and reinsurance giant General Re. Berkshire Hathaway was founded in 1955 and is headquartered in Omaha, Nebraska, United States.
Chartis has over 45 million policyholders in 160 countries worldwide. With more than 90 years experience in the insurance industry, and a range of progressive products, Chartis aims to help clients comprehensively manage risk
Hannover Re is the third-largest reinsurer in the world, with a gross premium of around EUR 10 billion. It transacts all lines of non-life and life and health reinsurance and maintains business relations with more than 5,000 insurance companies in about 150 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices on all five continents with a total staff of roughly 2,100.
Munich Re focuses on providing financial stability, and consistent risk management based on its extensive solution-based expertise. It operates in all lines of insurance, with around 47,000 employees throughout the world. Especially when clients require solutions for complex risks, Munich Re is a much sought-after risk carrier. The primary insurance operations are mainly concentrated in the ERGO Insurance Group. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand.
Swiss Reinsurance Company Ltd was established in 1863 and is present in more than 20 countries. Swiss Re provides reinsurance products and financial service solutions. It offers various reinsurance products covering property, casualty, life, health and special lines – such as agricultural, aviation, space, engineering, HMO reinsurance, marine, nuclear energy, and special risks.
In the aftermath of the unprecedented natural disasters that have afflicted the Asia Pacific region, many multinational insurance companies have filed poor quarterly results for the start of the year. However, other factors such as regulatory gridlock and increased competition have also have an effect on certain firms.
In the first quarter of 2011, Sun Life Financial Inc, Canada’s third largest insurer, reported that life insurance sales had fallen by 25 percent overall in its key Asian growth markets. These figures are largely accounted for by declining sales of policies in India, where recent regulatory changes regarding premium rates and foreign equity ownership are putting pressure on multinational insurance companies.
India currently limits the amount of foreign direct investment in its captive insurance industry at 26 percent, which should be rising to 49 percent soon, pending legislation. Sun Life operates in the country through a joint-venture called Birla Sun Life, currently one of India’s top five privately-owned insurers. Birla Sun Life offers life, heath, education, retirement, savings and mutual fund products.
Speaking to industry analysts about their first quarter results, Sun Life CEO Donald Stewart confirmed that performance in India had dropped. “Sales in India of US$105 million were down 33 per cent from the first quarter of 2010,” he announced.
In spite of flagging sales in India, Mr. Stewart was quick to note that Sunlife’s operations in the country were improving incrementally along with other Indian life insurance companies as they deal with a shifting regulatory environment. “The sales figures represent a 46 per cent increase over the sales reported in Q4 2010, as the entire life industry continues to adjust to the far-reaching September 2010 regulatory changes.”
Then Indian government has been active in limiting how much private companies can charge consumers for life insurance in the country. The federal changes to the insurance industry in India have been affecting an array of global insurance companies hoping to sell coverage and investment products to the country’s rapidly expanding middle class.
In the face of these regulatory hurdles Sunlife will persist in South Asia. The insurance industry has remained one of India’s fastest growing business sectors. As the country’s economy continues to grow, a greater percentage of the population will be able to afford to buy insurance for health and property. Sunlife sees significant opportunities in populous emerging markets like China and India where insurance penetration is currently very low and the middle class is projected to continue rapidly expanding.
Strong insurance sales elsewhere in Asia should help to offset some of Sunlife’s losses from India in the meantime. First-quarter earnings for Sunlife’s Asia business segment (SLF Asia) had risen significantly to US$44 million compared with the US$4 million earned in the first quarter of 2010. Business through joint-venture operations in Indonesia and the Philippines had notably grown by 39 percent and 12 percent, respectively.
Sunlife Financial has spent 2011 continuing to build its multi-national operations through joint ventures with local operators in Asia, rather than complete acquisitions, to gain further presence in the emerging markets currently offering insurers better scope for improving premium returns.
Last year the company’s 20 percent-owned Sun Life Everbright joint venture became the first foreign joint venture operation to be recognized as a domestic Chinese company by the China Insurance Regulatory Commission (CIRC).
Mr. Stewart explained how Sunlife would further focus its expansion efforts: “I generally don’t comment too much on geography, because sometimes deals show up in unexpected places, but I would say that Latin America is not a probable arena of future expansion. We continue to see opportunities in different places in Asia of varying sizes. There will continue to be opportunities in Asia.”
Sun Life’s operations currently cover more than a dozen countries, including Canada, United States, China, India, and Japan and Mr. Stewart maintained that would probably remain the case.
In February, the company signed a deal to acquire a 49 percent stake of Filipino insurance business Grepalife Financial Inc., a unit of the Yuchengco Group, for an undisclosed amount, expanding Sunlife distribution network in the Philippines. The deal will rebrand Grepalife into Sun Life Grepa Financial as soon as local regulatory approval has been settled.
Earlier in the year, Sunlife also opened a representative office in Dubai, where it will continue to market its products towards the Middle East and Africa regions.
One lucrative market Sunlife Financial has yet to develop is the sale of Islamic-compliant insurance, or Takaful, products. The takaful insurance market has become an important market for multinational insurance companies searching for new sectors and continued 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. The worldwide takaful insurance market is projected to grow by 31 Percent in 2011.
Malaysia Islamic insurance company Syarikat Takaful Malaysia Bhd recently announced they would be looking to grow their customer base of one million clients by 25 percent by the end of this year. Group Managing Director Datuk Hassan Kamil, explained Takaful Malaysia would achieve this goal through increasing the provider network and the introduction of new updated products. “This will increase our distribution channels and help to grow our company’s business,” he explained to journalists at the company’s annual general meeting.
When asked whether Takaful Malaysia would seek to form an international joint-venture partnership to achieve their growth targest, Mr. Hassan commented that the company would only be involved in selective discussion for any potential partnership at this juncture.
“We would have to look at what value-add in terms of technical expertise and business know-how the potential partner could bring to the company to improve its operations,” he responded.
Malaysia’s government has committed to the gradual financial liberalization of its Islamic finance sector. Multinational insurance powers like Sunlife should take note of this opportunity.
Insurance Companies Mentioned
Sun Life Financial
Sun Life Financial is an international financial services organization providing a range of protection and wealth accumulation products and services to individuals and corporate customers.
Sun Life Everbright Life Insurance Co. Ltd
Sun Life Everbright Life Insurance was established in April 2002. It’s shareholders include China Everbright Group, Canada’s Sun Life Financial Group, China North Industries Group Corporation and Anshan Iron and Steel Groups, based in Tianjin
Birla Sun Life
Birla Sun Life Insurance Birla Sun Life is a joint venture established in 1999 between Sun Life and Indian based Aditya V. Birla Group. Today, Birla Sun Life Insurance is one of the top 5 privately owned life insurers in India, and Birla Sun Life Mutual Fund is the fifth largest Mutual Fund House in the country.
Syarikat Takaful Malaysia Berhad
Syarikat Takaful Malaysia is a Malaysia-based family and general takaful insurance company. The Company operates out of Malaysia and Indonesia. Takaful Malaysia’s subsidiaries include Asean Retakaful International, Syarikat Takaful Indonesia, and P.T. Asuransi Takaful Keluarga.
On May 4th 2011, Aviva PLC, the world’s sixth largest insurance group, announced an array of benefit enhancements to further improve upon their award-winning international private medical insurance services.
To better meet the needs of their expanding base of international clients, Aviva has been upgrading its international private medical insurance products. Aviva’s ‘International Solutions’ modular private health insurance products have been specifically designed to cover globally-mobile people who are living and working outside their country of nationality, such as expatriates. The policies offer flexible coverage options to handle the large discrepancies in cost and quality of healthcare available when living overseas. A recent study conducted by Aviva concluded that medical coverage issues have remained a key concern in customers’ travel planning.
Under the company’s new updates, International Solutions will raise the overall core benefit limit from £1.5 to £5 million (US$2.4 to US$8.2 million) and the previous newborn lifetime cover of £20,000 (US$33,000) for 112 days will improve fivefold to £100,000 (US$165,000) for 112 days. Routine chronic cover annual benefit has been further doubled from £7,500 (US$12,400) to £15,000 (US$25,000), while the medical practitioner annual benefit limit has been increased from £1,500 (US$2,480) to £2,500 (US$4,130).
In addition to raising the limits of their international offerings, Aviva has transferred a number of benefits from its supplementary cover options into the core cover for International Solutions products. This includes coverage for vaccinations, which had previously only been available to customers purchasing the Wellness Option module. There is also now an option to remove compulsory per claim excess on individual insurance policies.
Several of Aviva’s optional benefit packages have also been updated. The maternity option benefit cap has been lifted from £7,500 (US$12,400) to £10,000 (US$16,500) and there is now an increased annual compensation limit for consultations with a specialist, diagnostic tests and specialist-referred surgical procedures and physiotherapy, rising from £1,000 (US$1,650) to £2,500 (US$4,130). Improvements have also been made to dental and optical services, as well as increased out-patient service options for both individual and corporate International Solutions insurance policies.
To complement International Solutions’ coverage enhancements, Aviva has added a StandbyMD medical consultation service. This exclusive arrangement grants Aviva customers 24 hour access to a physician offering medical support and advice. The healthcare concierge service is available through 4,000 cities, across 86 different countries worldwide. StandbyMD provides international health insurance customers with prompt telephone access to a qualified physician. Policyholders can also elect to arrange face-to-face consultations or home visits.
Additionally, a new repatriation benefit rider has been developed for expatriate customers with the compassionate travel option, which will enable policyholders to return to their home country (or country of nominated residence) if certain medical treatment is not available locally. If a policyholder possessing the benefit is evacuated, Aviva will now provide compensation for someone to accompany them on their journey, even if the individual in question does not possess an Aviva international health insurance policy.
For expatriate clients, Aviva has introduced a new electronic service which will enable customers to keep important health records and allow prompt access to said vital information while abroad. The Aviva ‘My Health Passport’ is available through two different formats: a small software version used to store practical information such as personal details and GP and insurance contact information, and a printed booklet which covers more comprehensive health information.
Aviva has set up a new provider network in the United States through a partnership with Miami-based Olympus Managed Healthcare. This arrangement incorporates an additional 6,000 hospitals, over half a million doctors and 57,000 pharmacies into Aviva’s health provider network across the US. Aviva policyholders will be able to locate a qualified American doctor or hospital through the comprehensive online network. If customers choose to go within the health provider network they will have their bills settled directly by Aviva, removing the need for individuals to handle costly medical bills themselves.
Olympus Managed Healthcare are market leaders in claims management, handling over 125,000 claims a year on average. Aviva believes that this joint venture will provide customers with additional security, dedicated support and improved access to healthcare in the United States.
Teresa Rogers, international business lead of Aviva UK Health, commented on the inception of International Solutions policy updates: “By listening to our intermediaries and customers, we’ve been able to focus on improving the right things. We’ve enhanced the benefits and support that our customers tell us are most important to them. This not only includes increasing monetary limits, but also adding expert support services such StandByMD to further improve the peace of mind our customers receive from their policy.”
All new benefits will become available from July 2011 for both new customers and existing policyholders looking to renew their International Solutions service.
Aviva has been very proactive in expanding and upgrading its operations to attract more potential clients worldwide. Aviva 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. The company has been able to maintain growth across key markets and will look to further improve upon its level of service to sustain strong performance through 2011.
Insurance Company Mentioned
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.
Olympus Managed Healthcare
Olympus Managed Healthcare offers medical claims administration and cost containment services in the international marketplace. The company also provides third party administrator, call center, and consultations services, as well as other specialty programs. Olympus Managed Healthcare operates through a network of doctors and hospitals around the world. The company was founded in 1994 and is based in Miami, Florida.
StandbyMD is a healthcare concierge service that provides insured persons with personalized physician oriented access to healthcare services 24 hours a day, seven days a week and includes an assortment of both hands-on and referral based medical solutions.
Several multinational property and casualty insurance companies have had their first-quarter earnings significantly impacted by the catastrophic losses due to earthquakes in Japan and New Zealand and the severe floods in Australia.
The frequency of large natural disasters has been the predominant news item for reinsurers in 2011. On March 11th a massive tsunami hit the coast of northeast Japan, causing thousands of casualties and wiping out scores of buildings in the region. The tsunami was caused by a 9.0 scale earthquake approximately 80 miles offshore and around 230 miles to the northeast of Tokyo. The earthquake was the strongest ever to hit Japan, a country well versed in seismic activity. Two nuclear reactors in the neighboring Fukujima region were damaged by the quake and extensive repair efforts to contain the potential fallout are still ongoing. These events followed a large 6.3 magnitude earthquake on February 22nd that struck Christchurch, the second largest city in New Zealand, and devastating floods as well as Cyclone Yasi which hit Australia earlier in the year.
Global catastrophe costs are trending upwards. According to Swiss Re’s latest sigma study in March, economic losses from both natural and man-made disasters were US$218 billion in 2010, more than triple the total 2009 figure of US$68 billion. These catastrophes cost the global insurance industry over US$43 billion, a 60 percent increase over 2009’s figures, with earthquakes accounting for almost a third of these losses. Swiss Re’s study concludes that the population growth and rising net wealth in seismically active areas results in earthquakes that are both more deadly and costly when they occur, irregardless of any evidence pointing to an increase in earthquake activity.
Analysts say that it will take considerable time to further determine and approximate the overall economic losses and the amounts payable by individual reinsurance companies for the recent natural disasters in the Asia Pacific region. Swiss Re has estimated that the insurance industry face cumulative losses of up to US$12 billion for the earthquakes alone this year. Swiss Re’s individual earnings have not yet been announced but industry analysts have forecast a substantial quarterly loss of around US$1 billion for the company.
XL Group PLC, a large Bermuda-based reinsurer, reported greater than predicted natural catastrophe losses of US$387.4 million, net of reinstatement premiums, doubling the company’s 2009 losses of US$181.1 million in its property and casualty insurance business. Net investment income fell from US$308.3 million to US$280.3 million during the first quarter of 2010.
Other Bermuda-based reinsurance companies to report first quarter losses include Endurance, which incurred losses of US$87.4 million during the three month period, and White Mountains, which posted a net loss of US$28.2 million. Axis Capital reported first quarter losses of US$384 million, compared with a net profit of US$112 million for the same period in 2010.
PartnerRe also reported losses that exceeded industry expectations. The insurer’s first quarter results presented a net loss of US$807 million, in comparison to a profit of US$79.7 million earned for the same period in 2010.
PartnerRe President & CEO Costas Miranthis commented in a statement that the large losses were caused primarily by the frequency and severity of natural disasters during the first few months of 2011. “During the first quarter, we witnessed an exceptional frequency of catastrophic events in international markets. As PartnerRe underwrites a globally diversified portfolio, the losses in Japan, New Zealand and Australia together led to catastrophe losses significantly in excess of our quarterly expectations.”
Despite PartnerRe’s heavy net losses, Mr. Miranthis said: “The strength of our balance sheet has enabled us to absorb these losses and maintain a strong capital position.” The President added that the growing frequency of catastrophe loss, in addition to recent industry revisions to modeling tools, is driving many buyers to re-evaluate risk in certain markets. “While the pricing reaction in loss-affected areas is predictable, the broader re-evaluation of catastrophe risk is beginning to change the pricing dynamics in all property catastrophe markets,” he said.
Even reinsurance companies that better weathered the storm are reviewing their investment strategy. Industry giant Hannover Re remained cost-effective during the first quarter of 2011, largely on the back of its improved investment returns. The world’s third biggest reinsurer announced a first quarter profit of €52.3 million (US$77.7 million), down 65 percent on 2010’s €151 million (US$224.4 million) returns.
As a result of heavy claims linked to the Japan and New Zealand earthquakes, Hannover Re declared that the company would cut its net profit forecast from €650 million (US$912 million) down to €500 million (US$702 million) for the year, providing losses from the upcoming American hurricane season remain below €410 million (US$575 million). The reinsurer confirmed that the previous profit targets were no longer attainable because the full-year budget of €530 million (US$ 788 million) for major claims was already exceeded due to catastrophe costs in the first quarter, totaling over €572 million (US$802 million) already.
In a conference call with journalists and shareholders, Hannover Re chief executive Ulrich Wallin lamented that the beginning of 2011 has posed excessive problems for the reinsurance sector: “This could be the worst ever quarter for losses in the reinsurance industry. With this in mind, it will not come as a surprise that our results have fallen short of expectations.”
Another major reinsurer that will re-evaluate its likely profitability in 2011 despite remaining profitable for the first quarter is US-based Berkshire Hathaway. The company predicts roughly US$1.7 billion in catastrophe losses for the first quarter of 2011, including a US$1 billion hit from the Japanese quake, US$412 million from the New Zealand quake and a further US$195 million from losses in Australia. Around US$700 million of the Japanese loss will come out of Berkshire’s 20% quota share of Swiss Re’s reinsurance business.
Berkshire Hathaway’s net earnings for the first quarter are estimated to be US$1.5 billion, down from the US$3.6 billion earned for the first quarter of 2010. In lieu of these figures, Chief executive Warren Buffett now believes it is unlikely his company can deliver an underwriting profit this year.
“We had some major catastrophes in the Pacific Asian areas, and that hit the reinsurance industry particularly hard,” Mr. Buffett said today at Berkshire Hathaway’s annual meeting in Omaha, Nebraska.
The global reinsurance industry has faced a tumultuous year thus far. Many companies have had their annual claims budgets overwhelmed by the cost of a series of unprecedented natural disasters in the Asia Pacific region. One mitigating factor that should placate investors in the industry is that the current turbulent climate will enable reinsurers to exact higher rates in areas where claims will remain high
Berkshire Hathaway is a conglomerate holding company that oversees and manages a number of subsidiary companies worldwide. Its core insurance subsidiaries include GEICO, National Indemnity, and reinsurance giant General Re. Berkshire Hathaway was founded in 1955 and is headquartered in Omaha, Nebraska, United States.
Hannover ReHannover Re is the third-largest reinsurer in the world, with a gross premium of around EUR 10 billion. It transacts all lines of non-life and life and health reinsurance and maintains business relations with more than 5,000 insurance companies in about 150 countries. Its worldwide network consists of more than 100 subsidiaries, branch and representative offices on all five continents with a total staff of roughly 2,100.
PartnerRe Ltd., through its subsidiaries, provides global reinsurance services. The company offers reinsurance coverage for all manners of property, assets and businesses worldwide. PartnerRe Ltd. was founded in 1993 and is based in Pembroke, Bermuda.
Swiss Reinsurance Company Ltd was established in 1863 and is present in more than 20 countries. Swiss Re provides reinsurance products and financial service solutions. It offers various reinsurance products covering property, casualty, life, health and special lines – such as agricultural, aviation, space, engineering, HMO reinsurance, marine, nuclear energy, and special risks.
XL Group plc, through its subsidiaries, provides insurance and reinsurance coverage to industrial and commercial firms, insurance providers, and other institutions worldwide. The XL Group operates in three market segments – Insurance, Reinsurance and Life Operations.
Bupa Asia Pacific, Australia’s largest privately owned health insurer, has delivered exceptional results for 2010. The company reported a 26 percent rise in after-tax profits as a result of pronounced increase in premium revenue coupled with a recovery in investment income.
Bupa Asia Pacific was established in 2008 as a $2.4 billion (US$2.63 billion) merger between Bupa Australia and MBF Australia Limited. The acquisition of MBF made Bupa the largest private provider of health insurance in the country. Today Bupa Asia Pacific covers over 3.2 million members in Australia, across an array of brands including, MBF, Blink Optical, HBA and Mutual Community.
According to Bupa’s latest accounts filed with the Australian Securities & Investments Commission (ASIC), earnings for the company increased $48 million (US$52.5m) to a total of $228 million (US$249.4m) for the year ending December 31. Revenue earned from health insurance underwriting rose by over $280 million (US$306m) to $4.24 billion (US$4.6b), a 7 percent increase for the year. These results followed an increase in claims made by Bupa policyholders, costing the company $3.65 billion (US$ 3.9b), a 5.6 percent increase on 2009’s expenses.
In 2010, Bupa Asia Pacific sold MBF’s previous life insurance and wealth management business operations to Clearview Wealth Limited, a financial services group, for $204 million. Bupa then acquired Peak Health Management and eye-care business, Health Eyewear, for around $10 million (US$11m) in total. The accounts further reveal that Bupa Asia Pacific paid $211 million (US$230.8m) in dividends to its parent company, down from $332 million (US$363m) in 2009, the first year following the MBF merger.
Bupa experienced a $31 million (US$34m) rebound in investment income during the year, rising up to $119 million (US$130m), which after assorted costs and expenses, gave the insurer a pre-tax profit of $331.5 million (US$362.6m) for 2010, $90 million (US$98.5m) ahead of 2009’s total. The company filed $97.5 million (US$106.6m) in tax together with a $5 million (US$5.5m) loss from discontinued operations, all of which totaled cumulative earnings of $228 million (US$249.4m).
The health insurance industry is closely regulated in Australia. The premium amount which private insurers can charge customers is directly monitored by the Federal Government. Every year, insurance companies provide the government with details of whether and how much they plan to alter their health coverage premiums in order to protect their business and guarantee that they remain a solvent operation in Australia. Once those rates are calculated and granted permission, they are systematically applied from April 1 of the following year.
Bupa’s accounts, along with those of its rival Australian insurers, have benefited from the recent substantial (almost 6 percent in 2009) industry-wide increase in the accepted cost of health insurance in the country. According to the accounts, about $17 million (US$18.6) of the rise in Bupa’s profits can be attributed to the increase in premium revenue. Last month the company was permitted by the government to further raise their premiums again. Their projected average premium increase of 5.14 percent, however, remains the lowest of the principal health funds in Australia.
Private health insurance companies in Australia have traditionally operated within narrower profit margins than the global insurance industry average and remain more concerned with maintaining good underwriting and long term viability in the country. Companies must hold minimum levels of capital above prudential requirements to make certain they can meet their obligations to policy holders and continue to operate. Increasing premiums grants the insurers necessary capital to more adequately cover any adverse events, potential volatility in benefits, as well as to enable further investments and expansion in their business. These factors will eventually improve the quality of service for insurance policyholders in Australia.
Private health insurance coverage is not mandatory for Australians. The Australian healthcare system features both state and private-run institutions. Medicare was established in 1983 to provide Australians with free universal coverage for medical treatment in addition to a scalable reimbursement scheme for outpatient services. The Pharmaceutical Benefits Scheme is also prepared to subsidize medical prescriptions. Australia apportions around 8.5% of its GDP towards healthcare, on par with other OECD countries. The Medicare system remains principally funded through general revenue. Those above a certain income who remain exclusively on Medicare are liable for a Medicare Levy Surcharge, which is assessed at 1% of taxable income.
The Australian Government has introduced incentives and insurance rebates to encourage more people to obtain private health coverage to ease both the financial and structural burden that the large numbers of aging patients are placing on the public healthcare system. The measures introduced in the past decade have had their desired effect with more Australians investing in their own health then ever before. The insurance industry has grown significantly as a result.
Bupa has been a successful player in the Australian insurance market for many years. The British based company has in fact seen its successful business in the Asia-Pacific region take on a more prominent role in the company’s overall growth strategy. Bupa is expecting challenging conditions to continue in its traditional established markets in the UK and the USA. Operations are expected to grow in the emerging economies, particularly in the populous Asian, Middle Eastern and Latin America regions, where there has been an increasing demand for quality health insurance coupled with a growing middle class that can afford such services.
Insurance Company Mentioned
British United Provident Association (BUPA) was established more than 60 years ago in the UK and is 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.