May
31
Australian Interest in Medical Tourism Increases, As Does Disease Risk
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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.
May
30
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
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.
May
27
Upcoming US Storms Could Raise Rates
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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
May
26
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
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.
May
25
AIG Raises $8.7 Billion through Share Sale
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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
AIG
The American International Group is a leading international insurance organization with operations in more than 130 countries and jurisdictions globally.
AIA
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.
MetLife
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
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
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.
May
24
More International Medical Insurance Providers Offer Full Underwriting Services
Filed Under Aviva, International Healthcare | 3 Comments
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
Aviva
Europe’s fourth largest insurance company, with more than 300 years of experience in the global insurance industry, Aviva is committed to the safety and satisfaction of its customers. They sell a broad range of insurance products including motor and property insurance, protection and health insurance, business insurance, life insurance and pensions.
Morgan Price
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.
May
23
Cost of Long Term Care to Double by 2050
Filed Under Healthcare | 6 Comments
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..
May
20
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.
May
19
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.
Companies Mentioned
Allstate
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
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.
May
18
New Insurance Products Launched for Non-Resident Indians in Emirates
Filed Under UAE Insurance | 6 Comments
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
AMAN
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.
ICICI Lombard
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.
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