Turkey may finally be realizing its potential as an important international healthcare center. Annual revenue for the Turkish medical tourism industry is expected to pass US$5 billion within 5 years, as the country’s modern hospital and spa facilities begin to attract a growing number of foreign patients who are seeking cost-effective medical treatment from all over the world.
The rising healthcare costs in developed Western countries coupled with the continued progress and flattening of the global economy has encouraged many people to now venture abroad for more cost effective destinations when seeking medical treatment, a practice now widely known as medical tourism. These macroeconomic factors combined with the falling costs of travel and communication have enabled world class healthcare facilities to establish themselves all around the world. International clients seeking alternative healthcare solutions to what is available in their home countries are now presented with many opportunities at competitive prices. Popular locations for medical travel include countries in South East Asia and Latin America, where many surgery procedures, including transplants and cosmetic procedures, cost a fraction of the price they would do in North America or Western Europe, and usually can offer shorter waiting times for treatment overall as well. The convenience and efficiency of pursuing international medical tourism options is something to be considered for patients seeking to fully evaluate their future health procedures.
According to a recent study conducted by the Turkish Statistical Institute and the Central Bank, the number of tourists coming to the country specifically for healthcare and wellbeing purposes has risen consistently over the past few years. In 2003 there were 103,400 tourists that received medical treatment in Turkey, spending an estimated US$91 million in the process. That number then increased to 162,480 tourists spending US$282 million in 2008 although it fell slightly in 2009 to 132,680 medical tourists at US$225 million. The latest estimates for 2010 are at around 165,000 tourists, which would now rank Turkey as the tenth most popular health tourism destination in the world. Inbound medical tourists have largely hailed from Germany, the Netherlands, France and the Balkans, which are all areas with a large Turkish Diaspora. There was also a noted increase in patients hailing from the Middle East, who have begun to prefer Turkey to Europe. Among these reported foreign patients, around 94 percent were treated in private facilities where the eye, brain surgery, orthopedic and cardiology departments attracted the largest number of patients.
The growth in Turkey’s medical tourism sector has been driven primarily by the comparative price advantages it holds over several key neighboring healthcare markets. In Turkey, fees for certain medical procedures can range from one-half to potentially as little as one-fifth the price in Europe and other industrialized countries. For example, the average price for a heart valve replacement in Turkey is $16,950 while it costs US$58,250 in the United States, US$25,000 in the UK and US$47,794 in Switzerland. In addition to this cost advantage, Turkey’s prime geographical location between Europe, the Middle East and Asia is a convenience, making it more accessible to a wide range of potential travelers. Furthermore, as a European Union candidate, the country has been forced to upgrade its health system to meet EU standards and now features high-quality hospital infrastructure with an abundance of well-trained staff well versed in a number of foreign languages. All of this combined with favorable US dollar exchange rates, suitable climactic conditions, and bountiful tourist attractions, add up to make Turkey a medical tourism destination with considerable potential
Turkey’s private healthcare industry has worked hard in the past decade to capitalize on this international medical tourism market potential, particularly in the provinces of Istanbul, Kayseri, Adana and Gaziantep, which attract the largest number of foreign patients. Turkey now hosts 556 private hospitals, each competing feverishly with one another for foreign clients. Furthermore, the national government has plans to upgrade a share of the country’s 833 publicly-run hospitals to accommodate foreign patients as well. International investors are also becoming aware of this opportunity and looking to invest in the country’s private healthcare market. Parkway Holdings, Fortis Healthcare International and Life Healthcare Group are among the top international hospital chains interested in establishing a presence in Turkey.
Despite these promising growth indicators, Turkey’s medical tourism industry still has several challenges to overcome if it wishes to compete amongst the world’s most popular medical tourism destinations, like India or Malaysia. Industry analysts have cited a lack of cooperation between state and private sector players as a key impediment to further developing the medical tourism sector. Without a more integrated national approach, Turkey has been unable to either effectively market its prime medical assets abroad or improve upon the number of qualified healthcare professionals working in the system at present. Another disadvantage Turkey currently faces is with its cumbersome legal system. Foreign patients generally have little legal recourse in Turkey. As it stands, it is incredibly difficult to win a lawsuit for medical malpractice under Turkish law. The protracted legal process usually required to conduct a case leaves many plaintiffs out of pocket even if they win damages. Visa requirements can further complicate matters and present further logistical and expense issues if the plaintiff is forced to leave a country before their case is concluded. In the rare case that a plaintiff has succeeded, compensation has been relatively minimal. These issues need to be resolved because Turkey’s international healthcare business continues to grow; more questions about the regulation of medical tourism in the country are sure to arise. Turkey’s medical tourism market is currently worth around US$500 million, but its potential is far greater.
New figures released this month by Malaysia’s insurance authorities have provided ample evidence of the country’s continued development into one of Asia’s most promising general insurance markets.
Malaysia’s economy grew at 7.2 percent last year, the highest rate experienced since the year 2000. The Malaysian government has continued to aggressively pursue substantial investment programs with the explicit goals of doubling GDP per-capita and turning Malaysia into a high income country by 2020. New parliamentary initiatives such as the New Economic Model (NEM), Economic Transformation Program (ETP) and the Tenth Malaysian Plan will, according to industry analysts, eventually contribute to a growth in demand for insurance products and services. However, despite these initiatives, the insurance industry in Malaysia currently faces numerous challenges as customers tighten their belts and become more skeptical toward the importance of protecting assets through insurance. The industry believes that general insurance agents must now play a greater role in order to weather the volatile economic and financial challenges.
In response to these challenges, the Malaysian Insurance Institute (MII), one of the country’s three insurance associations, organized the General Insurance Agents Convention for all general insurance agents in Malaysia on September 13, 2011 in Kuala Lumpur. The event was attended by 500 participants and encouraged discussion amongst industry professionals about how to best address the issues facing Malaysia’s emerging general insurance market going forward.
Speaking at the conference, Khadijah Abdullah, MII Chief Executive Officer, revealed that Malaysia’s general insurance agency force is projected to grow by over a quarter this year, up from the roughly 35,000 registered agents active in the country in 2010. This promising forecast is based on new MII data, which showed than an average of 800 new candidates per month had taken the insurance agents exam during the first half of the year. Not only are more Malaysian citizens realizing the importance of adequate insurance coverage, many are clearly now looking to the industry for employment opportunities. “A career as a general insurance agent is still attractive and very much sought after,” Khadijah Abdullah told convention attendees.
An increased agency force is vital to the future development of the Malaysian general insurance sector. Together with bancassurance, agents remain the most effective distribution platform for insurers in the Asia Pacific country. According to the General Insurance Association of Malaysia (PIAM), total general insurance gross premium amounted to MYR13 billion (US$4.1 billion) in 2010, of which agents contributed MYR7.4 billion (US$2.35 billion). In lieu of more technologically advanced distribution and promotion platforms, more agents will continue to be required throughout Malaysia as demand for insurance solutions escalates.
The changes in consumer attitude towards insurance in the Asia Pacific region have become more readily apparent. A new study released last week by ING Insurance Berhad showed that 83 percent of all Malaysian consumers believe that there is now a much greater need to protect their lifestyles now than compared to just 12 months ago. Rising healthcare costs and lifestyle expectations has enabled the attitude towards and awareness of insurance to change very quickly. Overall, the rise in income, healthcare, education and housing opportunities across most of Asia, have given families in the region greater access to a lifestyle they would now like to protect.
As the insurance industry continues to develop in Malaysia more regulatory measures are expected in the near future to update the market and more closely match international standards. For example, The Malaysian Central Bank (BNM) has recently come out with revised guidelines on motor insurance, aimed at curbing fraud and ensuring consumers understand the appropriate market value of their motor vehicle when applying for comprehensive coverage. The new measures came into effect on August 1st 2011 and have already worked to address many grievances in the motor insurance sector. In addition, Malaysia’s government has committed to the gradual financial liberalization of its Islamic finance sector and plans are also underway to introduce compulsory travel insurance cover for all Malaysians flying overseas by year’s end.
The MII advised that while these measures could do much to improve insurance awareness and coverage in Malaysia, their goals will not be realized without an adequately trained agency force, and this will take time and resources to achieve. “This requires the agents to have an in-depth knowledge and ability to advise their clients,” Khadijah Abdullah said, adding that further collective action would need to be taken to ensure best business practices are consistently maintained in Malaysia’s general insurance market “As an industry as a whole, we are driving higher professionalism as well as quality standards and in this respect, all stakeholders have to work together to achieve aims and objective.”
While both the numbers of agents and clients in the general insurance market are poised to grow, premium levels, with the exception of government subsidized motor and fire insurance lines, are expected to remain relatively stable due to intense competition amongst both domestic and foreign insurance players in the country. Malaysia has already proven to be an attractive location for several of the world’s most prominent insurers and they are bringing their expertise to the country to great effect. Prudential Assurance Malaysia Bhd (PAMB), a local joint-venture operation with the UK’s largest insurer by market value, posted a 13 percent increase in new business sales in the first half of 2011 and are now confident of surpassing last year’s totals. Indeed, Prudential now believes that the strength of its Asian business will continue to protect the insurer against the worst of another potential financial crisis in the West. These same sentiments were echoed earlier in the year by Allianz, who are themselves undertaking numerous initiatives to improve their distribution capabilities in the region.
Allianz Group is one of the leading global services providers in insurance and asset management. With a worldwide network of 153,000 employees, the Allianz Group serves 75 million customers in over 70 countries. Allianz offers a wide variety of insurance products to both private and corporate customers, including motor, accident, general liability, fire and property, legal expenses, credit and travel insurance. Allianz provides life and health insurance products on individual and group basis. Allianz is the market leader in the German market and has a strong international presence in insurance.
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.
ING provides banking, investments, life insurance and retirement services and operates in more than 50 countries. It serves more than 85 million private, corporate and institutional customers in Europe, North and Latin America, Asia and Australia.
Bank Negara Malaysia
Bank Negara Malaysia is Malaysia’s central bank, tasked with overseeing the nation’s economic and financial systems.
Health officials from Abu Dhabi have reissued a warning to all residents in the Emirate to maintain an up-to-date health insurance policy or else face a stiff penalty.
At a conference held yesterday, the Health Authority Abu Dhabi (HAAD) unveiled a new media awareness campaign that aims to publicize the activation of the Health Insurance Law No. 23 of 2005 and to further educate Gulf residents about the tremendous importance of having valid health coverage in the Emirates at all times. The HAAD wants all companies and UAE nationals who have workers under their sponsorship to be aware of the national health insurance requirement as well as the new mechanisms now in place to enforce it.
Read the rest of the Abu Dhabi Health Insurance article
While the United States’ political class continues to feverishly debate the merits of government involvement in healthcare and insurance, one key demographic has seen a considerable improvement in coverage since several provisions from President Obama’s contentious Affordable Care Act were put into place in 2010. According to two recently released surveys, one by the government and another by Gallup, nearly one million young adults have gained health insurance in the US within the past year.
Health insurance in the United States is primarily provided through private sector employers. This has meant that citizens classified as young adults, aged 18 to 25 and traditionally the most likely to be either be unemployed, underemployed or still in school, have been the demographic group with the lowest proportion of health insurance policyholders in the country. A key provision of the Obama Administration’s Health Care Reform Act has given citizens in that age range more coverage options. Starting in September last year, young adults can stay covered as a dependent under their parent’s family health insurance plan until they are 26 years old, enabling the mass of college graduates encountering a difficult job market to maintain some valuable security. Young adults are able to stay on a family plan even if they no longer live with their parents, are not a student, listed as a dependent on a parent’s tax return, or even married.
Under the previous law, dependent children were generally removed from a parent’s coverage when they reached a cut-off age (usually 19) or graduated college. These young workers would then largely abstain from coverage as starting positions frequently do not have extensive health benefits nor adequate wages to afford an individual health insurance policy.
According to data released by the Centers for Disease Control and Prevention (CDC), by the end of the first quarter of 2011 the number of uninsured adults in the 19-to-25 age bracket had decreased by 900,000 over the same period last year, moving from 33.9 percent of all young adults (10 million) in 2010 to 30.4 percent (9.1 million) this year. The CDC report, the National Health Interview Survey, interviewed more than 20,000 people from January through March and noted that the increase in insurance coverage amongst younger working-age Americans may continue through the remainder of the year. For every other age group surveyed, the proportion without health insurance actually increased, in conjunction with rising unemployment figures and contracting employer margins. The CDC noted that for the first time in over a decade, the 18-to-24 year old group was not the least insured group in the United States, having now been overtaken by other working-age Americans who are between 25 to 34 years old.
The CDC report reinforced findings made by the US Census Bureau last week, which reported that the percentage of young adults without health insurance cover dropped by 2 percentage points in 2010, to 27.2 percent overall. The Census Bureau uses different testing methodology to the CDC but that result still translates to 502,000 fewer uninsured 18-to-24 year olds in the United States over the past year. The Census numbers further revealed that young adults were the only group who gained coverage through private employer policies (possibly though their parent’s plans), and not government programs. A separate forecast by the Department of Health and Human Services last year, came between both government surveys, projecting that 650,000 young adults would gain coverage in 2011 due to the healthcare reform act.
A survey conducted by independent polling firm Gallup found similar rates of insurance amongst American young adults in the second quarter of 2011, giving valuable credence to the government’s assessment. Gallup’s data incorporated 89,857 interviews between April 1 and June 30 and found that the number of uninsured Americans ages 18 to 25 went down to about one in four (24.2 percent) from upwards of the 28 percent last reported in the third quarter of 2010. According to Gallup, this is near the lowest rate measured for this age group since the firm started to monitor health insurance coverage rates in 2008.
Neither survey explicitly linked the rise in insurance coverage amongst young adult Americans to the recent changes in healthcare law. However, when paired with stagnant unemployment numbers and falling health insurance rates elsewhere, it becomes more apparent that lifting age-restrictions to family cover has had a profound affect on the statistics. Allies of the Obama Administration’s agenda have been quick to use this data to demonstrate the positive role more proactive government policy can have in increasing insurance coverage in the USA. Last week, Kathleen Sebelius, Health and Human Services secretary, explained in a statement that young Americans would now be able to choose their career path without fear of dropped coverage or inadequate benefits. “This is a reminder the difference the Affordable Care Act is making in the lives of Americans …Where would we be if the inventors of Facebook had taken a desk job just to get health insurance,” Sebelius said.
Young adults, when given appropriate information and resources, are certainly interested in buying insurance and taking the necessary steps to protect themselves and their future. The rise in insurance awareness amongst younger working-age people is a trend being experienced worldwide. According to recent studies commissioned by Swiss Re and ING, the next generation of consumers in emerging Asian powerhouse markets India and China have become increasingly risk averse, more aware of the benefits of insurance, and willing to purchase cost-effective policies. For the international insurance industry, these younger clients are not only the future buyers of insurance, they also represent a tremendous business opportunity right now.
The Centers for Disease Control and Prevention (CDC) is a part of the U.S. Department of Health and Human Services. The CDC is the primary Federal agency responsible for executing and supporting public health initiatives in the United States of America.
Gallup Inc. was founded in 1935 and has grown to become one of the world’s leading polling, research and consulting organizations. The firm today employs thousands of industry specialists and provides its services through the internet, Gallup University campuses, and through 40 offices stationed around the world.
This week, Europe’s second largest insurer AXA selected Wasilah Insurance Agency to be its new business partner in the Kingdom of Saudi Arabia. The deal comes as part of the French insurance company’s plans to further develop and promote its products in the Gulf region.
On September 20th 2011, AXA Cooperative Insurance Company, the French insurance company’s Saudi Arabia-based shareholding company, signed a 10 year renewable agency contract with Wasilah Insurance Agency. Through this partnership, Wasilah has been given exclusive rights to market, distribute and sell all AXA-branded insurance products currently offered in Saudi Arabia.
AXA has been a key player in the Gulf and Middle East for over 60 years, offering a wide range of insurance products and services for corporate and individual clients in the region. In 2008, the company formed a co-operative insurance subsidiary in Saudi Arabia, called AXA Cooperative, and launched their company’s Initial Public Offering, which was over 5 times over-subscribed, in April 2009. Initially licensed to cover only motor and health policies, the insurer received final regulatory approval from The Saudi Arabian Monetary Agency (SAMA) last year to fully carry out its cooperative insurance and reinsurance business in the Kingdom of Saudi Arabia.
AXA’s interest in developing a greater presence in Saudi Arabia is well founded. With a population exceeding 27 million people, Saudi Arabia is the largest market in the GCC, and the insurance sector has developed substantially since the business was first permitted in the 1990s. Driven by strong macroeconomic performance (tied to a global rise in oil prices), rising income levels and positive demographic trends, the Saudi insurance market has grown by double digits for the past 5 years. In 2010, the Kingdom’s insurance sector grew by a further 12.2 percent, passing SAR 16.4 Billion (US$ 4.4 Billion) in gross insurance premium. This has all happened while the Kingdom’s non-life and life insurance penetration, at 1.0 percent and 0.1 percent, remain amongst the lowest in the region.
According to a recent report by Alpen Capital, Saudi Arabia’s insurance sector could reach US$9.24 billion in total written premiums by 2015 at an 18 percent combined annual growth rate. Due to an ageing population and regulatory initiatives, Saudi Arabia will be the only GCC market in which sales of new life insurance policies are expected to grow faster than that of non-life products. While the main business lines in the Saudi insurance industry have been health insurance and motor insurance retail cover, takaful insurance also has a significant presence in the Kingdom and their continued development will improve awareness and acceptance towards other lines of insurance in the region. Increased participation from the international private sector is also expected to yield additional positive returns.
This anticipated surge in demand for international insurance expertise in Saudi Arabia has pushed AXA to both improve upon their product portfolio in the region and seek out local business partners to enhance their immediate distribution platform. AXA’s new policies in Saudi Arabia will primarily cover retail products, but also will cater to the Kingdom’s growing SME sector. The new lines of business will include motor, property, marine and medical insurance as well as other protection options.
Through their new tie-in with Wasilah, AXA’s products will initially be sold through the agency’s headquarters in Riyadh. Within the next three years this network will be expanded significantly across the Kingdom, with around ten more agencies scheduled to be opened in Jeddah, Riyadh and Dammam. Wasilah’s head office in Riyadh will be responsible for supporting all new branches in addition to supervising its overall operations.
Speaking at the signing ceremony, AXA Cooperative Director Jerome Droesch asserted that their new partnership with Wasilah would give AXA the necessary edge to capitalize on Saudi Arabia’s remarkable market potential and take on the three leading players (Tawuniya, Medgulf and Bupa Arabia) in the retail and SME insurance sectors. “We see tremendous growth coming from KSA. We were very pleased to be granted our insurance license last year. Wasilah Insurance is a fitting partner to promote AXA Cooperative Insurance’s products and services in the Kingdom and they will be a key contributor towards our gaining dominance in the Personal Lines and SME line of business. It should represent as much as 15 percent of AXA Cooperative premiums in 3 years,” Droesch said.
According to Business Monitor International estimates, the Saudi population is one of the fastest growing in the world and is estimated to double by 2023. This substantial increase in the population not only increases the probability of insurance policies being taken out but also the number of Saudi locals able to work in the industry. Droesch explained that AXA would work hard to ensure the development of their insurance business contributed to the overall economic growth of Saudi Arabia. “This partnership shows that AXA will continue to invest in the region and our focus will be to seize the huge potential this market has to offer. We will leverage our international expertise and adapt our services and offerings to suit the local Saudi clientele. We will also continue investing in our employees and will use the large pool of well educated Saudi nationals as a prime source of recruitment and expertise,” Droesch remarked.
Khalid Al Rubaian, Board Member and Owner of Wasilah Insurance Agency, welcomed AXA’s involvement with his agency. Wasilah is a newly licensed agent but staffed with experienced insurance industry professionals, and with the right product portfolio could excel in the Saudi market.“I’m sure with AXA international expertise and the experience and knowledge of the Wasilah Board and Management supported by insurance matter experts with locally based expertise of international quality and standards; we will make a difference in the industry,” Al Rubaian.
AXA Cooperative Managing Director Paul Adamson, concluded the event, saying that their upcoming partnership with Wasilah brought them one step closer to fulfilling their overall commitment to expand AXA’s operations throughout the Middle East and match the evolving needs of their international clients. “Our customers will now be able to access us quicker and more easily…We trust that this reputation will carry us forward as we continue to grow and introduce new products to the kingdom,” Adamson said.
French Insurance Companies Mentioned
AXA Group is a worldwide leader in Financial Services. Headquartered in Paris, the AXA Group companies are engaged in life insurance, health insurance and asset management services among others. AXA’s operations are diverse geographically, with major operations in Europe, North America and the Asia/Pacific area.
Wasilah Insurance Agency
Wasilah Insurance Agency is a newly licensed insurance agency, providing multiple types of coverage options in the Kingdom of Saudi Arabia. The headquarters are based in Riyadh and additional 2 regional offices are scheduled to open in Jeddah and Dammam in 2012.
A new research document released this week by ING has found that more than half of Asia’s emerging middle class are planning to buy an additional insurance policy over the next 12 months due to a wide assortment of regional social and economic factors.
The ING Investor Dashboard has been published for the past three years by ING Investment Management as part of their quarterly study of investor confidence and activities among middle-income customers in 11 key markets across the Asia Pacific region, including China, Hong Kong, India, Indonesia, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Japan. Starting this year, ING began tracking insurance purchasing behavior and other middle-class lifestyle choices in a parallel study, titled ING Insurance Dashboard. The inaugural insurance survey was conducted in June 2011 and involved online interviews with over 2,300 middle-income investors, aged 25 years and above, from China, Hong Kong, India, Korea, Malaysia, Thailand and Japan. ING used international and independent research firm Nielsen to conduct the survey.
The findings of the ING Insurance Dashboard report, released on Wednesday Sept 21, revealed that 82 percent of all middle income Asian citizens have felt a greater need to protect their lifestyle in the past year due to a stagnant macroeconomic climate, uncertain income conditions and political changes (in Thailand and Japan), amongst other factors. This perceived threat of potential economic downturn has driven many to consider additional coverage options. Over half of all respondents (52 percent) claimed they were planning to buy a new insurance policy sometime in the next 12 months. Among the seven countries surveyed, India appeared the most willing to seek coverage with 85 percent of respondents worried about a lifestyle coverage shortfall and 75 percent planning to purchase insurance soon.
According to the ING Insurance Dashboard report, the top three reasons middle class Asians are saving today are to protect family income and to provide for retirement and their children’s education. These driving factors were relatively consistent across the Asian countries surveyed, with the exception of respondents from Hong Kong and Thailand, who intimated that purchasing a home and starting a business were also prime reasons for saving. The study also revealed that parents across Asia are starting to save for their children earlier, with over 45 percent of Indian respondents starting to save when their kids are between 0 and 3 years old. There is also a growing awareness of alternative insurance and savings plans like takaful and micro-insurance.
ING Insurance Asia Pacific Chief Executive Frank Koster explained in a press briefing that the survey’s results demonstrated how far the average middle class Asian consumer had progressed in terms of insurance awareness and lifestyle expectations. “This is in line with our experience. Asia’s growing middle class is looking for more protection to ensure they can maintain their lifestyles in the face of uncertainty and an increased awareness of the benefits of insurance,” Koster remarked.
The survey’s data also indicated that spiraling healthcare costs (particularly amongst respondents from China, Hong Kong, Malaysia and Thailand), combined with changes in the domestic sphere (China, India, Korea and Malaysia) were driving Asia’s middle income earners to increase their insurance coverage. These changes in consumer attitude towards insurance are all happening incredibly quickly. The survey showed, for instance, that 83 percent of all Malaysian consumers believed that there is now a much greater need to protect their lifestyles now than compared to 12 months ago. Overall, the rise in income, healthcare, education and housing opportunities across most of Asia, has given individuals and families in the region greater access to a lifestyle they would now like to protect.
Elaborating further on the report, Frank Koster said that combined insurance and savings products had become a popular choice for middle-income Asian families looking to address future concerns and a present shortfall in coverage. “Insurance policies with savings plans attached are proving to be the product that meets this demand. These policies are proving to be an accessible and affordable wealth management and protection product, for Asia’s growing number of middle income earners,” Koster noted.
The purchasing habits of Asia’s emerging middle class are already having a profound effect on the global insurance markets. ING cited Swiss Re’s latest sigma study, which showed that life insurance premium volume increased by 13 percent across Asia in 2010, more than doubling the 6 percent growth rate reported for the rest of the world for last year. This trend looks set to continue as insurers begin to introduce more elaborate wealth management products to meet the increased spending power now present in the Asia Pacific region. As more and more middle class Asian families secure a lifestyle and assets worth protecting, their income appreciates and becomes able to afford more robust wealth management and investment services.
The report concludes by saying that the continued rise of the insurance sector in Asia will not only help it’s citizens handle day-to-day issues but could also prove integral to the continued economic and social development for the region as well “People in Asia are obviously interested in looking after themselves and the lifestyle that they lead, and importantly, the opportunities they can create for themselves tomorrow,” Koster finished.
Insurance Companies Mentioned
ING is a global financial institution of Dutch origin offering banking, investment, life insurance and retirement services serving more than 85 million private, corporate and institutional customers in Europe, North and Latin America, Asia and Australia. ING Group is active in banking, investment management, life insurance and retirement services across 14 major economies in the Asia Pacific region, employing over 23,000 staff.
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.
Whittington Group, the Singapore-based international insurance investment conglomerate, announced today that it had reached a definitive agreement to sell off its British businesses to an international consortium of specialist insurers. The move follows similar actions taken by other players in the United Kingdom insurance market, as firms look to divest stagnant business lines to finance expansion in other parts of the world.
The announcement of a definitive sale agreement has ended a long-running evaluation process that had seen more than a dozen potential suitors assessed by Whittington Group over the past year. The consortium that was finally agreed upon by Whittington has been lead by London-based specialist insurer Tawa PLC, and also includes Norwegian marine insurer Skuld as well as Bermuda-domiciled insurance and reinsurance holding company Paraline Group PLC. The terms of the deal have not yet been disclosed, but are not thought to be far off Whittington’s initial £37 million (US$60 million) appraisal of its businesses. The transaction is now pending the approval of Lloyd’s and the UK Financial Services Authority (FSA) and would be expected to close before the end of 2011.
The deal will see the consortium acquire Whittington Insurance Markets Limited (WIM) and its UK subsidiaries, including Whittington Capital Management Limited, an important provider of turnkey managing agency services to new and existing syndicates at Lloyd’s of London. Upon completion of the transaction, a new management team, led by current Whittington chief executive Stephen Cane, will become equity investors in the acquired company.
In a statement Cane welcomed his new business partners and heralded their investment as an important step in the further development of the company: “We are extremely pleased with the acquisition by the consortium and also with the opportunity to participate in the ownership of our company. Each of the partners will provide strength and stability to our business. With the support of our new ownership group, we will also now have the ability to provide capital to selected new entrants to Lloyd’s.”
The chief executive for Tawa, Gilles Erulin meanwhile described the acquisition of WIM as a coup. Having an established presence in Lloyd’s turnkey system could prove to be an effective and cost efficient way to bolster their services in the company insurance market. “This transaction provides us with a platform through which to expand our range of services to the Lloyd’s community. Whittington is the leading franchise in the Lloyd’s agency management market and provides us with real scale as a provider of live insurance services. This is highly complementary with the range of consulting and outsourcing services currently provided through Pro, and we look forward to developing these businesses in tandem with one another,” Mr. Erulin commented.
Turnkey syndicates are managed by third parties on behalf of capacity providers and are integral in providing cover for large companies as well as small and medium enterprises. Whittington currently manages six key syndicates at Lloyd’s: WR Berkley, Channel Syndicate 1915, the Goldman Sachs-backed Arrow Syndicate, Sirius Syndicate 1945, and two recent transfers from Alterra Capital; Syndicates 2525 and 2526. The combined capacity of these syndicates totaled approximately £500 million (US$785 million) for the 2011 year of account. At the end of 2010 WIM’s consolidated profits before tax were £4.6 million (US$ 7.2 million) with net assets worth £3.5 million (US$5.5 million).
The addition of Whittington’s Lloyd’s platforms has come during a busy period of acquisition for Tawa, which has seen it buy up run-off insurers like Oslo Reinsurance and Bermuda’s Island Capital, as well as the £38 million purchase of Swiss Re’s P&C legacy business Pro in 2009. Tawa, long focused on run-off management, has been looking to expand and diversify its services portfolio, targeting higher margins over increased volume, and becoming a more traditional insurance business with recurring and reliable revenue streams. The company has become a service provider with developed platforms in the United States, Europe and now the Lloyd’s and company market in London.
For the Whittington Group, CEO Anthony Holbrow explained in a statement that the deal would enable their firm to focus on developing its core business in Asia. “Our group’s focus has, for some time, been on developing our businesses in Asia and the sale of WIM in London will enable us to accelerate our ambitions in the region and focus our energies on the Asian insurance markets. This marks the end of 18 years in the London Market for Whittington Group and we thank our dedicated people and loyal clients for making WIM the attractive business that has it has become.”
Whittington moved their headquarters to Singapore in 2006 and has been selling off their assorted turnkey operations to free up capital for further activity in the Asia Pacific region. The Group’s largest project to date is a direct online motor business in Singapore called DirectAsia.com, which they purchased in June 2010. This growing internet business combined with a rising regional middle class and motor pool presents an opportunity for a higher rate of return on capital. The emerging insurance markets in Asia are now widely expected to outperform that of other more mature Western markets, with India and China leading the way. Hobrow concludes that the Whittington Group is aware of this trend and is acting accordingly to shift their global focus and seize the opportunities a rising Asian middle class can provide. “There are plans to expand the DirectAsia.com brand into other markets in the region and the sale of our London business will certainly give our Asia operations an added impetus.”
Insurance Companies Mentioned
The Whittington Group offers global capital and consultancy services to non-life insurance businesses, in the areas of start-up, growth, exit, outsource, run-off administration, and office accommodation and infrastructure. The company was founded in 2005 and is based in Singapore.
Tawa PLC specializes in acquiring and developing the run-off portfolios of insurance and reinsurance companies, as well as introducing its own products to serve the international insurance market. Tawa was founded in 2001 and is a United Kingdom-based company.
India looks set to continue being one of the fastest growing insurance markets over the next decade, with rising income levels and awareness of risk management expected to drive a considerable demand for coverage solutions nationwide. Two new industry briefings released by India’s commerce chamber reveal that the country will be one of the few major insurance markets expected to deliver double digit growth rates across both life and non-life product lines, contributing around a tenth of total global premium growth by 2015. Indian insurers could furthermore make a significant mark and compete on the global stage if they are able to refine their business models and capitalize on the tremendous potential available in their home market.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM), released statistics this week that forecast an 18 percent annual growth rate for India’s general insurance industry until 2015, with the market size increasing from US$9.8 billion at present to upwards of US$18.8 billion in five years time. Assocham based their industry projections on the increased consumer base for healthcare and automobiles, growth and investment in domestic small and medium enterprise, and a persistent demand for coverage options. “With this trajectory, India will be one of the fastest growing markets in Asia and globally – next only to China among major markets,” the report said.
According to Assocham, motor insurance will remain the largest business line in the non-life insurance sector, accounting for over 40 percent of the industry’s net premiums for the foreseeable future. India is slated to become the world’s third largest car market by 2020, behind China and the United States, with over 7 million automobiles expected to be sold annually in the country. This surge in supply in conjunction with updated road safety, coverage and infrastructure will drive growth in the motor insurance sector.
Increased spending on healthcare and infrastructure will also be integral to the further development of the general insurance industry in India. Total expenditure on healthcare, through government sponsored schemes and private sector activity, is expected to top US$200 billion by 2015 and this will create significant opportunities for the country’s emerging health insurance sector. According to Assocham Secretary General D.S. Rawat, through substantial investment and government involvement, health insurance may finally be gaining traction in India. “The health insurance segment will grow the fastest and account for close to 30 per cent of total industry premiums by 2015.” He remarked in the press briefing.
The Indian government’s upcoming 5-year economic plan, beginning April 2012, will call for nearly US$ 1 trillion in fresh infrastructure spending, updating and improving upon the country’s vast road, port, railway and power systems. This substantial investment will create many opportunities for the local insurance industry, which will need to provide cover for these new projects. Assocham predicts that engineering insurance coverage for new infrastructure projects will become a particularly important area for growth, and could develop further avenues for expansion across other commercial lines sectors as well. The private sector is also developing briskly, with the number of small and medium enterprises in India projected to rise by 20 to 22 percent over the next decade. The trade body noted that the number of companies competing in the general insurance market had already increased from 16 in 2007 to 24 in 2011, and more would be forthcoming as more government and private sector business opportunities emerge.
India’s life insurance market also presents significant growth potential. In a separate report, Assocham noted that the life sector’s annual gross written premiums of US$5.6 billion would grow by 13 to 14 percent annually and reach US$108 billion by 2015. Over the past decade, India’s life insurers reported a 28 percent rise in new business premiums, 27 percent in rise in annualized premium equivalent (APE) and a 25 percent increase in gross written premiums.
Assocham Secretary General D.S. Rawat, claimed however that while India’s life insurance market had already become one of the ten largest in the world, the local insurance industry still has to improve upon its performance standards. “The level of protection as measured by sum assured to GDP is about 55 percent relative to benchmarks in developed markets of 150 percent to 250 percent,” Rawat noted. India’s domestic insurance industry has been criticized for overtly focusing on selling short-term products and acquiring new business premiums at the expense of maintaining operational efficiency, profitability and customer retention. According to Assocham’s data, between September 2010 and March 2011, the life insurance industry has slowed down considerably, posting negative APE growth rates in successive quarters.
The Indian life insurance industry is of course learning from this. Insurers need to develop sustainable business models to solve their profitability issues and succeed in a more competitive market. Going forward, Assocham expects the industry will broaden their focus to readdress their agency model incentives to encourage selling more long-term savings and protection products to consumers. Insurance industry regulators are also likely to become involved in the near future to ensure that the Indian life market better conforms to international standards.
Assocham concludes their report by highlighting the rapid evolution of the Indian consumer and how this could affect the sale of insurance going forward. The emerging Indian middle class is at the forefront of the digital revolution, adopting the latest mobile technology and spending an increasing amount of their time and money digitally across networks. Over the next five years, mobile and internet driven micro-transactions in the country are projected to grow three to four times over. Thus it has become incumbent on insurers to enter this space to promote the value of insurance to consumers. Assocham believes this could in fact become a positive development for India’s insurance industry. “High-quality and low-cost broadband access through mobile and hand-held devices through 3G and 4G services will provide a unique opportunity to leap front legacy issues and drive innovations which can help unlock growth, reduce costs and enhance service levels.”
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) is India’s premier apex chamber of commerce, with a membership encompassing over 200,0000 companies and professionals across the country. Assocham works to represent the interests of all industry and trade in India. The organization lobbies the national Government on policy issues and interfaces with corresponding international organizations to support bilateral economic interests. Assocham was established in 1920 by promoter chambers and represents all regions of India.
The United Arab Emirates’ large expatriate workforce will soon be subject to a comprehensive medical screening process before being admitted into the country as part of the government’s plan to stop the spread of contagious diseases amongst migrant workers in the Arab state. The new system will also curb the number of workers who slip into the UAE with fake certificates by mandating re-tests once they arrive in the UAE.
Starting on October 1 2011, expatriate workers from Indonesia and Sri Lanka will undergo preliminary screening for 16 medical conditions, including tuberculosis, hepatitis B, HIV/Aids and malaria, in their respective countries of origin before they can be approved for a visa to live or work in the UAE. Some specific categories of expatriates will also be further checked for additional non-infectious health issues such as diabetes, cancer and renal failure. Those who test positive for a specified illness at any of the 220 medical centers throughout Asia that are part of the Gulf Approved Medical Centers Association (GAMCA) will be refused entry into the Emirates. Migrant workers who pass the first screening will then be re-tested in the UAE upon their arrival to confirm results. These same tests will also become applicable for residence visa renewal. Visitors entering the UAE on tourist or visit visas however will be exempt from these new health requirements for now.
The screening process being implemented in the UAE is the first phase of the Gulf Co-operative Council’s (GCC) Expatriate Worker Medical Examination Program, which began in 1995 as a medical fitness system to track the spread of communicable diseases across the Gulf region. This standardized healthcare exam is currently used by Qatar, Oman, Kuwait and Saudi Arabia, and includes tests for HIV/Aids, pulmonary tuberculosis, leprosy and syphilis. All GCC visa applicants must also be up-to-date on all their vaccines, including Hepatitis A and B, influenza and the Rubella virus. The UAE is now the final GCC member country to put this program into action, a state that sees almost 1.7 million new expatriate workers head to the state every year. Now, in collaboration with the region’s leading physician’s advisory group, the GCC technical committee, routine checks will be held internationally to ensure that the highest health reporting standards are maintained and that all newcomers in UAE have genuine accreditation and are free of infectious diseases.
Indonesia and Sri Lanka were chosen as the first two countries to undergo the medical screening system after the GCC technical committee conducted a thorough inspection of their healthcare facilities. These two countries will serve as very useful pilot subjects, as there are currently an estimated 250,000 Sri Lankan and 100,000 Indonesian expatriates working in the UAE. After a three-to-six month evaluation period, the program will be extended towards migrant labor from at least eight other Asian and African countries, including India, Pakistan, Bangladesh, Ethiopia, Nepal, Egypt, Sudan and the Philippines.
Health officials have long expressed concern about the spread of infectious disease among migrant workers in the Gulf, and in particular tuberculosis. The World Health Organization (WHO) has warned that new strains of tuberculosis and other drug resistance diseases have increased globally over the past few years, with new cases occurring most prominently in South Asia, a region that supplies the Gulf with many of its workers. According to the UAE Ministry of Health’s 2009 data, over 21 percent of all Asian expatriates screened for visa renewal tested positive for TB while in the country.
The UAE’s Ministry of Health explained in a statement that the new testing regime was necessary to both prevent the spread of disease and keep adequate records of migrant labor in the Emirates. “The new procedures will positively affect public health and eliminate diseases among newcomers to the UAE who are either coming for work or residence…The most important reason for the implementation of the program in the country of origin is to discover diseases in a suitable time. This achieves the highest protection grades.” The UAE’s previous immigration rules called for similar medical checks for expatriates before securing a visa. However, immigrants were allowed to enter the country and wait for up to a month before the screening process and this could’ve contributed to the spread of communicable diseases in the UAE before the diagnosis was made.
According to the Ministry of Health, instituting a thorough double check process by both the home country and UAE will work to curtail fraud and will lessen the stress and expenses on the UAE healthcare system, which has to treat all patients with communicable diseases at great cost before deporting them. Many of these sickly immigrants would not have been able to fulfill their job commitments in their present condition anyway. The number of people waiting to get tested is also expected to drop as expatriate workers will be deterred from trying to get into the country with faked test results. As part of the GCC’s regional expatriate testing initiative, all screening centers, embassies and consulates are connected through a computer system to ensure transparency and improve security. Health centers found issuing fraudulent health certificates and medical reports will have their license revoked and be fined thousands of dollars.
“Double-testing will positively affect public health and eliminate diseases brought in,” said Salem Darmaki, Acting Undersecretary at the Ministry of Health, at a press conference in Dubai on Wednesday, concluding that “We hope these procedures have a positive impact on public health in society to eliminate diseases among newcomers to the UAE, and reduce the psychological and financial burden in case they fail to obtain a residency visa.”
New Statistics released this week by the U.S. Census Bureau reveals that health insurance has remained stagnant in the United States, with citizens failing to increase their coverage due to more pressing economic concerns.
According to the report, titled Income, Poverty and Health Insurance Coverage in the United States: 2010, 49.9 million Americans or 16.3 percent of the total US population had no health insurance in 2010. That percentage represents a slight increase on 2009’s figures, when 49 million citizens or 16.1 percent of the population was uninsured. The Census report noted that their 2010 data represents the first full year after the recession that officially ended in June 2009, and could thus be compared to similar periods after the end of other recessions in the past. The report noted that the year following the most recent recession showed no major difference in the uninsured rate, while in the years following the recessions that ended in 1991 and 2001, the uninsured rate in the US increased more substantially.
While there was no significant shift in numbers this year, the percentage of Americans covered by private health insurance policies has continued along its decade long decline. The Census data showed that the rate of private coverage decreased from 64.5 percent in 2009 to 64 percent in 2010. The number of people covered by private health insurance in the United States stands at 195.9 million people, still the largest insurance market in the world but the rate of private coverage has been decreasing since 2001.
The increased number of uninsured Americans has been largely attributed to the continued decline in the availability of employer-sponsored health insurance. Private sector employers have long been the bedrock provider of health insurance benefits for working Americans and their families. Although the US population has grown from 279.5 million to 306.1 million in the past decade, the percentage of employment-based healthcare coverage has decreased every year since 2000, from 64 percent and 179.9 million people, down to 55.3 percent covering 169.3 million people in 2010.
The proportion of job-related coverage available in the US has been dropping due to rising insurance premiums, unemployment and adverse economic conditions. Employers have also attempted to shift rising healthcare costs to workers, making insurance less affordable. Furthermore, in a recession with high unemployment rates, many employers find themselves in a position where they no longer need to provide cost-effective health benefits to attract or retain employees. According to the census data, around 14.3 million or 15 percent of all full-time employees were uninsured. Of those Americans not working, 28.5 percent were without healthcare coverage in 2010, roughly the same percentage as 13.7 million part-time workers in the country.
The number of uninsured may in fact have been greater had it not been for the increased presence of US government insurance programs (including Medicare, Medicaid, TRICARE and Children’s Health Care Program), which have mitigated the coverage shortfall considerably. According to the Census report, the number of Americans covered by government health insurance programs increased to 95 million people in 2010, up from 93.2 million in 2009. The percentage of people covered by these programs has now increased for the fourth consecutive year, rising to 31 percent in 2010 from 30.6 percent in 2009. Last year Medicare and Medicare enrolled a record number of beneficiaries, with 48.6 million and 44.3 million incoming people, respectively. These state coverage programs are set to expand further through upcoming healthcare reforms but it is yet to be determined whether or not they can handle the influx of people who now lack employer-based coverage.
According to the Census data, the rate of health insurance coverage in the US remains divided by ethnicity, geography and income. Nationwide statistics remained relatively unchanged this year with 30.7 percent of all Hispanics uninsured, followed by 20.8 percent of blacks, 18.1 percent of Asians and 11.7 percent of whites. The South continued to lead all regions with 19.1 percent of its resident population lacking health insurance. Those with household incomes below US$25,000 accounted for the highest rate of uninsured, at 27 percent, while households earning over US$75,000 annually comprised only 8 percent. Why these relatively wealthy 8 percent have not purchased health insurance is not answered.
The Census Bureau did note one demographic that managed a notable increase in cover over the past year and that is young people. The number of uninsured among 18 to 24 year olds, commonly the least likely to be employed and have coverage, declined by 2 percent from 2009 to 2010. The US Secretary of Health and Human Services Kathleen Sebelius attributed this promising statistic to one aspect of the federal Affordable Care Act that had already been put into place. Starting last year, dependents could stay covered under their parent’s health insurance plan until they were 26 years old, which has enabled graduates encountering a difficult job market to maintain some valuable security. “The report showed that the percentage of young adults with insurance increased from 70.7 percent in 2009 to 72.8 percent in 2010. That translates into 500,000 more young people with insurance. We expect even more will gain coverage in 2011 when the policy is fully phased in,” Sebelius noted on the department blog.
It remains unclear how the remaining provisions in the Obama Administration’s Affordable Care Act will impact these coverage stats, with many important facets still being debated on a political level and in the courts. Under the Affordable Care Act nearly all American citizens would have to carry health insurance in 2014 or else face a fine. The federal law will require that the general public have insurance policies which meet certain minimum benchmarks, more sufficient than basic catastrophic coverage and preventive services. This individual mandate is currently facing legal challenges in 26 states which contend that the United States government cannot compel its citizens to engage in such commerce. Two federal courts have already ruled that the mandate violates the Constitution, and the US Supreme Court is ultimately expected to decide upon the contentious issue soon. As we get closer to the inception date for these important healthcare policies, expect the annual Census reports to reveal more telling data that determines whether in fact such reforms will work for the average American.
Lloyd’s of London, the world’s leading specialist insurance market, has now begun writing direct insurance policies in China through its fully owned subsidiary Lloyd’s Insurance Co. (China) Ltd, according to a press statement released by the insurer on Wednesday.
A more open China, now presiding over the world’s second largest economy, has proved to be a tempting opportunity for international insurers looking for sustained premium growth due to favorable economic conditions and an under-penetrated market. Total written premiums in China’s insurance market reached US$221.4 billion in 2010, a 30.4 percent annual increase. This momentum has continued into 2011 despite persistent international market turmoil and record catastrophe losses. According to the latest China Insurance Regulatory Commission (CIRC) figures, the total premium income reported by Chinese insurance companies’ surpassed US$123.95 billion in the first half of the year, a 13 percent rise on last year’s figures. China is currently ranked as the sixth largest insurance market in the world and the second biggest in Asia. Many industry observes are expecting China’s insurance market to overtake the United States to become the number one market, possibly as early as 2020.
Lloyd’s decided to establish a presence in China in March 2007, opening Lloyd’s Reinsurance Company in Shanghai, which enabled the market to begin developing non-life reinsurance business in the country. Other Lloyd’s insurers have followed suit, attracted to the Asian nation’s ongoing economic success. The CIRC’s decision last October to extend overseas licenses to include the option to underwrite for non-life direct business in China also encouraged foreign players XL and Guy Carpenter to apply for and begin operating in the country in the past year.
In May 2010, the CIRC broadened Lloyd’s China’s existing local reinsurance license to include writing general insurance, short-term accident and health insurance business. In addition, Lloyd’s Chinese branch is now permitted to write policies covering large commercial risks (including international marine, aviation and cargo transportation insurance) outside of Shanghai under certain circumstances. Obtaining this direct insurance license in China had been a priority for Lloyd’s, with increased product diversification and further international growth both key pars of its three-year strategic roadmap. The new license has allowed Lloyd’s to expand beyond their current business of providing product solutions and increased business capacity through their reinsurance products in China, and marks the next step in its plan to become a major provider of specialist insurance and reinsurance services in the Asia Pacific region.
Lloyd’s extended insurance license in China became operational as of September 2011, with the market now equipped to broaden its product portfolio. This year long process of preparation has involved converting Lloyd’s Reinsurance Company (China) Ltd into a direct insurance company as well as the corresponding development of all associated infrastructure required by the CIRC. Initially, Lloyd’s four managing agents in China (Travelers, Starr, Sportscover and Navigators) will be underwriting policies covering directors and officers, marine cargo and sports contingency insurance. Depending on performance, the insurer has plans to add more managing agents and products to their operation in China in the near future.
Lloyd’s chairman Lord Levene commented in the statement that the new direct license would prove to be a significant development for both Lloyd’s and the Chinese insurance market. “We are delighted to be taking the next step on our journey into China and marking another historic milestone for Lloyd’s. We see Asia as crucial to our development this century and hope it will mirror the success of our venture into America last century.”
Eric Gao, Chairman and CEO for Lloyd’s China, confirmed that although this step was a small one, it would be important for the continued success of Lloyd’s in China. “This is a small but important step for Lloyd’s China. Reinsurance will continue to be our main source of business for some time, but there is huge potential for our insurance business,” Gao wrote, adding that “Lloyd’s expertise and capacity can support the growth of financial centers such as Shanghai as we allow companies to offset their risks as they grow their business.”
While China’s insurance sector is indeed poised for growth, it is not the only emerging market with a promising future. In fact, in terms of business written by Lloyd’s, China has remained behind rival developing countries like Brazil, India and Russia. The Asian nation still presents many challenges to foreign investors. The International Finance Corporation has ranked China as the 79th easiest country to conduct business in, with state regulators restricting the percentage stake an overseas company can hold in a joint venture operation as well as the lines and provinces in which foreign insurers are allowed to operate. Despite these noted obstacles however, China will continue to be seen as a lucrative investment opportunity for many large multinational insurance companies as well as investors from the financial-services sector. Lloyd’s ability to sell their more diverse product portfolio will go a long way to establishing themselves as the premier provider of specialist insurance and reinsurance in Asia.
Insurance Companies Mentioned
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.
This week, MetLife Alico announced a new partnership with Mashreq Bank, one of the MENA region’s leading financial institutions, to provide new life insurance products and other protection options through their facilities in Bahrain.
Read the rest of the article about MetLife Alico partners with Mashreq in Bahrain article.
South Africa’s ABSA Insurance Company (AIC) has acquired Takafol SA, the first and only Islamic insurance provider operating throughout Africa’s largest economy. The transaction was announced last week for an undisclosed amount and is subject to regulatory approval.
Islamic insurance products, otherwise known as takaful, are mutually beneficial coverage policies that cater specifically to Muslim communities looking for Shariah-compliant savings and investment solutions. Currently the takaful industry comprises only around one percent of the cumulative global insurance market but that will soon improve as highly populated Muslim markets such as Indonesia, Saudi Arabia and Malaysia begin to spend more on protection policies. In April, Ernst & Young’s World Takaful Report forecast the takaful market would likely be worth US$12 billion in 2011, growing 31 percent from US$9.15 billion in 2010. Key takaful markets are characterized by low insurance penetration rates and comparatively high rates of economic growth. Major foreign insurers have duly taken note of the huge growth potential from this brand of products. For example, Standard Chartered and Allianz Takaful in Qatar entered into a 5 year agreement to distribute Alliaz Takaful’s insurance services through Standard Chartered Bank in 2010. The two insurers then quickly partnered again to allow Standard Chartered SME insurance products to be sold through Allianz Takaful in Bahrain.
Takafol SA was established in 2003 to tap into South Africa’s emerging Islamic insurance market, which now brings in an estimated ZAR 3 billion (US$419 million) in annual premiums. The company found success in being South Africa’s sole firm providing short-term takaful insurance for business, vehicle, personal and household cover. In 2008, Takafol made AIC their underwriting partner and this relationship contributed to Takafol SA’s further development, with personal lines and commercial business growing by more than 66 percent over the next two years.
Due to their successful partnership, Absa Group, parent company of AIC, decided to acquire Takafol SA and merge their operations into Absa’s own developing Islamic financial services sector. After the transaction in completed, Takafol SA will become part of Absa Islamic Banking and operate as the new brand Absa Takafol. The integration of Takafol SA’s Islamic product portfolio into AIC will enable greater control over the company’s underwriting, pricing and administrative efforts. Through AIC meanwhile, the newly-rebranded Absa Takaful will enjoy a greater capitol position and be better able to respond to customer needs in a dynamic international environment. The group will also maintain that Absa’s new range of takaful insurance products will continue to meet global standards of Shari’ah governance.
Speaking on the transaction, Edwyn O’Neill, AIC Managing Director, told reporters that the acquisition of Takafol SA would make Asba the leading provider of Islamic financial solutions in South Africa, with a look towards developing the takaful market on the rest of the continent. “This deal demonstrates Absa’s commitment to provide the Islamic community with a holistic financial services offering that is Shari’ah compliant. Today, we cement our relationship with the Islamic community and recognize that there is a need for similar products in the rest of Africa.”
Uwaiz Jassat, Takafol SA’s CEO who will head the new unit, confirmed that incorporation into Absa would enable their company to further develop their specialized Islamic portfolio for clients and provide the necessary means to expand their presence further in Africa. “The global Takaful and Re-Takaful industry is experiencing significant growth. The principles of mutual or joint guarantee are the foundations of Takaful and play a significant role in the economic and social development of societies. By integrating into the Absa Group, Takafol South Africa will be well positioned to expand Absa’s Takafol offering into the African continent,” Mr. Jassat told reporters.
Absa, majority owned by Britain’s Barclays, has embarked on an ambitious expansion strategy, titled ‘One Absa’, which plans to increase insurance awareness and business opportunity through organic and acquisitive growth in South Africa and throughout the rest of the continent. Growing earnings on the African continent has become a key priority for the banking group. The purchase of Takafol SA has followed the acquisition of a life insurer in Mozambique earlier this month, and the establishment Absa Life Botswana in February. The Islamic insurance market in particular has been an important target for the group and remains one of the best mechanisms to gain a foothold on the African continent. It is estimated that over 40 percent of Africa’s population is Muslim. East Africa in particular has a large Muslim base and approximately half of Nigeria’s 150 million population, long recognized as an African country with significant insurance business potential, practices Islam. Formulating products to cater to these new emerging market clients will be a challenge but necessary to sustaining long term premium growth in Africa.
Other South African insurers are casting their net further a field. This week it emerged that Sanlam Ltd, South Africa’s largest insurance company, plan to spend ZAR 1.9 billion (US$266 million) to purchase 26 percent of India’s Shriram Capital, as they expand operations outside their home market. Sanlam has been looking to spend ZAR 3.2 billion worth of excess capital on purchases in emerging markets in Africa and India. Funds not spent on expansion will be returned to investors, the company said. Sanlam’s Indian investment will help the company expand its presence in the world’s largest democracy, where incomes are rising but insurance penetration remains low. The ability of South African-based insurers to now compete on an international level reflects the maturity of their own market but also the necessity to expand abroad to maintain profitability in a dynamic marketplace.
Insurance Companies Mentioned
The Absa Group Limited (Absa) is one of South Africa’s largest financial services conglomerates, providing a comprehensive range of banking, insurance and wealth management products and services. Absa is a subsidiary of Barclays Bank PLC (who hold a majority 55.5%) and serve 11.8 million customers, with 36,000 permanent employees throughout Africa.
Takafol South Africa
Takafol South Africa (Pty) Ltd. provide Shariah compliant insurance products and services both in South Africa and globally.
Multinational insurance companies are continuing to look towards the Asia Pacific region for sustained premium growth and innovative new business opportunities to offset the more stagnant performance forecast for their home markets.
This week, representatives from Swiss insurer Zurich Financial Services Group told media that they were planning to expand their operations in Indonesia considerably over the next year, taking advantage of the country’s steady economic growth, rising household incomes and demand for protection products.Read the rest of the Increasing Activity in Asia from Zurich and Munich article.
The global reinsurance industry could be set to rebound, with rates finally rising to offset the record catastrophe losses incurred this year by an unprecedented series of natural disasters in both the Asia Pacific region and United States. New analysis released this week by worldwide credit and insurer rating agencies looks to assure clients that over the coming 12-18 months, positive market trends should be able to offset the significant challenges currently facing the industry.
On Tuesday, Moody’s Investors Service issued a report, indicating they had revised their outlook on the international reinsurance sector up to “stable” from “negative.” The New York-based agency based their ratings decision on a combination of factors. Moody’s believes that the good risk management and underwriting discipline displayed by the industry in the past year, combined with a hardening market and increased demand, would enable reinsurance companies to raise rates and respond to recent catastrophe losses. Moody’s previous negative rating had been in place since 2009.
Moody’s reported that reinsurance prices had already risen considerably in recent months, and not only in the regions and lines of business most affected by natural disasters. Recent renewal data has indicated that the price for catastrophe reinsurance cover in the United States was firming from between a 5 percent to 10 percent increase. Moody’s predicts further price increases at 1 January 2012 renewals as well. The lead author of the report, Moody’s VP and senior credit officer, Dominic Simpson explained that the aftermath of the worst quarter for natural catastrophes since Hurricane Katrina could become an earnings event for the industry. “Recent catastrophe losses loom large in our decision to revise the outlook to stable, as they have provided momentum for reinsurance rates to harden. However, over the longer term, it remains uncertain whether this expected plateau is a temporary halt to further pricing weakness or whether it will be followed by sustained market improvements,” Simpson wrote.
Moody’s indicated that the imbalance between supply and demand for reinsurance cover, in which overtly intense competition had kept pricing soft over the past few years, could be moderated by the current market environment. High catastrophe losses have already cut some of the excess capacity in the sector, and future supply could be further constrained by more expensive cover and consolidation within the industry, in which Moody’s anticipate market conditions to remain favorable. In terms of demand, Moody’s is confident that insurers will continue to take out reinsurance policies, despite tighter budgets. Natural disasters are one of the best reminders to have adequate protection against catastrophic loss. Moody’s noted that while the balance sheets for insurers were strong in 2010, allowing them to retain more risk on their own, now many companies would have “little flexibility left in further reducing reinsurance usage.” Insurers seeking further protection due to the updated Risk Management Solutions (RMS) hurricane model, as well as increased capital demands through Europe’s Solvency II regulatory regime, could also increase demand for reinsurance in the future.
Even though possible gains are on the horizon, Moody’s notes that short-term profitability for reinsurance companies remains “under meaningful pressure.” Reinsurers had already exhausted their 2011 catastrophe budgets before the Atlantic Hurricane and investment returns have been muted during the period as well due to low yields. Despite catastrophe budgets being stretched and a downward pressure on profits, Moody’s believes reinsurer loss ratios will stabilize during 2012 as prices harden and companies adapt to the new market. Reserve levels for most major reinsurers have remained adequate. The ratings agency remains concerned, however, about reduced investor activity and confidence in the sector. In the long-term, Reinsurance companies with low equity valuations may struggle to replenish their equity capital after another major catastrophe. Security would be weakened for policyholders and bondholders of these insurance companies who cannot recapitalize to meet their obligations. “Against this background, and notwithstanding the existence of a number of credit challenges, including the low investment yield environment and constrained financial flexibility, we have revised our outlook on the sector to stable from negative,” Moody’s concluded
The other major worldwide credit ratings agencies, including Standard & Poor’s and Fitch, have confirmed Moody’s outlook, each with their own stable rating for the global reinsurance sector. This week AM Best was the latest to offer its analysis in its Special Report, ‘Reinsurers are Ready to Move as the Market Begins to Stir.’ The Oldwick, New Jersey-based agency indicated that the reinsurance market may finally be able to tackle years of soft pricing and high catastrophe losses.
AM Best, like the others, believes that recent events have triggered an increased focus on the value of reinsurance and this could be just the lift the industry needs. “The recent spike in global catastrophe activity, combined with changes in catastrophe models, is expected to bring about some change in the perception of risk on the part of the primary companies,” the report said, adding that a severe hurricane on the US mainland could further push the market. “This, together with increased regulatory pressures on solvency margins, may turn the tide on reinsurance demand, which should help to bolster current pricing for property-related business,” Best added.
Ratings agencies have long recognized catastrophic loss as the primary threat to the solvency of both reinsurers and property and casualty insurers due to the severe, rapid and unexpected impact that can occur. Global demographic and economic trends have been pushing property values and concentration risk in catastrophe-prone areas upwards and insured exposure has in turn escalated rapidly in the past decade. As more and more people (and clients) inhabit these areas, insurers must take on more responsibility to provide coverage against a wide array of new concerns, including terrorism. As a result, the worldwide insurance industry’s exposure to catastrophe losses continues to rise and solutions need to be found.
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.
Moody’s Investor Services provides credit ratings, research, credit risk management, and other services for more than a hundred thousand commercial and government entities around the world.
Aviva PLC, the United Kingdom’s largest insurer with over 19 million customers, reported this week that it had so far paid out £212 million (US$ 341.28 million) on its critical illness and life insurance policies in the first half of 2011. This equates to a settlement on 98 percent of all claims made during that period.
Many British insurance providers are now publishing half year, as well as annual, claims statistics for their customers. Being able to report a high claims ratio can be seen as a valuable promotion tool for a company, demonstrating an ability to consistently meet obligations to clients. Both increased transparency and payouts will also work to improve the image of the insurance industry as a whole in the UK. So far this year, Bright Grey, Scottish Provident and Zurich have published their claims statistics. Zurich have so far paid out 89 percent of critical illness claims (for a total of £43.7 million (US$67 million)) while Scottish Provident paid 91 percent and Bright Grey settled 90 percent of claims.
On critical illness policies, Aviva paid out £62 million (US$99.8 million) during the first six months of 2011, a 21 percent increase over last year’s corresponding first half totals. The company disclosed that 755 customers had made claims on critical illness cover between January and June and that they received an average payment of around £81,000 each (US$130,000). The typical critical illness claimant was described as a 44 year-old women or a 45 and three months old man and the most commonly claimed-for diseases were cancer (accounting for 65.9 percent of all claims), followed at a distance by heart attack (11.3 percent) and stroke (7.9 percent).
Aviva reported that 92.5 percent of all critical illness claims were settled during the first half of the year, lifting the insurer’s claims paid percentage over the past 12 months to a high of 94.3 percent. Of the remaining unsettled claims, Aviva’s statistics show that around 6 percent were denied for failing meeting policy criteria. Meanwhile, the number of critical illness claims rejected for reasons of non-disclosure during the January-June period fell to 1.5 percent, a result the insurer described as significant.
With regards their life insurance policies, the first six months of 2011 saw Aviva pay out £150 million (US$241 million) worth of claims to the beneficiaries of policyholders who had died or had become diagnosed with a terminal condition. The company was able to settle 99.7 percent of all claims resulting from death, a stat Aviva understood to be “unsurpassed within the industry.”
Robert Morrison, Chief Underwriter for Aviva, suggested that these claims totals should restore confidence amongst customers, assuring them that the company will continue to support them through difficult periods of their lives. The evidence shows that in fact the vast majority of claims are settled quickly and only a few turned down for reasons of non-disclosure or from not meeting with certain policy criteria. “At Aviva we believe it is crucial we pay every claim we can. While unfortunately across the industry there are a small number of claims insurers are unable to pay…these latest figures should help to reassure customers that we are there to help them when it matters most.”
Mr. Morrison added that Aviva would remain committed to improving and developing new mechanisms to address critical illness claims. This month, the insurer introduced a new electronic group risk claims process designed to make it easier and more efficient for group risk customers to submit claims in the immediate aftermath of a policyholder death. Aviva also plan to add coverage extensions to its international private medical insurance products to better meet the needs of their expanding base of international clients. The additions come as a result of a recent research paper, conducted by Aviva, that revealed that over a third of all UK businesses worry about how they would manage if an employee was involved in an unforeseen accident while traveling abroad. “We would like to see critical illness claims figures rise even higher across the industry and at Aviva we are constantly reviewing how we work with our customers and advisers to assist them from the point of purchase. This way they can be confident that should the unexpected happen and they need to make a claim, we can help provide the financial support they require so they can concentrate on more important matters”, Mr. Morrison concluded.
The number of successful critical illness claims in the United Kingdom is increasing as insurers succumb to increased public and regulatory pressure to settle as many policies as possible. New data published by the Association of British Insurers (ABI) this month has shown that £1.9 billion (US$3.06 billion) was paid out in 2010 by insurance companies to claimants, up from £1.8 billion (US$2.9 billion) the previous year, with £1.14 billion (US$1.84 billion) coming through life insurance and £776 million (US$1.2 billion) spent on critical illness claims. According to the ABI, More than 40,000 British families and individuals received a claim payment last year, with an average settlement of £47,166 (US$75,533)(almost double the average UK salary).
The British insurance industry has taken action to better inform and educate customers about the details of their policies so that fewer claims are turned down in the aftermath of a critical illness or bereavement. In 2008, the ABI issued a public guidance on insurance claims, which increased transparency and ensured customers who applied for life insurance would not be penalized for accidental non-disclosure of medical information. This occurred amid a public backlash after the proportion of rejected claims reached a high of 16 percent in 2007. The ABI soon began introducing standard definitions for many of the more common conditions on contentious critical illness policies. Since the guidelines have been implemented, customers have developed a deeper understanding of their policies, reducing the number of claims turned down, and thus the number of complaints leveled at long-term insurers in the UK has reportedly fallen by over 50 percent. Both the insurance companies and clients have realized the importance of improved transparency and efficient payouts when settling critical illness and life insurance policies.
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.
Association of British Insurers
The ABI (Association of British Insurers) represents the collective interests of the UK’s insurance industry. The Association speaks out on issues of common interest; helps to inform and participate in debates on public policy issues; and also acts as an advocate for high standards of customer service in the insurance industry. Every day, ABI members pay out an estimated £155 million in benefits to pensioners and around £58 million in general insurance claims.
India’s private healthcare industry, which features an abundance of specialist hospital facilities, an extensive network of healthcare providers and highly trained staff, has become one of the preeminent destinations for travelers seeking cost-effective medical treatment from all over the world, a practice widely known as medical tourism. According to a new study released by India’s commerce chamber, the country’s medical tourism sector will remain competitive amongst its South Asian rivals, attracting an increasing number of international clients and providing a considerable boost to the national economy.
Last week, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) published a report titled ‘Emerging Trends in Domestic Medical Tourism Sector,’ which estimated that over 3.2 million medical tourists could arrive in India by 2015. Currently the country’s private hospitals and specialist clinics are serving around 850,000 foreign patients annually, with a market valuation of Rs45 billion (US$980 million). India has been able to maintain a strategic advantage over its neighbors in providing essential resources like world-class medical technology, infrastructure and a skilled medical workforce. The country’s leading private healthcare groups, including Fortis Healthcare and Apollo Hospitals, are expecting to nearly double their foreign patient intake in the next few years. Assocham calculated that if the country’s medical tourism industry continues along at the current 40 percent compounded annual growth rate, the market would be worth around Rs108 billion (US$2.4 billion) by 2015 with an inflow of over 3 million health travelers. “The rapid growth will not only earn foreign exchange but will also give a huge boost to the country’s health sector,” the study claimed.
According to Assocham, India’s ability to quickly develop top-tier specialist healthcare facilities for in demand therapeutic sectors like cardiology, joint replacement, orthopedic surgery, organ transplants and more, has been a critical in attracting foreign patients. The industry’s ability to keep treatment prices low across the board has enabled Indian hospitals to target a wide spectrum of international clientele from all corners of the world. A hip replacement in India costs on average only around US$9,000 versus US$43,000 in the United States (without insurance) or US$12,000 in Singapore. The largest proportion of medical tourists choosing India as their destination are coming from the Middle East, followed by Americans, Western Europeans and then citizens from nearby countries including Bangladesh, Nepal, Pakistan and others.
D.S. Rawat, Secretary General of Assocham, confirmed that the prevailing high cost of medical treatment in other industrialized countries was encouraging more people to consider cost-effective alternative destinations for care. “High quality medical care at a fraction of a price people would traditionally pay in developed countries is the basic reason behind this surge in number of patients flocking to India for treatment purposes,” Rawat remarked.
The Assocham report identifies the states of Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra, West Bengal and New Delhi as the key emerging medical destinations in India, each with a sufficient number of private hospitals and clinics that target medical tourists. Cosmetic procedures such as facelifts, botox treatment, tummy tucks, eye and dental care have so far proven the most sought after treatments by foreign patients.
Furthermore, the availability of distinctive holistic medicinal services in India, such as yoga, meditation, ayurveda and allopathy, present further treatment and tourist opportunities that are difficult to match in other countries. Ayurveda and spa tourism have become increasingly popular among both domestic travelers and foreign tourists as people look towards natural systems of treatments instead of conventional medical procedures for certain ailments. The western states of Goa, Kerala, and Rajasthan have emerged as the most popular destination for ayurveda and spa treatment resources.
India’s healthcare providers however cannot afford to rest on their laurels as they will soon face tough competition for medical tourists internationally. National governments and private companies in other South Asian countries, such as Malaysia, Singapore, and Thailand, have been quick to recognize this lucrative marketplace and have been investing heavily in their healthcare infrastructure to meet the global demand for quality-assured medical care together with highly trained medical specialists and the latest advancements in medical technology. Countries such as Taiwan and South Korea are not far behind and have also taken measures recently to improve their performance in the international private healthcare market. Assocham also warns that countries further a field such as Australia, Belgium, Cuba, Costa Rica, Hungary, Greece, Poland and South Africa are also working hard to promote their healthcare facilities worldwide and could pose a threat to their client base in the long term.
In order to combat intense competition from other countries and maintain India’s preeminent position in the world medical tourism market, Assocham has proposed developing 10 dedicated public-private ‘health cities’ throughout the country to both increase operational capacity for patients and encourage high-caliber healthcare professionals to work in the system. “This will not only help India secure a bigger share of the market but will also encourage reverse brain drain by attracting non-resident Indian doctors and experts settled abroad,” D.S. Rawat explained. India’s commerce chamber further argued that both central and state governments would need to play an active role in promoting the country’s medical tourism facilities abroad and to ultimately help construct and invest in these facilities. While similarly ambitious proposals for medical cities have been made before, Assocham hope the numbers presented in their report could finally push both the government and private investors into action.
Fortis Healthcare Limited, founded in 1999, is a leading healthcare provider with a network of 46 hospitals, satellite centers and heart command centers in India. The company also offers diagnostic, travel, IT and financial services through it’s’ wholly owned operation Religare Enterprises Limited.
Apollo Hospitals Group
Apollo Hospitals is the largest healthcare provider in Asia, third largest in the world. The company operates 53 hospitals, a total capacity of 8500 beds, across Asia. The company also offers medical consultancy and pharmacy services. Apollo Hospitals was founded in 1983 and is based in Chennai, India
Swiss Re announced this past week that it had submitted its application to Brazil’s industry regulator, the Superintendence of Private Insurance (SUSEP), for a local reinsurance registration in the populous South American country. A local license would enable the world’s second largest reinsurance firm to better participate in the emerging Brazilian insurance industry, servicing a more comprehensive range of clients and risks, and lending its vast international experience towards future market development in the country.
Brazil’s insurance industry has undergone a significant evolution in the past few years, delivering sound growth as a result of improving macroeconomic conditions and the loosening of market regulations in the country. In 1996 the Brazilian insurance market was first opened up to foreign participants, who have since brought substantial investment and the introduction of new products, technologies and expertise to the domestic industry. In 2007, the country’s reinsurance market underwent similar reforms with the elimination of the 70 year state monopoly that the Instituto de Resseguros do Brasil S.A. held over the industry. The goal of these reforms has been to open the local insurance markets to increased competition and to improve the availability of coverage and lower the costs for Brazilian citizens.
Despite this noted progress, international firms have found their capacity to invest in the Brazilian reinsurance market curtailed by a resurgent regulatory effort by the national government to rollback market liberalization, which has added to the cost of doing business in the country substantially. Through two new regulations that came into effect March 31st 2011, 40 percent of all reinsurance business must be allocated to local Brazilian companies and these same local insurers are prohibited from ceding more than 20 percent of premium, related to coverage provided, to affiliated intra-company reinsurers located abroad. Many insurance industry observers are concerned that arbitrarily reducing foreign insurance capacity for handling large commercial risks in Brazil will drive up prices and it will be become more difficult and expensive for Brazilian insurers to diversify and access foreign reinsurers.
Swiss Re has been involved in the Brazilian insurance market since 1924 and opened its first branch in Sao Paulo in 1996. The Zurich-based reinsurance group has decided to adapt to recent government regulation by applying to become a local reinsurer under the reinsurance registration for its operations in Brazil. Swiss Re’s Region Head for Brazil and Southern Cone Reinsurance Rolf Steiner, explained in a company news release that the South American country’s continued economic development together with the impending infrastructure projects surrounding the World Cup and Olympic Games have increased the need for their services to be more readily available in the region.
“Brazil is a key growth area for Swiss Re. The economic expansion coupled with large infrastructure projects to support this growth, the World Cup, and Olympics have increased the need for risk management support,” Steiner said, adding “As a global re/insurance leader, Swiss Re has the expertise and capacity to serve the growing demand in this thriving region. With 100 years of service to the Latin American market, we have seen Brazil evolve as a leader and we view the local registration status as further evidence of our support for our clients.”
Insurance companies have been competing for lucrative contracts that will cover the massive infrastructure projects planned by Brazil to host the 2014 FIFA World Cup. Over 1 million people are expected to visit the country for the month-long soccer tournament and an estimated US$ 29.4 billion is being spent on major construction projects in 12 Brazilian cities to accommodate them. This investment, largely through public money, could provide a huge boost to the local insurance market. Outside the World Cup and Oylmpics, Brazil presents an attractive opportunity for insurers as well. Brazil’s real GDP grew by 30 percent in 2010. Domestic insurers have benefited from the strong level of economic activity, higher availability of credit, and growth in employment; all factors that have driven strong internal demand for coverage. In 2010 the Brazilian insurance industry outpaced the country’s GDP and grew 16.6 percent, with gross written premiums totaling R$ 99.4 billion (US$ 62.7 billion).
The Brazilian insurance market is the largest in South America, and offers the potential to become a more prominent global insurance market across all disciplines. Recent economic stability, positive credit trends, and regulatory reforms that have stabilized the currency and promoted domestic savings, are producing sound growth across the insurance industry in Brazil. Despite continued regulatory hurdles, large multinational insurers cannot ignore the market’s size and growth potential and will be looking to invest themselves further in Brazil, and other emerging economies, to offset the continued static performance of the established North American and Western European markets.
Swiss Re, like many, has identified that increased life expectancy and healthcare expectations in conjunction with the rising cost of long term care, has been a chief proponent in dragging down performance in more mature insurance markets. In a new report, titled “A Window into the Future: Understanding and Predicting Longevity,” the company addresses how and why rising life expectancy has been consistently underestimated and what insurance companies can do to develop advanced models to better understand the issue. While modern medical advances in technology have helped increase life expectancy worldwide, a large healthy elderly population provides a significant challenge in retirement financing. According to figures released by the European Commission, currently for one person aged over 65 there are four people of working age compensating pension funds, insurers and government social safety nets. By 2060, this ratio could be down to one retiree for every two persons of prime working age. A report from the OECD issued earlier in the year confirmed that aging populations will cause overall global spending on long-term care to double or maybe even triple by that time.
A collaborative approach between governments, businesses and insurers is recommended by Swiss Re to collectively develop a long-term sustainable infrastructure for retirement financing, which would need to include the appropriate sharing of longevity risk. Insurance actuaries meanwhile need to update their mortality models to encompass the most up-to-date medical advances and disease related risks, and to discard historical information that has made the industry slow to react to the increase in life expectancy and long-term care costs in the past. “The future is highly uncertain, but a key benefit of predictive approaches is that they can increase confidence in the pricing and funding of future retirement income solutions,” the report states, concluding that “However, holding longevity risk continues to be a major challenge for pension funds, insurers and governments and better methods need to be developed to share the risk appropriately.”
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.
International Medical Group, also known simply as IMG, announced the launch of two new international travel health insurance policies for the coverage of groups overseas. The plans, Patriot Platinum Group Travel Medical Insurance and Patriot Green Group Travel Medical Insurance are intended to cover groups of five or more people while they are overseas.
As part of the company’s aim to provide “Coverage without Boundaries,” the two new policies are intended to provide high quality medical insurance protection and world class service to overseas travelers.
The Patriot Platinum policy option will provide policyholders with superior medical insurance coverage up with an overall maximum benefit of up to US$ 8,000,000. The policy will allow the group to select from a range of deductibles, include coverage for certain pre-existing medical conditions, and will offer comprehensive in-patient and out-patient treatment benefits.
The Patriot Platinum plan can be obtained by a group of 5 or more US nationals intending to travel overseas for a period of 5 days to 3 years, or to Non-US nationals traveling outside their home country.
The Patriot Green plan is a new take on environmentally friendly health insurance products and is intended for groups of 5 or more travelers who are interested in an eco-conscious medical insurance plan. The International Medical Group foresees this plan being obtained by travelers who are committed to sustainable and environmentally friendly tourism. Covering a range of sporting activities, including wildlife safaris and cave tubing, within the Eco Rider portion of the policy, the Patriot Green plan from IMG also has a unique Accidental Death and Dismemberment (AD&D) benefit.
The AD&D benefit under the plan will see the policy donate US$ 5,000 to an environmental organization or charity which has strong links to conservation in the event of the policyholder’s accidental death or dismemberment while overseas.
The Patriot Green policy is available to cover a period of 5 days to 2 years, and can be purchased by American Nationals traveling outside the USA, or foreign nationals outside their home nation. The IMG Patriot Green plan is currently only available through the IMG website.
Insurance Companies Mentioned
International Medical Group
International Medical Group (IMG) is an Indianapolis, Indiana-based insurance provider which has been focused on providing expatriates and international travelers with high quality health, travel, life and indemnity insurance. IMG has a number of subsidiary companies which allow it to offer flexible products and 24-hour customer services to cover every insurance need in the international community. In their 20 years of business, IMG has grown to become a leading administrator of international insurance products worldwide, with more than a million customers around the globe.