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Allianz optimistic about 2012 development

The Allianz Group has a rich history dating back to 1890 and prides itself on being able to offer solutions in insurance, banking and asset management areas. Insurance wise, Allianz thrives in Europe and has especially excelled itself in the German market. 2012 has started off in a positive direction for the company and CEO Michael Diekmann sees this trend continuing for the rest of the year.

On May 15^th, Allianz was able to confirm their total profit target of 11.1 billion US dollars (8.7 billion euros) for the end of the year, after results from their first quarter net income showed a profit increase of at least 53%.
Almost all regions have assisted Allianz in this growth but the Australian and Asian-pacific sectors in particular have performed significantly well so far. All three components that make up the Allianz group have contributed to this increase but it is in the insurance sector where such increases are most noticeable and are enabling the company to stay on track towards reaching their set target.

In terms of shares, since December 31^st 2011, Shareholders’ equity reported a growth of 7.4% meaning an increase from 58.2 billion US (44.915 billion Euros) to 61.4 billion US dollars (48.245 billion Euros). Furthermore, as of last week, Allianz will now be welcomed to list their stock on the Chinese markets and thus continue their growth across Asia.

It appears Allianz are benefiting from the impact of the many natural disasters that occurred last year and have been able to push higher prices for coverage in property and casualty insurance – an area of high importance when profit is concerned. The company’s CFO Oliver Baete reported that as the impacts of natural catastrophes appear to be increasing in frequency and damage, Allianz has increased their budget for 2012 as a response.
Aon Benfield, the world’s biggest reinsurance broker has estimated that so far, natural disasters have cost insurers and reinsurers less than US$ 3 billion in losses, an almost insignificant figure when compared to the staggering US$ 53 billion the previous year.

2011 definitely deserves the title of most costly year on record with earthquakes, tsunamis, floods and tornadoes all making for a very difficult time for the entire insurance industry. This time last year, both the New Zealand and Japan earthquake with its tsunami aftermath had already struck massive blows to the insurance industry and contributed to a massive total of 60 billion US-dollars in losses.

By contrast, 2012 has experienced a lesser impact from natural catastrophes and as a result, Allianz has shown significant improvement in Property and Casualty as well as Life and Health insurance with a 50% increase in net income. This has enabled the company to reach their second-highest revenue level in history and brought in an impressive figure of 38.3 US dollars (30.1 billion euros) compared to 38 billion US dollars (29.9 billion) the same time last year.

Of course natural disasters are not the company’s only concern. Volatile Markets continue to decrease interest rates and the sovereign debt crisis remains an ongoing issue but Allianz prioritises the monitoring and analyzing of such challenges and believes they can continue to expect an operating profit of 8.2 billion euros to ensure a profitable growth.

Allianz has clearly managed to keep their head above water even when faced with disasters of huge proportions and their confident solutions in times of crisis are amongst the number of factors enabling them to stay ahead of their European competition.

Globalsurance International Health Insurance - Expat Medical insurance products for you and your family no matter where in the world you live.

HDFC ERGO Establishes Department to Handle Claims In-House

India-based HDFC ERGO, the joint-venture between Indian finance group HDFC and Germany’s insurance company ERGO International, have recently established their own in-house claims servicing department for health care and insurance claims and questions.

The HDFC ERGO General Insurance Company, which is the 4^th largest general insurance company in India, provides a number of lines of private insurance including motor, home and local health insurance plans. ERGO recently established their own department to service health claims in-house. The new department, called Health Claims Services (HCS), will focus on expediting HDFC ERGO’s claims settlements, while also ensuring a level of transparency throughout the process.

Customer satisfaction surveys focused on Indian general insurance companies have indicated that customers often stake their opinion of health insurance providers on their experiences during claims settlement. Meanwhile, regulatory adaptations in India allowing portability between insurers for health insurance products and a new system for filing and tracking complaints have also improved consumer choices further raised customer expectations.

By creating the Health Claims Services department, HDFC should be able to control their customers’ claims experience from end to end, rather than relying on an outside entity, like a Third Party Administrator. By increasing their engagement in the process and also with the customers, HDFC ERGO may be able to build trust with its clients provided that the Health Claims Services department continues to provide quality services.

In order to further this goal, the Health Claims Services will not only manage the claims settlement of health policies, but will also assist customers with other relevant health queries. HDFC ERGO is facilitating this through partnership with numerous network service providers such as diagnostic and wellness facilities, ambulances and pharmacies in addition to their 3,000 strong network of hospitals.

HDFC ERGO’s Head of the Strategic Planning Group, Mr. Mukesh Kumar said about the announced creation of HCS, “In today’s era, customer expects to interact with company directly. There is more trust generated with higher accountability involved in servicing the customers. With this internal mechanism we are planning to establish better control on the overall claim settlement process & improve the turnaround time (TAT) with seamless, hassle free & transparent services in health claim settlement.”

Companies Mentioned

HDFC ERGO

HDFC ERGO General Insurance Company is a Indian general insurance joint-venture between ERGO International AG, the main insurance arm of Munich Re Group, and HDFC Limited which is one of India’s leading finance institutions for housing. The joint-venture which is split 26:74 between ERGO and HDFC, is the 4^th largest general insurance provider in India, and operates a number of lines of insurance including motor, health and home.

Globalsurance International Health Insurance - Expat Medical insurance products for you and your family no matter where in the world you live.

Qatar and Dubai Set to Become Major GCC Insurance Hubs

Both Qatar and Dubai are well placed to become regional insurance hubs, reports have revealed, following the creation of a Governmental partnership with Samsung Life Insurance in Dubai and the implementation of a national health insurance law in Qatar.

According to a Financial Times report, the Investment Corporation of Dubai is set to agree to a memorandum of understanding with Korea’s largest Life Insurance underwriter, Samsung Life, to deliver high quality life protection products to the Middle Eastern and North African Regions. Historically both underserved markets for life products, the ICD and Samsung intend to grow the distribution of life insurance plans across the region with a view to entering the less developed markets located in Sub-Saharan Africa.

This initiative is mirrored in Qatar, which has implemented a national healthcare reform intended to alleviate the State of the burden of healthcare costs within the local Qatari population. By 2014, Qatar’s government has stated, all individuals living within the country will have a private health insurance policy. In the case of local Qataris this will be funded by the government, however for expatriates either the expatriate themselves or their employers will be responsible for the provision of appropriate coverage.

The development of a set of comprehensive regulations for a robust Qatar health insurance scheme comes at a critical time; the country is becoming increasingly overburdened by the cost of care in its many world class medical facilities – Qatari nationals are entitled to receive free medical treatment from their government.

The system of free care for local nationals saw the country spend roughly US$ 2.6 billion in 2010, a staggering sum which is not economically viable as the local populace continues to grow off the back of an oil driven economy.

In addition to mandating coverage for all individuals and families living in the country, the Qatari government, through the Supreme Council of Health (SCH), is also considering linking tourist visas to proof of health insurance; ensuring that any holidaymaker entering the country is able to pay for their hospital bills in the event that they suffer from a serious illness or accident.

While there has been no clear indication on the proposal for a health insurance-visa link scheme, the 2014 rollout date for the Qatar national health insurance regulations does give the country enough time to test the initiative ahead of the 2018 Qatar FIFA World Cup.

Approximately 300,000 tourists journeyed to South Africa for the 2010 World Cup and similar numbers can realistically be expected to be seen in Qatar. However, this poses a major problem for the Legislature in Doha, as the local population is a relatively modest 1.7 million people. If any of the World Cup tourists were to fall ill or suffer an accident while in the country, under the current system, there would be real concerns about the loss of money in the healthcare system; a system which is already struggling under local needs as it is.

However, in a sign of good news Mark Britnell, Chairman of Global Health-KPMG, in speaking with the Gulf Times indicated that the deployment of a universal scheme will actually lower overall healthcare costs while increasing the quality of those same services. “you get efficiency and effectiveness when you start to know exactly what you’re paying for and when you’re paying for it” he said on a system involving a single non-competitive insurer.

While there has been no firm mention on whether the proposed Qatari insurance scheme would involve a single insurance provider, or operate under free market competition principles, analysts in the region believe that it is more likely that the regulation would involve a number of providers. This could have the effect of spurring Qatar forward in becoming the largest health insurance hub in the Middle East, especially if expatriates or their employers are allowed to select and purchase coverage with their choice of provider.

Globalsurance International Health Insurance - Expat Medical insurance products for you and your family no matter where in the world you live.

Globalsruance.com Flags Hong Kong Insurance Trends

This Article appeared as a Press Release on Yahoo Finance.

Globalsurance.com, an internet based international health insurance advisor, has revealed some unusual trends in the Hong Kong Medical Insurance market today.

In a departure from form, expatriates in Hong Kong, Asia’s leading financial services center, are eschewing international health insurance options in favor of locally provided Hong Kong Medical insurance products. This is the direct result of more than 10 years of increases in international health insurance premiums at a rate of roughly 10% per year; which themselves are the product of heightened levels of medical inflation in the city.

Hong Kong, along with Israel, is the second most expensive place in the world to receive healthcare after the United States of America.

In terms of the charges associated with various treatments at Hong Kong’s private hospitals examples can be seen in a scenario involving Maternity. Realistically, delivery of a child at a Hospital like the Matlida, Hong Kong’s leading maternity services provider, can easily reach HK$ 156,000 – 234,000 (US$ 20,000 – 30,000) even if there are no complications. A private room at this same hospital will run the patient HK$ 5,935 (US$ 761) for a single night.

In the last 10 years, the levels of disposable income within Hong Kong’s expatriate community have not risen at the same rate as medical inflation, and consequently the premiums charged by international health insurance providers. This is putting pressure on insurance premiums as the loss ratios of not adjusting for the heightened cost of medical care in HKSAR are not economically feasible.

With a large proportion of the Hong Kong expatriate community choosing to obtain local health insurance options, rather than their international variants, Globalsurance.com believes that further evolution of the design of international protection plans available in the city is not far off. Potential restructurings may include the provision of selected service providers given that private medical facilities in the City are amongst the most expensive in the world; leading to less comprehensive healthcare options for individuals but also reduced premium charges.

Globalsruance.com is of the opinion that any innovations within Hong Kong’s iPMI market would be an attempt to stem the tide of expatriates choosing to purchase local health insurance options, but would also need to compete with the major players in the local market whilst providing coverage enabling the policyholder to receive treatment options at superior medical facilities in order for developments to be considered a success.

Globalsurance International Health Insurance - Expat Medical insurance products for you and your family no matter where in the world you live.

AXA to Expand Footprint in Korea

French insurance giant AXA SA has made a move to strengthen its position in South Korea’s important direct insurance market through the acquisition of general insurer Ergo Daum Direct in a deal announced this past week.

Officials representing both AXA and the Dusseldorf-headquartered ERGO Insurance Group completed and signed a share purchase and sales agreement on May 3^rd which will see AXA General Insurance Korea, the French global insurer’s local unit, take over 100 percent of ERGO’s subsidiary in South Korea, ERGO Daum Direct this year. Although the official purchase price has yet to be disclosed by either party, local media put AXA’s expected outlay for their local market rival at around KRW50 billion (US$44.2 million). Closing of the sale remains subject to final regulatory approval.

Ergo Daum Direct is a Seoul-based non-life insurer that focuses its operations around direct motor insurance policy sales. Founded as Daum Direct Auto Insurance in 2003, the company has been quick to build a considerable business portfolio, with a client base now surpassing 500,000 members and annual insurance premiums worth KRW260 billion (US$229 million). The Korean insurer became a subsidiary of Ergo Insurance Group, when the firm, which is itself a subsidiary of global reinsurance giant Munich Re, acquired a 65 percent stake of the company in 2008. According to their 2011 year-end financial statement, Ergo Daum Direct is now the fourth largest direct motor insurance provider in South Korea, with a share of just under 8 percent of the domestic direct motor insurance market.

While Ergo has certainly benefited from their time in South Korea, the firm put up their local unit for sale last year on fears that their current market share and sales momentum would not be able to offset rising claims costs going forward. Ergo Daum Direct has been dragged down by losses due to high loss ratios in motor insurance and have been unable to raise insurance premiums appropriately and compete due to ongoing governmental pressure to freeze rates. AXA was among several suitors vying for Ergo’s South Korean motor insurance book, and was finally able to successfully outbid its principal rival, the Korean Federation of Community Credit Cooperative, after local laws barred the cooperative from owning more than 30 percent share of the domestic financial entity.

AXA already have a leading presence in the South Korean motor insurance sector through its wholly-owned subsidiary AXA Direct Korea. AXA’s local branch currently controls around 15 percent of the market with over 950,000 policyholders and KRW534 billion (US$467 million) in written annual premiums. Now, with the acquisition of Ergo Daum Direct, AXA becomes the biggest player in the Korean auto insurance industry as its market share will jump from 15 percent to 22 percent after the merger. In addition, if you combine the KRW700 billion (US$ 612.6 million) in net premiums both direct insurers have written as of January, AXA’s Korean operations would rank ninth amongst all general insurers active in the Asia Pacific nation.

Speaking on the transaction in a press statement, Stephane Guinet, CEO of AXA Global Direct, noted that the decision to purchase Ergo’s South Korean business will give AXA the opportunity to further reinforce it’s its presence in one of Asia’s fastest growing and most developed motor insurance markets for years to come. “We are extremely pleased to have agreed on the terms with ERGO for the purchase of ERGO Daum Direct, which further strengthens AXA’s number one position in the Korean direct motor market,” Guinet remarked, adding that with the addition of ERGO’s business, AXA now serves almost 5 million clients through it’s general insurance operations worldwide. Guinet Continued to say, “This acquisition demonstrates AXA’s commitment to the Korean market and is fully consistent with our global strategy to accelerate our development in the Direct Property & Casualty business.”

President and CEO of AXA Direct Korea, Xavier Veyry, assured clients of ERGO Daum Direct and AXA Direct Korea that the transaction will have no immediate impact on their account status and that going forward both organizations will benefit from improved access, service levels and product offerings. As it stands, insurance coverage will remain unchanged and fully in force. “Both companies have very similar business models and organisations,” says Mr Xavier Veyry, adding that “through this acquisition we are efficiently reinforcing our platform for growth in the most dynamic and strategic distribution segment in Korea”.

In a separate statement ERGO’s representatives heralded AXA as a strong brand that is more than capable of developing the company’s position further in the current South Korean direct motor insurance market which has its own specific challenges. Indeed, Ergo’s decision to sell comes at a time when Korean insurers are facing tough market conditions at home, with intense competition and low profitability forecasts prompting many to consider new business opportunities by expanding into new insurance markets through mergers and acquisitions abroad. Evidence of this trend was seen in November last year when Korea Life Insurance penned a 50-50 joint venture insurance operation in China with Zheijiang International Business Group. The insurer, South Korea’s second largest life insurance company, has also expressed an interest in ING Groep’s Asia Pacific insurance operations. This has been followed by plans made by their chief rival, Samsung Life, to develop operations in Thailand, India and Indonesian insurance markets in 2012.

South Korea is one of the worlds most saturated and competitive insurance markets. According to a Swiss Re sigma study, the country’s insurance penetration, as measured by the ratio of premiums to gross domestic product, is one of the highest in the world at 11.2 percent in 2010, behind only Hong Kong (11.4 percent) and Taiwan (18.4 percent). The South Korean market offers limited organic growth opportunities going forward compared with other markets in the region, in particular China and India where insurance market penetration holds rates of 3.8 percent and 5.1 percent respectively. In those countries, insurers remain focused on home market development, which features large populations and favourable demographic factors that should continue to support and drive premium growth. Given the fact that overseas expansion also helps to spread risk and balance business cycles as well as broaden client bases, it only makes sense for Korean most prominent insurers to pursue these new insurance markets abroad.

Insurance Companies Mentioned

AXA

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.

ERGO

ERGO is a subsidiary of global reinsurance giant Munich Re and offers a wide spectrum of insurance provision and services across 30 countries; it currently has more than 40 million customers. ERGO has a strategic focus in Central and Eastern Europe and certain Asian markets. The German insurer has become one of the leading health and legal expenses insurance companies within Europe. In addition ERGO provides property and personal accident insurance in India. In 2011, ERGO recorded a premium income of 20 billion euros and paid out benefits to customers amounting to E17.5 billion.

Globalsurance International Health Insurance - Expat Medical insurance products for you and your family no matter where in the world you live.

William Russell Uncovers Expatriate Insurance Shortfall

New research out this week from prominent international medical insurance provider William Russell warns that an alarming number of expatriates are currently risking their livelihoods overseas without an adequate life or income protection policy in force.

William Russell carried out a customer survey with over 650 of its expatriate insurance policyholders from all over the world, with questions ranging from coverage tendencies to evolving consumer product and technology attitudes. The main finding the insurer took away from the study was that while a lot of expatriate clients consider international private medical insurance an important investment to make before working abroad, purchasing life and income protection policies have not been given similar deference thus far and this could lead to significant hardships for underinsured expatriates if adverse events transpire while overseas.

When William Russell’s health insurance clients were asked whether they had a life or income protection policy in place, through themselves or any another insurer, well over half the respondents (61.4 percent) said that they didn’t. A further 5.7 percent of those polled indicated that they were unsure whether they had more coverage, while the remaining 33 percent claimed that they had at least one of the life and/or income protection products in force.

William Russell’s survey then found that, conversely, when these expatriate clients with life and income protection plans were asked about their health coverage situation, almost 70 percent said they had already had a medical insurance policy in place, while a further 7 percent were unsure as to their arrangements. These results show that the majority of expatriates are only making provisions to take care of their immediate health and are ignoring insurance policies that could help in the event of an untimely death or protracted workplace absence and income loss due to an illness or injury.

Speaking on the customer survey findings, William Russell’s Sales Director, James Cooper commented that more work clearly needs to be done in convincing expatriate clients to broaden their insurance portfolio. “Although we are pleased to see that a high number of expatriates are making provision against the risk of needing expensive medical treatment whilst they’re abroad, it is worrying to see how many expatriates are not making financial provision in the event of their untimely death, or an illness or accident that would prevent them from working.”

While the discrepancy between health and life insurance cover for expatriates in the survey was considerable, William Russell concluded that ultimately the results were unsurprising given that domestic figures have been falling in a similar fashion over the past few years. Regardless of this fact however, expatriate consumers need to be better advised and informed about the risks of being uninsured outside their home country. Having sufficient protection in place has always been important, but is particularly so if you are living abroad, as you may not be able to rely on the financial support of family, friends or government benefits if you suffer an unforeseen injury or illness and lose your workplace income for an extended period of time. Because of this, William Russell and other multinational insurers offer global life insurance protection plans for expatriates, which provide valuable security to families in the event of a sudden death or incapacitation. Also, with advances in modern medicine meaning that more people can now live for longer with a serious illness or injury, the need for income protection insurance has now become just as significant as the need for traditional life insurance cover.

In addition to policy purchasing behaviour, William Russell’s survey also revealed some interesting developments in expatriate consumer attitudes. While online technology has fast become the industry standard, over a quarter of William Russell policyholders claimed, when asked, that they would still prefer to access and view their insurance documents in a hard copy format. In addition to this, the rise in importance and popularity of smartphones was made evident by the fact that almost 2 in 3 respondents said they would encourage the development of a William Russell specific mobile application.

The customer survey also provided some interesting insights into the social networking habits of expatriates, certainly valuable information for marketers. According to the survey, Facebook is the most popular social networking service, with just under 60 percent of expatriate respondents indicating that they have an account there. LinkedIn finished second with 47.3 percent of respondents online. Perhaps surprisingly Google+ was more popular than Twitter amongst the expatriates polled, with 19 percent using Google+, while 14.5 percent are on Twitter. The remaining respondents, around 25 percent of the total, have not held an account on any of these social networking platforms.

Inez Cooper, Managing Director at William Russell concluded the report, saying that is now incumbent on insurers and financial advisors to use whatever channels are available to them to better convey the importance of comprehensive insurance coverage for expatriates. “We would certainly encourage insurance brokers and Financial Advisers to advise and inform their expatriate clients about the risks of being uninsured,” Inez Cooper said, adding that “an insurance solution can be found that will protect families today and into the future.”

Companies Mentioned

William Russell

William Russell is an international health insurance company, focused on providing health, life and income protection products to expatriates across the globe. Based in the United Kingdom, William Russell opened its doors in 1992 as a family-run company and since then has grown into an international company that does business with people of every nationality in over 180 countries around the world. They have central offices in the UK, Indonesia and Dubai and offer their customers a 24/7 emergency medical assistance hotline.

Globalsurance International Health Insurance - Expat Medical insurance products for you and your family no matter where in the world you live.

Insurance Companies Post Q1 Statements

While stagnant growth forecasts, sovereign debt contagion issues, and political infighting continue to drag down many Western economies and industries, the first quarter of 2012 was relatively stable to many in the international insurance industry. Several notable insurance companies posted positive business developments in the face of adverse market developments over the past month. The following is a summary of some of the most recent earning statements put forward by some prominent insurers.

MetLife, the United States’ largest life insurance group, posted net loss of US$174 million during the first quarter of 2012. This result was driven by a derivative net loss of US$1.3 billion for the quarter, which the company said was due in principal to rising interest rates and lower credit spreads experienced during the reporting period. Outside of these derivate losses, which impact the valuation of certain insurance liabilities but not the company’s overall economic performance, MetLife’s operations have remained on track in 2012. According to the financial statement, MetLife’s operating earnings hit US$1.5 billion for the first three months of the year; an 11 percent rise on the US$1.3 billion in earnings recorded during the corresponding quarter in 2011. Operating revenues climbed by a further 7 percent to US$16.7 billion on gains made in the Asia Pacific and the Americas. The insurer also reported US$5.1 billion in net investment income, a 6 percent increase over the same quarter last year.

MetLife has attributed much of their quarterly insurance growth to their Alico acquisition and the positive impact it has had on the company’s investment portfolio thus far. Chief Executive Steven Kandarian remarked in the company statement that “these results reflect top-line growth in all of MetLife’s global regions, sound fundamentals and the core earnings power of our diversified businesses.” Metlife had been looking to grow its international footprint and expand it’s distribution platform for a long time. In 2010 the New York-based insurer decided to purchase American Life Insurance Co. (Alico) from AIG for US$15.5 billion to achieve these goals. The purchase of Alico, which operates out of over 50 countries, has given MetLife access to new insurance markets in Asia, Europe, Latin America and the Middle East, and they been rewarded for this business decisions already as their international segment generates an increasing amount of earnings relative to their home US market.

Aflac is another American insurer finding success in more international insurance markets. The insurer posted a substantial 21.9 percent surge in revenues for the first quarter, which was driven primarily by the Japanese insurance market and a stronger yen to dollar exchange rate. Aflac’s sales in Japan officially doubled to a record ¥52.4 billion (US$659 million) for the quarter, led by deals through banks and the introduction of a popular new supplemental medical coverage policy. As this occurred, the company also managed to post a 5.2 percent revenue growth in its home US market and further reduced it’s exposure to European financial companies, reflected in the drop in investment loss to US$29 million from US$376 a year earlier.

Companies active in the US health insurance sector have also put forth their first quarter financial results. Aetna Inc reported earnings of US$477.4 million for the first three months of the year, which was a 15 percent drop on the US$560.2 million posted during the same period in 2011. While net income fell from US$586 million to US$511 million, revenues rose by 6 percent from US$8.3 billion to US$8.8 billion over last year. The company’s statement revealed that healthcare revenues grew substantially over the yearly reporting period from US$7.71 at the start of 2011 to US$8.2 billion by the first quarter of 2012, owing to higher premiums earned from Medicare and Medicaid membership enrolment, improved underwriting margins, and the addition of Genworth’s Medicare-supplement business, which was purchased by the health insurer last year. As this occurred however, the amount Aetna paid out in medical claims, its largest expense, rose by more than 9 percent to US$5.86 billion for the first quarter. The company’s Chairman and CEO, Mark Bertolini, believes they can adjust to new market realities in lieu of any further Affordable Care Act developments, and continue to grow the customer base. “We’re balancing growth and profitability, and are confident of our ability to increase membership over the course of this year to 18.2 million medical members.”

Aetna’s two largest competitors in the US health insurance market, WellPoint and UnitedHealth Group, have also announced their first-quarter results. In Wellpoint’s, the insurer noted that net income fell by about 8 percent annually from US$926.6 million in 2011 to US$856.5 million the first three months of 2012, with sliding enrolment and a 5 percent rise in healthcare claims costs (to US$11.77 billion) cited for the drop in earnings. The health insurer has lost a reported 525,000 members, or 1.5 percent of its 33.7 million client base since March last year, and this was one of the reasons the firm decided to purchase California Medicare Advantage plan provider, CareMore, for US$800 million in June. While the first quarter of 2012 has not started quite as brightly as WellPoint would’ve otherwise liked, their decision to purchase CareMore may have been vindicated by the fact that of the company’s US$495.4 million surge in new revenue, US$266 was accounted for by the inclusion of their new California business. The demand for Medicare-supplement insurance, sometimes referred to as ‘Medigap’ plans, is only set to grow further as the burgeoning ranks of incoming US retirees expect similar healthcare benefits to those they have enjoyed throughout their career and many still have the clout to pay for them.

UnitedHealth was the lone US health insurance giant who finished the first quarter of 2012 in the black. America’s largest health insurer finished the quarter ending March 31 2012 with revenues of US$27.3 billion, up US$1.7 billion, or 7 percent, on the US$25.4 billion reported for the same quarter in 2011. According to the company filing, UnitedHealth was able to buck the trend and grow their operations by increasing their enrolment by an additional 1.6 million customers over the past year, of which 1 million joined during the first quarter of 2012. The statement adds that this membership growth has been well balanced and diversified, with numbers split amongst the traditional commercial insurance markets and subsidized public and senior markets. As a result of this development, the company has already increased its earnings outlook for 2012 by about 3 percent, with membership expected to swell by additional 750,000 people, to settle between 1.7 million to 1.9 million new policyholders by 2013.

US-based health insurance companies were able to post greater-than-expected profits in 2011 because fewer Americans filed claims and used healthcare services as a result of the weak economy. As the fortunes of the average American citizen begin to improve they will begin to demand more of their respective insurer and this could make the market even more competitive and expensive. Expect more companies to cast their net further adrift and expand into international markets to further develop their business portfolio.

Insurance Companies Mentioned

MetLife

MetLife is the largest life insurance company in the United States, with total assets of US$785 billion and over US$4.2 trillion of life insurance in force. Possessing over 140 years of insurance expertise, MetLife aims to be an innovator in the field of international Life insurance. Globally, MetLife is able to offer its clients accident and health insurance, life insurance, disability income protection, and retirement and savings products.

Aflac

AFLAC is the world’s leading provider of supplemental medical insurance. Founded in 1955, the insurer has gone on to provide services to more than 50 million people through more than 70,000 agents worldwide. Aflac’s total assets at year-end 2011 totaled more than $117 billion with annual revenues of more than $22.2 billion.

Aetna

Aetna is a leading global diversified health care benefits company head-quartered in the U.S., serving approximately 35.8 million people with information and resources to help them make better informed decisions about their health care. Aetna offers a broad range of traditional and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, and medical management capabilities and health care management services for Medicaid plans.

WellPoint

WellPoint is the largest health benefits company in USA, with more than 33 million members in its affiliated health plans. As an independent licensee of the Blue Cross and Blue Shield Association, WellPoint serves members as the Blue Cross licensee for California; the Blue Cross and Blue Shield licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio, Virginia, and Wisconsin.

UnitedHealth

UnitedHealth Group is a leading health care company, serving more than 75 million people worldwide. UnitedHealth Group is a leader in the health benefits and services industry, the insurers six businesses offer exceptional service, broad capabilities and enduring value in creating a modern health care system.

Globalsurance International Health Insurance - Expat Medical insurance products for you and your family no matter where in the world you live.

India Launches Expatriate Pension Program

May 1st was International Labour Day, a date that celebrates the contributions and progress made by workers in industrialized nations over the past two hundred years. The occasion was perhaps a fitting time for India to formally announce a new life insurance and pension fund that specifically targets the country’s sizeable overseas workforce in a bid to better address their social security and resettlement needs going forward.

The Indian government’s Pension and Life Insurance Fund (PLIF) was officially launched by the country’s Minister for Overseas Indian Affairs, Vayalar Ravi, at a function held over the holiday period. The scheme looks to fulfill a promise made by Prime Minister Manmohan Singh last January to improve upon India’s expatriate benefit framework, and could help the country’s millions of overseas workers, especially those now working in Gulf Cooperation Council (GCC) states, invest back in their home country and prepare for their future resettlement and retirement. The low-cost life insurance plan that covers against natural death for the period of time they are abroad is furthermore expected to become a key savings tool for many families while their breadwinner works abroad.

The PLIF scheme has been designed to provide three distinct benefits for India’s expatriate community: pension planning, life insurance cover, and resettlement compensation. Any Non-Resident Indian (NRI) or overseas contract worker aged 18 to 50 who want to save for resettlement and retirement through the PLIF program will be eligible with a valid work permit and proper immigration clearance. This stipulation would entail holding an ECR (Emigration Check Required) passport or an active employment contract in an ECR country. While the government wants as many overseas Indians covered as possible, the PLIF scheme will be based on voluntary contributions by expatriate workers. Under the provisions of the PLIF, the Indian government will contribute INR 2,000 (US$40) for every member paying between INR1,000 (US$19) and INR12,000 (US$230) into the fund annually, and female overseas workers will be eligible for a special co-contribution worth an additional INR1,000 (US$19) a year.

When it comes time to collect, the three arms of the PLIF scheme will be managed by three different operators. Pensions will be regulated by India’s Pension Fund Regulation and Development Authority (PFRDA), the savings for resettlement will be held in a mutual fund controlled by the Securities and Exchange Board of India (SEBI), and the life insurance requirement will be managed by a dedicated insurance company. PLIF subscribers can begin to withdraw their savings after five years, capped at 50 percent of their account value. If this occurs, 40 percent of the remaining funds will be paid back as lump sum once the policyholder turns 55, with the rest reserved for a monthly pension. PLIF subscribers who return to India before retirement can maintain their savings account for old age through their bank and the electronic claims system.

In addition to this expatriate pension scheme, The Ministry of Overseas Indian Affairs (MOIA) has also set up an Overseas Workers Resource Centre, which is a 24/7 telephone helpline for Indian emigrants and their relatives if they need information about legal procedures, country-specific risks, and what they should do if things go wrong while abroad. The announcement of this new hotline followed the establishment of the Indian Community Welfare Fund (ICWF) to assist distressed expatriate workers in 2009 and other moves made recently by the MOIA to update their electronic documentation network and generally improve upon the country’s strained emigration system.

India’s expatriate workforce is growing not only in number but also in political clout, as successive governments try and entice the country’s large overseas workforce with initiatives to encourage greater reinvestment back home. It is estimated there are around 25 million Indian citizens currently living and working abroad, an entire nation in and of itself. While other prominent Asian countries like China and the Philippines have been able to reap substantial economic reward from their expatriate workforce through sizable remittances and trade activity, India’s emigrant contributions remain muted, and thus the national government is now trying to more actively engage their overseas diasporas in a bid to boost domestic fortunes.

Of particular interest are India’s expatriates in the Gulf. Indian immigrants make up a considerable proportion of the region’s working class, with many moving to the rich Gulf States during the oil boom to work as construction laborers, domestic helpers and in other more specialized fields. The region has been an attractive destination for South Asian migrant labor due to the higher salaries available and the relatively short travel distance to the subcontinent. However as more of Indian workers move east, problems begin to emerge. Citizenship, permanent residency and other legal rights are seldom granted to immigrants working in these Gulf countries and as a result maintaining affordable access to necessary services like healthcare and retirement planning has become a serious problem for most Indian expats. Added to this now are increased regional security concerns surrounding the aftermath of the Arab Spring revolutions last year.

The moves made to address the expatriate social safety net follow renewed efforts made by India’s chief insurance regulator (IRDA) to improve the country’s insurance market and encourage the rising number of Indian middle-class consumers to make more proactive insurance and investment decisions. The county’s insurance sector has grown rapidly over the past decade, driven in particular by the popularity of unit-linked life insurance products, which have dominated the market. Since the Indian insurance market was first opened up to the private sector by the Insurance Regulatory and Development Authority Act in 1999, total insurance penetration across the country has nearly doubled, with the local market overtaking several developed economies in terms of premium output in the process. Critical to this growth has been the input from the international insurance industry. Overall, India represents one of the world’s fastest growing insurance markets, with rising income levels and growing awareness of risk management amongst the populace expected to drive a substantial demand for cover and investment solutions nationwide. Foreign multinational insurance companies have played a big part in this development but contributions from the country’s tremendous expatriate populace should look to play a large part in this development as well.

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Insurers in China Given Increased Investment Range

China’s insurance companies could soon be given greater investment opportunities and simplified approval procedures after the country’s insurance regulator claimed it would consider such procedures in a bid to improve the industry’s overall contribution to the nation’ economic growth and development going forward.

In a statement released online last week, the China Insurance Regulatory Commission (CIRC) claimed they will begin to gradually increase both the type and scale of unsecured corporate bonds that domestic insurers can invest with this year. As these investment restrictions lift, the regulator will then also work to adjust percentage ceilings on different asset classes within company portfolios, all in order to tighten CIRC supervision over the market and ensure that insurers still maintain their capacity to settle claims. This release was based on remarks made by CIRC Chairman Xiang Junbo during his routine trip to Wenzhou in eastern Zhejiang province over the past week.

According to the CIRC statement, these new investment rules could be tested in Wenzhou city through a pilot scheme at first, and if successful would then be rolled out to the rest of China. Under this scheme, qualified private investors in the city could be encouraged by local authorities and the CIRC to set up and aid regional insurance companies. Wenzhou is already well regarded throughout the country as a promising business centre and has been selected by the State Council for similar financial reform testing initiatives. In the statement’s closing remarks, CIRC Chairman Xiang called on domestic insurance companies to support Wenzhou’s pre-eminent role in the nation’s overall economic development by introducing innovative new insurance products and improving their services there, particularly towards local small and medium enterprises. Products that could be developed and introduced in Wenzhou under this scheme include export credit insurance, domestic trade credit insurance and mortgage insurance.

The revised investment quota is but the latest reform put forward by the CIRC in the past year to improve domestic insurance sector performance. Last month, the regulator announced several new rules governing property investments for domestic insurers. Through these proposals, the combined book value of a given insurance company’s assets and property investments could no longer exceed 50 percent of their net asset value. Domestic insurers will also have to separate their self-use property assets from those used for construction and investment and file separate asset management accounts. The CIRC introduced these rules to strengthen its oversight capabilities over insurer financials in China and to diminish the threat of risk contagion spreading from the insurance industry to the banking sector and vice versa during this period of pervasive global economic volatility. These moves could prove necessary to ensure that insurers’ core business interests and, most importantly, their policyholders remain protected from global market risks.

The CIRC have also brought forward new limits on insurance company banking activity. Going forward, Chinese life insurance groups with total assets of at least CNY10 billion (US$1.59 billion) will no longer be allowed to deposit more than 20 percent of their holdings into any non-state run bank. For the Asian nation’s general insurance and reinsurance companies, this asset value cap is set at CNY2 billion (US$320 million). The CIRC are convinced that these moves will also work to lower the default risk present in the domestic insurance industry, and prevent contagion between the banking and financial services sector. Encouraging larger insurance companies to spread their capital holdings across multiple institutions will reduce risk and will strengthen operational oversight as well. Holding greater reserves also grants insurance companies an added buffer against unexpected catastrophe losses, a pressing issue given the record-setting disaster losses of 2011, to better protect and serve their existing policyholders

In addition to increased financial oversight, the CIRC plan to revise insurance agent standards in China to better conform to best international business practices. These new reforms include lifting entry requirements for insurance licenses and tightening monitoring efforts to prevent fraudulent sales practices. The CIRC remains concerned about certain domestic insurance companies and their inability to make payments to policyholders on time, and are exploring ways to help them replenish their capital base in order to do so. One solution has been to encourage firms to tap the offshore yuan market in Hong Kong for additional funds.

Increasing supervision over China’s insurance market has become a key goal for the CIRC in 2012. Tackling the sector’s lax service standards has been at the forefront of the insurance regulator’s planning because claims settlement problems and miss-sold insurance policies have accounted for almost 90 percent of the consumer complaints received by the CIRC over the past five years. There have also been problems with sales management mechanisms as most of the sales persons in the industry remain under qualified for their positions. CIRC Chairman Xiang Junbo made special mention of this in his annual address, saying that unprofessional business practices had become the main concern for the industry and that the regulator needed to shift its focus from gross premium growth in 2011 to improving overall service quality and promoting agricultural and catastrophe insurance this year. According to the CIRC Chairman, the Chinese insurance industry’s preeminent focus on expansion has come at the expense of improved management structures and service innovation, and this has failed to satisfy customer demand. Increased professionalism and product innovation within the industry may be the best way to address these challenges, otherwise China’s emerging insurance powers will be unable to keep pace with the market going forward.

Organizations Mentioned

CIRC

The China Insurance Regulatory Commission (CIRC) is authorized by China’s State Council to regulate the Chinese insurance sector and ensure it’s continued stability. The CIRC was founded in 1998, upgraded from a semi-ministerial to a ministerial institution in 2003, and currently has 31 local offices in every province

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China’s Elderly are an Opportunity for Insurers

China is heading towards an aging demographic disaster. By 2050, the powerful Asian nation is projected to be the oldest BRIC economy, with the number of senior citizens far outstripping the actual working age population. A new study out this week by the Boston Consulting Group (BCG) and Swiss Re argues that insurance companies could prove integral in addressing this aging issue, and that they should be actively planning on how they will capitalize on both the challenges and opportunities the graying Chinese population presents going forward.

BCG and Swiss Re’s paper, titled “From Silver to Gold: how insurers can capitalize on aging in China,” examines how the Chinese population has and will continue to age, and what challenges a more elderly citizenry poses for the state’s health and social security systems, as well as the wider international business community. The report notes that any solutions found to address the demographic imbalance will likely require a concerted effort on the behalf of both public and private sector players in China, and, given their line of work, insurers are in a unique position to tackle the country’s fluctuating protection and savings demands.

Aging societies are by no means unique to China, it is indeed a global phenomenon particularly common in Western industrialized nations, but Asia’s largest economy will face some particularly harsh headwinds compared to most. China’s self-described ‘demographic dividend,’ which has been credited for driving the country’s rapid socio-economic growth and development over the past two decades, is coming to a swift halt as many in the workforce responsible for their country’s ascendance near retirement age. The shrinking working-age population and increasingly aged population will result in a deterioration of the citizen old-age ratio. BCG notes that the true ramifications of this development may be felt as early as 2015, when the proportion of those aged between 15 to 59 years old, the working population, begins to decline quite precipitously. As this occurs, the segment of China’s population aged 60 and above is forecast to grow at an alarming rate, from around 165 million at present to as high as 440 million by 2050. At this point, the number of senior citizens would account for over a third of China’s overall population, placing them at a competitive disadvantage relative to the other sizeable emerging economies: Brazil, India and Russia. Outside of insurance industry concerns, this could mean that tomorrow’s workers may have to pay higher taxes to support higher government spending on the aged, while older people will have to work for even longer than they do now.

The Mainland government has been working to address these issues, launching both a RMB 850 billion (US$125 billion) healthcare reform plan and a social insurance law over the past two years. While important advances have been recorded, especially with regard to improved access to medical services and insurance coverage across China, medical and longer-term costs continue to rise as a share of total household expenditure. Alleviating these concerns thus remains a pressing issue for the Chinese government, as it needs its citizens to spend more of their considerable savings, rather than holding on for medical emergencies, to drive the world’s second largest economy further forward.

China’s social security system is expected to struggle with the country’s shifting age dynamics. According to the report, China’s pension system and mandatory social insurance fund have not properly taken into account the rise in living expenses, medical inflation and demand occurring across the country and thus it might not keep pace with further adverse developments, especially as other voluntary and private sector pension schemes remain relatively underdeveloped in the market. The domestic healthcare sector isn’t expected to fare much better, with research showing consistent shortages in scope of treatment, services and medicine supply. Added to this is the fact that China’s traditional family support network, the true backstop for elderly long-term care support in the country, has weakened due to the mass migration occurring from rural regions to urban areas. The country’s notorious one-child policy has also worked to foster a 4-2-1 (four grandparents, two parents, one child) family structure, which places an undue burden on the younger generations to provide for the old. “China’s ability to deal with these challenges will have a significant impact on its prosperity level for decades to come,” commented Richard Huang, a BCG partner based in Beijing.

The Chinese government has taken note of this development and is determined to drive down costs despite facing strong internal challenges from vested interests that see reform as a threat to their current pay as you go business model. In the government’s next three-year reform strategy, the Health Ministry plan to protect care employees and reduce graft by increasing government subsidies in public hospitals while relying on insurance companies to make up the difference. By the end of 2015, the Chinese government has set a moderate goal to increase their contribution to about 33 percent of all health spending and to reduce individuals’ out-of-pocket expenses to 30 percent or less of the cost of treatment. Another issue China’s government looked to address in their broad social security reforms last July was the access and cost of maternity care in the country. Hong Kong has proven to be a popular destination for expecting Mainland mothers as children born within their borders are exempt from one-child restrictions and entitled to local residency. According to the Hong Kong government, the city-state’s maternity facilities were put under serious pressure last year after 40,000 Mainland mothers gave birth in local hospitals, equal to roughly half of the city-state’s total births. With the birthing threshold for such activity already surpassed again this year, tensions are running high between the two governments to solve this and other social security shortfalls between the two territories.

While it is the job of the Mainland government to continue reforming its social safety net to better meet the needs of its citizenry, both public and private insurance companies should expect to play a larger role in fixing the problems caused by an aging population going forward. According to BCG, China-based insurers should focus on several key initiatives to capitalize on the country’s demographic developments over the next couple of years. The report notes that insurers should place themselves at the forefront of any regulatory reforms which could aid the growth of private sector pension, healthcare and insurance markets in China. Part of this plan will require insurers to do more to survey and educate Chinese consumers about the longer-term value of savings and investments in retirement preparation. Once the under-penetrated market is better understood, insurers can innovate to its demands with better managed long-term care products and channels. Where available, insurers were furthermore advised by BCG to collaborate with the state’s social security system to help the government better manage its pension and healthcare systems at lower levels of longevity risk and cost. In addition, Chinese insurers will need to adjust to the impact of its own aging workforce. Chris Kaye, a BCG partner based in Hong Kong, concluded that if insurers prepare for China’s aging population accordingly they could reap dividends. “Insurance companies that take correct and prompt actions can turn the silver segment into ‘gold’, which means new revenue streams and higher profits.”

Companies Mentioned

The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and one of the world’s leading advisors on business strategy. BCG partners with clients in all sectors and regions to identify opportunities, address critical challenges, and transform their businesses. Founded in 1963, BCG is a private company that operates through 71 offices in 41 different countries.

Swiss Re

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.