Is the Latin America Health Insurance Market in Good Shape?

Posted on Nov 02, 2011 by Sergio Ulloa (G+)

In recent weeks there has been a wave of news from within the international Health insurance industry revealing that Latin America is causing a host of issues for Health Insurance companies. The leading causes of concern are primarily fraudulent claims being submitted under plans, and massive overcharging by healthcare providers for individuals seeking treatment who are in possession of medical insurance coverage. Both these issues are leading to increased health insurance loss ratios for most companies providing policies to the region, and is placing the continued viability of international health insurance for LatAm in doubt. This is especially concerning considering the fact that Latin America has weathered the global economic downturn in a fairly robust manner. Brazil, for instance, as a key market for many international insurance companies and a major emerging BRIC economy should present high growth opportunities for insurers. Despite the perceived opportunities in the Latin American health insurance market insurers are increasingly wary of the region and are slowly beginning to pull out of these markets. One such insurance company planning to leave LatAm is Nordic, the health insurance brand of Europæiske Rejseforsikring A/S; Nordic has revealed that it plans to cease the sale of NHC Americas Health Insurance products. The company is also moving towards a complete withdrawal from Latin America, and will no longer sell NHC products through Agents or Brokers located in the region. The move has surprised many industry insiders as it has been known that Latin America was one of Nordic's biggest markets, and the company was well placed to capitalize on the expansive economic growth of the region over the near term future. However, Nordic sources have revealed that this withdrawal from the LatAm health insurance market was instigated after an extensive internal review, and is being conducted in order for the company to consolidate its positions in other markets, with Asia being a key focus. Unlike the recent announcement regarding the complete shutdown of Aviva Global LifeCare Health Insurance products, Nordic has stated that policyholders currently enrolled on an NHC Americas health insurance plan will still be able to renew their policies going forward, and that the plan will be serviced in accordance with existing policy terms. This means that in contrast to Aviva, Nordic will not completely disable its NHC Americas business, but rather stop the sale of any NHC Americas products to new customers. As such, existing NHC Americas policyholders will be able to receive continuing coverage for any medical conditions they may have developed while on their health insurance plan. The two companies, Aviva and Nordic, could not have handled the "shut down" of their respective plans in a more contrasting manner. Nordic, unlike Aviva, has shown its commitment to policyholders and has displayed its intent to provide high quality on-going services to members who may have developed serious medical conditions while enrolled on their health insurance plan. Aviva, on the other hand, has shown a complete disregard for the impact of its actions on its clients. While the Aviva Global LifeCare plans may have been loss making for the company, the position they have placed themselves in by simply ceasing to operate these products could do major damage to the perception of "safeness" which IPMI policies offer on a global level. Facing a similar position, Nordic has elected to stand by its existing customers who may have otherwise faced a difficult proposition in obtaining continuing coverage for this region. Nordic will not force policyholders off plans which are already in place. This key distinction over the manner in which Aviva is treating existing members is a major insight into the duality displayed by many major Global health insurance providers in the modern age. For the international insurance industry to grow, consumers must have trust in the company they are working with, in that the protection they are purchasing is often intended to provide their medical coverage for the rest of their life. While Aviva may have had a negative impact on the perceived trust levels clients have towards their insurer, Nordic has proven that at least some international insurance companies do care about the people they are protecting, and that these insurers are committed to protecting customers over the long haul. At present it is still unclear why NHC has made this startling decision. Market Analysts suspect that one of the major contributing factors is due to the company's Claims Ratio in the LatAm region; future claims development in Latin America for NHC was viewed by insiders as potentially unsustainable. While the news will undoubtedly come as a blow for individuals in Latin American countries due to the high quality and coverage levels associated with the NHC Americas policy, the fact the Nordic remains committed to continuing service of existing customers will be welcomed by many.