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New EU Gender Directive Impacts International Insurers

Posted on Dec 21, 2012 by Sergio Ulloa ()

In December 2012, the new European Union Gender Directive, which will no longer allow European-based health insurers to base premium rates on gender, will officially be put into action. One of the areas where this directive will have the greatest impact is in regards to maternity benefits. Despite maternity benefits only being applicable to females or couples, the new directive will result in the high costs associated with those benefits being distributed among all who are insured regardless if they can become, or plan to become pregnant. The two international health insurance providers that will particularly feel the impact of this directive are IMG and Integra Global. Both companies have adjusted their premium pricing in different, unique ways to comply with the new directive and overcome possible hurdles. IMG has adopted a gender-neutral pricing approach, whereby the structure of the plan and the benefits included will be the same, but the premium will be adjusted based on the average risk of insuring both men and women. This method is already in use by many in the market, including Bupa International and AXA PPP and is viewed as a straightforward approach to adjust to the requirements of the new regulation. Some of the advantages to following this method of pricing premiums include: Customers whose ages fall outside of the age bracket where a maternity benefit would be needed will not see their premiums adjusted to reflect the new directive. Women whose ages fall within the age range where a maternity benefit is required will see premiums decrease, but men in the same age range are likely to see a significant increase of their premiums (even though benefits remain the same). Couples who have insurance together will not see a significant change as the increase and decrease are likely to balance each other out. This shift in calculating premiums is a more suitable option for insurers to adhere to, requiring only a change in the rate calculation per policyholder. IMG also recently announced more details and statistics about the effects of the new directive for customers' premiums. Their analysis reveals that premiums for men are likely to go up by 10 to 50%, depending on the customer's age. Those who are closer to 30 are expected to see the greatest change. On the other hand, premiums for women are projected to decrease anywhere from 6 to 30%. IMG will combine the changes to premium structuring resulting from the Gender Directive changes with the premium review that will take place in April 2013, so that all new premiums are fixed for 2013. Premiums are expected to increase by at least 10% in conjunction with medical inflation. In congruence with the gender directive changes, premiums for men are expected to be negatively affected, but reactions and reception to these changes is not yet fully known. However, if retention rates go down significantly, female premiums may still increase in order to offset the potential of men leaving the portfolio. Integra Global is another leading health insurance provider that will be directly affected by the new gender directive. The company has decided to take the route of revising plans and their design in order to adhere to the new requirements. This is seen as a more radical move and is expected to require large amounts of investment so as to fully educate customers on how their plans are changing when the time comes to renew their policy. Integra will release four new plans that strategically cater to specific groups, including families and individuals. Plans designed for individuals will be titled 'YourLife' and 'PremiereLife' plans and the two plans created for families will be called 'YourFamily' and 'PremiereFamily'. These plans were mainly created for customers depending on whether or not they require maternity benefits. This new and different approach will require some adjustment time as customers will require these new plans to be thoroughly explained to them making policyholder retention over the next year crucial. At the moment, the new EU Gender Directive will only affect insurers based in Europe, however it may not be long before similar directives will be implemented in other regions and gender-neutral premium pricing could become a global standard.
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