International health insurance giant, Bupa International, continue to focus their development in the Asia region with particular interest in the China market. There have been a number of successes and announcements recently supporting Bupa International's move and focus. One of the more recent developments involves Bupa's attempt price their insurance premiums more competitively within China. Bupa recently announced an across-the-board 30% reduction on SME plan premiums within the country. By enabling this premium reduction, Bupa hopes to develop a more extensive portfolio of SMEs and to ignite that business in hopes of SME plans matching the success of the insurers Individual plan growth in China.
Bupa has seen strong results with its individual plans, which are more costly than group insurance, and believe that by offering a 30% discount on their SME plans, they will be able to grow those plans as well. The SME market remains somewhat unstable in China, however, and Bupa may still need to make further changes to existing plans. Globalsurance analysts have suggested that an even higher discount may be necessary in order to be successful.
Bupa's Lifeline plans, which make up the SME product line, have been on the market for more than 20 years now. In that time, Bupa has created the Essential, Classic and Gold plans, which all offer varying options of comprehensive coverage. While this series of plans have proved to be successful in other regions for more than two decades, they have not seen the same success in China. Some have attributed this to a lack of more region-specific options.
While the health insurance industry is still growing and maturing in the world's most populous country, the standard has been set by other insurers offering much more flexible SME plans. Some features of more flexible plans include geographic restrictions or the exclusion of specific facilities on the policy.
Bupa's plans, however, do not allow for much flexibility until there are at least 100 people included on the policy. This has been somewhat problematic for Bupa, as the Chinese market is one where the option to tailor plans has been an important factor in achieving success. Some analysts have suggested that it will be necessary for Bupa to include more opportunities for personalizing plans so that customers are more confident and comfortable when it comes to purchasing their health insurance plans.
In addition to flexibility, there have been a number of ideas circulating about how to attract more Chinese businesses and how to make SME plans more suitable for local customers.
Some companies have suggested that they would like to see narrower coverage areas, as their employees do not always require coverage outside of China. While this may seem like an easy way to bring down the cost of a premium, there are reasons to explain why this could have little effect on costs in China. One of the main reasons is that China is home to some of the world's most expensive hospitals, and writing a plan that would include all of the country's hospitals, particularly high-cost foreign-operated hospitals, would result in a hefty premium.
As such, limiting coverage to China only does not make a significant difference to the overall cost of a health insurance plan. Another important factor to consider is that foreign workers often times will prefer to receive care in their home country. Language and cultural barriers are common in China and the healthcare sector is no exception. As a way to attract and retain foreign employees, many companies will opt to include health insurance coverage in their employees home country if the employee chooses, or if it is an emergency situation.Another way to address the issue of China's high healthcare costs is to design China plans that restrict coverage at the hospitals and clinics that are known for their higher treatment costs. These facilities are often referred to as high cost providers, or HCPs. One way insurance companies are addressing the issue of HCPs is by implementing a co-payment requirement. For example, the insurance company may opt to put in place a 20% HCP co-payment where the insured would be required to cover 20% of their costs at the HCP. This method has seen success with a number of clients that want to offer HCPs to their employees, but do not want to increase the overall cost of the premium.
Some insurance policies have gone a step beyond and implemented all-out exclusions for treatment at HCPs so that policy holders will not be able to receive coverage at these places. This has been a popular method of reducing premium costs in part and allows a company to choose the plan and coverage level that fits with their employees needs.
Many analysts have suggested that Bupa will need to add these types of options to their SME plans in order to be more successful in China. Others have also expressed that the insurer will need to make their plans and products more flexible and allow for easier adjustments beyond the three products they currently offer. Many competitors already offer flexible plan options for groups of smaller sizes, and also allow for more flexibility when it comes to additional benefits, such as maternity and dental benefits.
While the Bupa brand is one of the most recognizable in the health insurance industry, relying on their strong, reputable brand will not be enough in the China market. Even though the company has been able to keep many of their plans and policies the same as they've developed in other emerging markets, this approach is not likely to work quite as well in a market as unique as the China market.