We are pleased to present the second Annual Globalsurance International Private Medical Insurance Review for the year 2013. This report is a collection of data from the 1st of August 2012 to the 31st of July 2013 for individual policyholders and does not include changes in the SME or multinational corporate health insurance market. The 2012 Annual Review is here.
Results and data were gathered from eight leading international private health insurance companies:
Bupa International - Worldwide Health Options plan
Aetna Global Benefits - IHP plans
William Russell - Elite plans
InterGlobal - UltraCare plans
AXA PPP - International Health plan
Allianz Worldwide Care - International Healthcare plan
IHI Danmark / IHI Bupa - International Health and Hospital Plan
Globality Health - World plan
These companies vary in size from the largest IPMI provider globally (Bupa International) to the more niche insurers and managing general agents. All companies included are considered key global players in the IPMI market and have a minimum portfolio size of over USD $50 million gross written premium. Results have not been weighted by insurer portfolio size, as this data is not available, but have been measured by arithmetic average.
This report focused on medical insurance premium changes from 2009 to 2013 (five years) over 10 key countries. The countries analysed were selected based on their global importance in the IPMI market, but also to provide a variety of information on different geographical markets around the world. Countries included: Hong Kong, Singapore, China, Indonesia, Thailand, Philippines, Dubai, UK, Kenya, Brazil.
In order to complete the survey, only the most common plans sold by each insurer were studied and these included the following: inpatient only, inpatient and outpatient, inpatient and outpatient including maternity. The age ranges used in the assessment once again represented those most commonly seen in the purchase of IPMI. In total, approximately 7,680 data points were collected.
The objective of this survey was to identify the trends in global medical insurance inflation in the IPMI world. Data was collected from published material by the respective insurers and is in the public domain; as such, the information is not restricted or confidential. These survey findings are purely based on the data and do not include the responses or opinions of clients or insurance holders. Although Globalsurance recognizes that using different data points could lead to slight variations in conclusions, our analysts are confident that the underlying trends observed in this study reflect the reality of the current global IPMI industry, due to the size and breadth of the sample analyzed.
It is possible to infer that changes in the cost of insurance have occurred due to changes in cost of healthcare. However, there are some risks in drawing this conclusion. It is important to remember that the cost of treatment accounts for only 50 percent of the total cost of health insurance – other market forces are also responsible for determining the price of insurance premiums. For example, more insurance options may lead to more competition in the market and cheaper premiums.
Although this survey cannot conclusively provide the causes behind changes in healthcare costs, it can be assumed that there is a link between health insurance premiums and health insurance costs, given that treatment represents such a large part of the premium paid for health insurance. In this survey, Globalsurance analysts aimed to identify possible reasons for changes in health insurance premiums, based on the experience and knowledge of the insurers and markets which the survey studies.
Finally, and most importantly, the rates of medical insurance inflation recorded in the survey are specific to a segment of the total health insurance sector; namely, the international private medical insurance segment.
This particular segment is typically characterized by high net worth local nationals and senior management expatriates. The inflationary forces within this segment are not reflective of the mass market health insurance sector and readers should keep this in mind so as not to draw any broader conclusions about medical insurance inflation or healthcare costs in the market.
The format of the study this year follows that of the 2012 study, in which data was first analyzed by region, country and then by insurer; finally coming to an overall conclusion on the general state of the market.
Globalsurance compared the results and data from eight leading international private health insurance companies and the results showed that the IPMI inflation rates have actually started to decrease overall in the most recent years, especially in contrast to the extreme spikes in premium inflation recorded in the years 2009 to 2011. However, results also prove that the increasing costs for medical treatment now being experienced worldwide have kept premium inflation for IPMI at a disproportionately higher average than different market sectors in the business world.
To provide a basic perspective on the average regional inflation rates for all areas and insurers included in this report, rates recorded were 10.2% per year for Southeast Asia, 9.3% per year for the Middle East and 9.5% per year for the rest of the world.
Globalsurance expects this downward trend to continue across all insurance companies in future as the amount of new insurers entering the market will increase the competition and therefore impact premium costs. Furthermore, with more companies gaining specific international exposure, this will enable more insurers to make tailored inflation adjustments per country or region and therefore accommodate for the disparity in cost for medical treatment on a worldwide scale. This is compared to years previous whereby there was a higher likelihood of premiums being priced on the same level regardless of differing medical costs per country.
The first region examined was Southeast Asia, including: Singapore, China, Thailand, Indonesia, the Philippines and Hong Kong.
Healthcare in the Southeast Asian region has continued its upward spiral in the cost of medical treatment, resulting in corresponding increasing rates of premium inflation. Results varied across insurers, changing on an almost year to year basis but overall, Singapore and Hong Kong both experienced measurably higher amounts of inflation compared to most other countries in this volatile region. If the average adjustments for each country from 2009 – 2013 (displayed in the chart below) are examined, it can be seen that Hong Kong upheld the highest overall levels of premium inflation with an average of 12.2% over a 5 year span, above Singapore at 11.6%. However, when looking at just the short term, the most recent single year’s adjustment tells a slightly different story and 2013 saw Hong Kong’s premium inflation come in at 11.1%, below Singapore’s average of 11.3%.
Premium Inflation in South East Asia:
With Hong Kong and Singapore traditionally showing high inflation rates for IPMI, along with the rising strength of the Chinese economy, Asia as a whole has maintained its dominance of this market. Furthermore, when comparing all other areas worldwide as well, Asia has continued to top the global charts with inflation rates for both the long term and short term averages.
Asia has produced the highest worldwide rates of inflation in the long term as can be seen when comparing its total average over the past five years to those of all regions. Premiums in Southeast Asia have increased at an average of 10.2%, compared to the Middle East sitting at 9.3% and the rest of the world at 9.5%. However, when looking at the past 12 months, quite a different deviation was recorded whereby premiums increased on average by 9.2% in SE Asia compared to the Middle East at 7.3% and the rest of the world averaging just a 7.8% increase.
When looking at the long term trends, premiums in Southeast Asia as a whole are only moderately higher than the rest of the world by around 0.8%. However, when examining only the data from the past 12 months, premium inflation for Southeast Asia compared to the rest of the world more than doubled and was 1.6% higher than other regions.
The statistics become more interesting when dividing the countries within Southeast Asia into two sections: High cost countries (inclusive of China, Hong Kong and Singapore) and low cost countries (Thailand, The Philippines and Indonesia). By doing this, a more accurate description of exactly which areas are experiencing the most inflation can be provided.
The past five years have seen premiums in high cost Asian countries increase at an average rate of 11.6%. This growth is considerably higher than the growth in low cost Asian countries, where premiums increased at a five year average of 8.9%.
This difference between these averages is significant, but even more so is the data comparing inflation over the past 12 months. During the past year, premiums in low cost Asian countries increased by just 7.3%, whereas in high cost countries, premiums increased by 11%. The chart below indicates that, with this division between high and low cost countries, only the inflation rates in high cost Southeast Asian countries are above the global average.
Inflation rates comparing low and high cost Asian countries:
Further research was carried out to better understand the highly volatile and important market sector of Southeast Asia. As per the chart below, individual countries were reviewed to identify country-specific trends in insurance premium growth.
When examining the last five years, the most interesting statistics of any single country came from Hong Kong. This city has by far the largest average growth overall, yet it is the only market that has maintained a steady pattern of inflation with an overall downward trend. All other countries displayed far less predictable variances each year.
For example, 2009 witnessed a considerably large 14.2% average increase in Hong Kong, which dropped slightly in 2010 to 13.3% and again down to 11% in 2011, where it leveled out around the 11% mark over the next two years until 2013. It is interesting to note that Hong Kong was seemingly unaffected by the troughs and peeks which caused wider ranges of inflation in every other country in the earlier years of this study.
China and Hong Kong were relatively even every year with the exception of 2010, when the adjustment dramatically dropped down to just 7.3%, nearly half the rate of 2009 which measured 14.2%. It should also be noted that in 2011, China recorded another large variance of 11.1%, which similarly to Hong Kong was maintained in 2012 before dropping slightly in 2013 to 10.7%.
This huge deviation between the years 2009, 2010, and 2011 was found in all other countries in this region, though the most significant deviations were seen in Singapore. Average premium increases in Singapore began at an incredibly high 16.7% in 2009 before dropping to a remarkably low 7.3% in 2010. Similar to China, in 2011, Singapore averages also experienced a large change in direction with an even higher increase that brought them back up to 12.2%; again staying steady for the next two years coming to a stop at 11.6% in 2013.
Changes from one year to the next were almost parallel in Indonesia, Thailand and the Philippines, with exactly the same increases occurring three out of the five years, but some variations did occur. For example, although all three countries experienced the same dramatic drop in 2010, landing evenly on 6.9% compared to 11.0% in 2009, and although they all followed the an upward trend in 2011, they each saw quite different end inflation results. Indonesia recorded the highest average at 11.5%, Thailand increased to 9.9%, and the Philippines experienced the lowest increase that year going back up to just 8.2%.
The last two years saw even more interesting outcomes as all three countries went back to level pegging on 9.4%. Indonesia dropped by 2% to get there, Thailand by a much less significant 0.5%, and the Philippines increased by 1.2%.
The final year saw all three countries in this subgroup stay perfectly parallel, dropping 2.1% down to 7.3%. However, despite the uniformity within this group alone, their result does contrast to the rest of the region where the largest change recorded was just 0.8%.
So the Asian region as a whole saw some significantly varied results. It seems logical, then, to conclude that the costs for medical treatment remains higher in areas with concentrated expatriate communities as is shown with China, Hong Kong and Singapore; all of which demonstrated distinctly higher averages over the last five years than Indonesia, Thailand and the Philippines (where the expatriate communities are not as prevalent).
As Hong Kong has continued to display the largest premium increases two years running, further study was deemed necessary to examine individual company movement in the city and to allow for comparison against the other analyzed locations in Asia.
With Hong Kong being one of the most sought after destination points for expatriates in the past few decades, as well as an attraction for an increasing amount of high net worth locals, an increase in demand for high class medical services at premium facilities has resulted in constant high premium inflation levels, not only in comparison to Asia, but when compared to premium inflation around the world. The full scope of medical insurance premium inflation in Hong Kong can be seen in this table:
Insurance premium inflation in HK*
*IHI Bupa includes global pricing, but the company’s main market is Hong Kong
The highest average premium increase recorded for 2013 was from Globality Health at 20.9%. Despite Globality Health only being on the market since 2011, it was deemed important to include this plan in the review as the insurer has made a substantial impact on the global market since their beginning in 2010.
Furthermore, Globality Health are currently underwritten by one of the largest global re-insurers, Munich Re, and are a perfect example of how new insurers often need to make large adjustments in the first few years as they acclimatize to new regions. 2013 alone saw a 34.1% increase for the insurer and this trend was also prevalent for AXA PPP with their 2010 increase coming in at a staggering 44.1%, helping them to achieve the second largest overall average at 16.2%.
When comparing these extreme adjustments to those experienced by the other companies with a longer presence in Hong Kong, such as Aetna, Allianz Worldwide Care, William Russell and InterGlobal, it can be observed that the annual changes for a newer insurer are more of a fine tuning than a radical adjustment. While some of these already established companies did experience some higher than the global average increases, this is put down to the dramatically increasing cost of treatment in this region.
In fact, both William Russell and Allianz Worldwide Care have experienced a downward trend this year, indicating that experience in the region helps to ensure that premiums are correctly priced per year and can avoid any dramatic surges.
The WHO plan from Bupa International, though new to the market, managed to maintain relatively stable premium inflation rates due to Bupa’s existing experience in the region on their previous lifeline plan.
Overall, Hong Kong has continued to have relatively high, though still volatile levels of premium inflation with only one company, Allianz Worldwide Care, remaining under the global benchmark (10%) over the past five years with an impressive 8.2%, while Globality Health experienced an extreme high of 20.9%.
With China experiencing an average increase in the last five years of 11%, some very interesting comparisons can be made with Hong Kong. Some companies have very similar levels of health insurance premium inflation, while other insurers have presented far more unpredictable changes in their premiums.
The table below displays the health insurance premium inflation in China for 2013:
Insurance premium inflation in China
Globality Health once again had the highest five year average at 20.9%, though AXA PPP, who had the second highest average in Hong Kong over the last five years were actually the second lowest in China at a considerably lower 9.4%. AXA PPP, along with Allianz Worldwide Care (9.9%) and InterGlobal (9.1%) were the only three companies in China to remain under the global benchmark of 10%.
Allianz have again remained at the bottom of the list with a startlingly low 6.5% increase; however, it is worth noting that this was the first five year average for Allianz Worldwide Care that did include the stretch of 2006 to 2008, during which Allianz Worldwide Care experienced some of the highest increases levels of any company. Since then, their adjustments have been steadied and are now priced correctly according to the costs of treatment in this increasingly medically expensive country.
Singapore is the last of the higher cost countries examined in Asia, and averages in this country were similar to both China and Hong Kong.
Insurance premium inflation in Singapore:
Aetna (12.2%), William Russell (10.6%), Bupa’s WHO plan (10.6%) and Globality Health (20.9%) all remained level in their five year average premium inflation increases when compared to China and Hong Kong, with Globality Health once more taking the place for highest average.
InterGlobal dropped to their region low of 9.1%, coming under the global benchmark for the first time. Allianz Worldwide Care also scraped in under the 10% mark landing on a 9.9% average with 2009’s increase of 23.2% making Singapore the highest result for this insurer. AXA PPP presented a 9.4% average, lower than their Hong Kong result but still above their China results.
Overall, Singapore sat at second tier this year regarding averages over the past five years, despite the higher increase shown by Allianz Worldwide Care and the significantly lower AXA PPP inflation rate.
Indonesia showed the fourth highest rate of medical insurance premium inflation in Asia for 2013, with an average yearly rate of 9.3% over the past 5 years, and 2013 showing an average of 7.3% and coming in at nearly 2% lower than 2012’s figure.
Insurance premium inflation in Indonesia
Indonesia is still closely linked to Singapore in terms of both treatment costs and the resulting insurance premiums, as Singapore is the most common destination point in cases of medical evacuation.
The range of treatment facilities in Indonesia show particularly high levels of disparity, not only in regards to the level of actual treatment given, but geographically as well with many areas not having any access to decent medical treatment.
For example, the island of Bali is easily the most sought after destination point in the country for foreigners with regards to recreational travel, and as a result, costs for routine outpatient treatment in Bali have significantly increased compared to the rest of the country.
Furthermore, there are basically no inpatient medical facilities on the island with the capability to treat serious accidents. As a result, the occurrence rate of medical evacuation– usually to Singapore - is higher in Bali than any other area of Indonesia, causing some insurers to price Bali as a different zone to the rest of the country.
In Indonesia, it is interesting to note that Aetna saw its first five year average reach below the 10% benchmark hitting 9.8%, though Allianz had the lowest five year average with just 6.9% and Globaility Health was at the top once more with 12.4%.
Thailand had the second lowest five year average of 8.9% with a yearly health insurance premium inflation equaling Indonesia at 7.4%.
Insurance premium inflation in Thailand
Like Bali, Thailand is also a huge destination point for international recreational travelers. However, the occurrence rate of international evacuation is not as high in Thailand as in Indonesia due to the fact that Bangkok is home to some of the best medical facilities in Asia, such as the Bumrungrad Hospital.
Despite this, premium inflation in Thailand still lags behind the other Asian countries examined due to the relatively smaller size of the expatriate community and the consequent low demand of high level medical facilities.
Regarding specific insurers’ performance in Thailand, the lowest average for the past five years was shown by AXA PPP with just a 5.5% average, their lowest yet on record. Allianz also came in at a low rate of a 6.1% alteration in premiums and Globality Health still remained the highest with 12.9%.
The fact that there are several high level facilities available in Thailand, combined with some of the lowest premium averages in Asia, has helped Thailand become one of the primary destination points in the world for both medical and dental tourism.
Finally, the Philippines displayed the lowest five year average inflation rate at 8.5%, though equaling both Indonesia and Thailand for 2013’s increase at 7.3%.
Insurance premium inflation in Philippines
Allianz performed positively and measured a low rating of 6.1%; however, this was easily overshadowed by AXA PPP averaging just 2% in the past five years, helping them to remain one of the more popular choices in this region.
The low average by AXA PPP was mainly a result of their rates dropping by 12.9% in 2011 after the insurer changed the matrix design regarding premium per country. Previously, AXA PPP had just three levels of premium and these were the same in each country, according to the three areas of coverage they offer (worldwide, worldwide excluding the U.S.A., and Europe only). However, in 2011 AXA PPP changed this coverage area policy to make premium rates specific to each country, and in the case of the Philippines this caused a reduction in premium.
It is important here to highlight how making country specific inflation adjustments can be beneficial for an insurer and their clients located in specific areas, as previously to AXA PPP’s adjustment, plans were 12% more expensive than they should have been.
However, despite the relatively slow rise in premium inflation currently occurring in the Philippines, Globalsurance predicts that in the future, inflation rates will increase as the economy grows.
Both Goldman Sachs and HSBC have predicted the economy of the Philippines to grow considerably in the next 30 years as it adjusts its agricultural economy to be one based more on services and manufacturing. This change will undoubtedly be accompanied by a growth in the expatriate community and subsequently, a bigger demand for better medical treatment.
The Middle East
In the Middle East, Dubai is typically still considered to be the focal point for IPMI with a large expatriate population and a vast amount of high net worth individuals resulting in the biggest demand for upper level health facilities in the area.
The total average rate of premium inflation in Dubai in 2013 was a surprisingly low 7.3%, 3% lower than the preceding year. This is somewhat unexpected, especially considering the fact that the UAE seems to be focusing more on increasing the standards of lifestyle in hopes of lowering rates of chronic conditions, such as diabetes. Currently, the UAE has one of the highest rates of type 2 diabetes and ranks 11th worldwide with nearly 20% of the population being affected by this disease*.
However, despite these facts and the increasing availability of high cost medical treatment, the inflation rates for Dubai managed to not only experience a downward trend of 3.0%, but also stayed below the average of the last five years at 9.3%, remaining below the global 10% benchmark.
As mentioned above, Dubai experienced a lower average rate of health insurance premium inflation compared to Southeast Asia. Rates of premium inflation by company were recorded as follows:
Insurance premium inflation in Dubai
Globalsurance analysts believe that, in spite of both the growing expatriate and high net worth communities, the lower than average inflation rates found in Dubai can still be attributed to the rebuilding of this region after the GFC (Global Financial Crisis) that affected the area so severely in 2009 and 2010.
Insurers are still weary of premiums inflating too quickly, as much of the aftermath of the GFC is still apparent and visible in the city. For example, many major building developments with collective estimated net worth of over USD $200 Billion are still on hold. Dubai’s recovery from the GFC is however showing increasing improvements, and this is definitely reflected in the growth for IPMI in this region.
Regarding insurers, DKV held the top spot with a 12.2% average increase over the past five years, and AXA PPP had the lowest increase rates at just 5.5% on average.
Dubai provides another excellent example of how helpful adjusting premiums according to specific regions can be. The two plans with the most premium increases in the Middle East, Globality Health and IHI, also maintained on average the highest increases in Asia as well.
With IHI, this high premium inflation was due to the fact that they only offer worldwide plans including the U.S.A., which is home to the world’s most expensive healthcare. As such, IHI needs to maintain an even level of inflation due to the costs of coverage in America.
However, for the companies with the lowest inflation levels, Allianz and AXA PPP, it is clear that having country specific inflation adjustments will promote long term sustainability, as clients in low cost areas will not need to shoulder the premium increases of areas with higher inflation, making the plans more financially suitable on a worldwide scale.
The Rest of The World
Representing the rest of the world sample, data from the United Kingdom, Brazil and Kenya was examined. It should be noted that the exclusion of the U.S.A. was deliberate; if it had been included in this comparison, this would only act to sully the worldwide statistical relevance of the other countries mentioned.
The United Kingdom tends to be considered the most ‘mature’ market for health insurance, with one of the oldest and most established private healthcare markets alongside one of the largest public medical providers. Furthermore, the UK is also home to many leading IPMI companies and therefore makes a fitting choice to be the first studied as a representative of the rest of the world’s premium inflation rates.
Insurance premium inflation in UK
2013 showed a notably low average of 8%, helped mainly by the strikingly low increase in this region from William Russell at 3%, and Interglobal showing an even more impressive 1.6%. With the last five year average sitting almost exactly on the 10% benchmark, this does give an overall indication of the stability of inflation in this highly established region. However, with William Russell able to show such low inflation in the UK, it does beg the question as to whether this five year average would demonstrate the same results if companies such as IHI Bupa and Globality Health, still at the top of the chart, were able to produce more country specific inflation calculations. Then again, Allianz performed with a relatively high rate of 11% in 2013, especially high when compared to Hong Kong (a higher cost area) where Allianz Worldwide Care made an adjustment of just 7.2%.
2013 was a very interesting year for this BRIC nation in regards to IPMI, with more internationally based insurers choosing to tighten their eligibility rules for residents of Brazil due to the increasing prevalence of more locally based insurers.
However, the resulting rates of inflation showed similar results to that of the UK with an overall average of 9.9% in the last five years.
Insurance premium inflation in Brazil
The most noticeable movement for 2013 was presented by Allianz, who showed their highest rate of medical inflation for any region with a considerable increase of 17.6% that, though not the highest on record as a whole for any company, was more than double the average per country for this specific insurer.
Despite this huge spike from other insurers, William Russell and Interglobal once more showed exceptionally low increases of 3.5% and 1.6% respectively, which helped to keep the overall 2013 average down to 8.8%, and the five year average below the global benchmark.
Like last year’s report, Globalsurance decided to use Kenya as a proxy for all African data due to the relative stability of the nation, and its wealth in comparison to the rest of the continent.
As expected, Kenya again experienced lower rates of inflation when compared to most other countries, with the lowest 2013 average on record at just 6.6%.
This was likely due to the somewhat low costs of treatment in the region, as well as this country having one of the more reliable sources of inpatient treatment in Africa, meaning fewer medical evacuations were required.
Inflation rates of medical insurance premiums in Kenya
Allianz Worldwide Care once again proved how their country specific premium adjustments were crucial and recorded a considerably low 0.4% increase in Kenya for 2013, bringing their 5 year average to an impressively low 5%. The only two companies with increases above the 10% benchmark were IHI Bupa and Globality Health.
Bupa International deserves a significant mention as this was the first time their WHO plan averaged under the 10% benchmark in the last five years, with a 9% increase.
The report will now move on to examining individual insurance companies and their rates of inflation for all the above mentioned locations, in order to understand the premium increase and decrease for each provider.
Taking over the company Goodhealth, AETNA Global has been providing insurance on an international level for approximately six years. Although Aetna Global is still relatively new to the international market, its parent company, Aenta, are one of the longest running insurance providers in the U.S.A. where they were formally established in 1853 and are now a member of the fortune 100.
Aetna Global maintained an average of 10.6% across all regions between 2009 and 2013, though the 2013 average came in exactly on the global benchmark of 10% across all regions.
Aetna Global premium inflation
Aetna’s upward trend on the 2013 inflation adjustment can most likely be attributed to the blanket increase placed across all regions this year. Had Aetna followed their 2012 model, whereby more specific adjustments were made per region, Globalsurance analysts believe they would have been able to boast a yearly adjustment under the global benchmark, as they did in 2012.
IHI Danmark, also known as IHI-Bupa, are rather unique in the IPMI market as they are the only plans that do not have the option to exclude the U.S.A. for treatment. As a result of this, premiums for IHI need to be priced according to inflation for treatment in the U.S.A. regardless of where the insured member lives.
The unavoidable result is that all areas have seen relatively high levels of inflation adjustment, with the average over the past five years coming in at 11.1%, and 2013 showing a 10.3% rate of inflation.
IHI/IHI-BUPA premium inflation
Despite 2013 showing an above benchmark increase of 10.3%, it is interesting to note that this is the first time in four years that IHI Bupa have seen an increase above 10%. However, their 2009 adjustment of a remarkably high 16.4% has resulted in their five year average remaining relatively high at 11.1%. Globalsurance analysts anticipate that if IHI’s 2014 adjustment remains low again, next year the group could achieve a five year average that comes in under the 10% benchmark.
Globalsurance analysts also suspect that inflation averages for IHI Bupa would compare differently if the other insurers examined all included premiums priced for coverage in the U.S.A., predicting that they would actually remain at the lower end of the spectrum; Bupa for example, would need to load their premiums by nearly 300% just to include the U.S.A. in the coverage. Being the only company without the option to exclude the USA in the cover, IHI have a depth of experience in this country compared to the other insurers that would likely see higher inflation if comparing USA premiums.
InterGlobal had a dramatic downturn in 2013, showing an across the board average of just 1.6% adjustment for inflation in this year. This differs significantly compared to the trend for their last two years which showed an average increase above 10%, sometimes reaching as high as 17.5%. This extreme turnaround, however, has managed to bring their average five year rate down to 9%.
InterGlobal premium inflation
Having such a large increase in 2011 and 2012 has enabled InterGlobal to keep their premiums very stable in 2013. However, Globalsurance are anxious to see what 2014 will bring for InterGlobal and if they can maintain this below benchmark five year average.
Despite InterGlobal putting a blanket increase in place across all regions in 2013, specific areas were not differently affected as the increase was only a 1.6% adjustment, so there was no risk of drop in retention rates due to clients facing higher than needed inflation rates for their region.
William Russell rates have continued with their downward trend and recorded a five year average of 8.8%, though their 2013 rates presented a considerably lower 3.9% on average.
William Russell premium inflation
The wide gap between this year’s average and the five year average is mostly due to performance in 2009 and 2011 when William Russell saw average increases above 12%, with some regions having increases of close to 20%.
However, 2012 and 2013 saw William Russell record lower averages and Globalsurance expects this trend to remain stable again in 2014.
Allianz Worldwide Care
Allianz Worldwide Care, known simply as Allianz, has at just 7.6% enjoyed the lowest average inflation rates of all insurers in this study when looking at the average over the past five years, despite the fact when looking at the more recent results there were other insurers with lower averages for just 2013 alone.
Allianz Worldwide Care premium inflation
One of the main reasons behind this performance comes down to Allianz’s capacity to make regionally specific premium adjustments. When examining the scope of adjustments Allianz Worldwide Care made in each country for the year 2013, there is an extremely wide deviation of results ranging from as low as 0.4% in Kenya up to 17.6% in Brazil. Furthermore, if we were to take the highest increase Allianz Worldwide Care made in any country from each of the five years and assume that this was then used as a blanket increase for all areas, the average would still come in relatively low at around 13%.
The table above shows that the highest increase Allianz Worldwide Care presented in any one year was in 2009 when Singapore had a significantly large adjustment of 23.2%. However, since 2009, Allianz Worldwide Care has not seen average increases over 10%, and if this downward trend continues for Allianz Worldwide Care, it is likely that the insurer will easily remain at the bottom of the board in 2014 as well.
AXA PPP is the first company included in this study which does not have full data for the complete study period; however the results still show some highly interesting trends.
With an average inflation rate of 7.7% per year, the results for this company’s rates of medical insurance premium inflation are as follows:
AXA PPP premium inflation
It is important to note regarding AXA PPP is that in 2011, the company changed their pricing model to be country specific. AXA PPP previously had the same rates for all countries, but in 2011, they put in place a new system that allowed the rates to be different for specific countries. Because of this change, prices in some areas increased and other decreased quite dramatically. This is best shown on the following chart, where it can be seen that each year adjusted quite steadily, with the exception of 2011 when some very erratic movement both upwards and downwards occurred in different countries.
The other significant result that this graph displays is the incredibly high adjustment which occurred in Hong Kong in 2010. Globalsurance believes this year was an obvious catalyst for AXA PPP to decide to change the premiums to be country specific the following year.
Bupa International - Worldwide Health Options
Bupa Worldwide Health Options is a new product line from internationally renowned insurer Bupa International. Despite Bupa International also showing quite stable results across the board with an average increase this past year of 10.5% along with an overall average of 10.4% across the past four years, it is essential to include Bupa International in this survey as they are one of the most recognized brands in IPMI.
Bupa International WHO premium inflation
Due to the plan being new to the market, Globalsurance analysts again had limited data available on which to base conclusions. The average inflation adjustment of 10.4% was slightly higher than Globalsurance had anticipated, however it does show the start of a downward trend compared to the two previous years.
2013 was an interesting year for Globality Health, formally known as DKV, with the restructuring of their plan design to introduce the new ‘World’ plans. Globality Health had comparatively high inflation adjustments averaging 16.3% for 2013 alone, and 14.9% on average over the past three years that the plan has been available.
Globality Health premium inflation
This high yearly average, however, was mainly due to the fact that premiums in Asia saw a 34.1% increase across the board. The fact that Globality Health needed to restructure their plans is actually seen as a good sign by Globalsurance analysts, and premium stability will likely increase in the long term, whereas the previous plan design consisted of benefits that were obviously under priced, thus resulting in the need to for such an increase in Asia.
2014 will be a very interesting year for Globality Health to see if the new design and pricing structure are more suitable for this plan. It is also interesting to note that this is the first year the Globality Health plans have had pricing adjustments made according to specific zones, another sign for increased stability in the future.
Additional Findings and Supporting Data
The regional inflation rates this year for all areas and insurance providers mentioned above were 10.2% per year for Southeast Asia, 9.3% per year for the Middle East, and 9.5% per year for the rest of the world.
The last five years have witnessed a huge expansion in IPMI, with a growing global expatriate community and more individual options becoming available on the market. Globalsurance analysts predict this downward trend will continue as more international hospitals become available, bringing more competition and therefore helping to lower costs for treatment. Furthermore, as competition increases between the insurers themselves, they will need to keep their premiums as competitively priced as possible to retain clients. In a regional breakdown, mirroring the data provided above, the following tables display the relative increases by year for each of the following regions, followed by an overall breakdown by country:
Rest of the world
Rates of insurance premium increases have remained higher for international private medical insurance plans, compared to local providers and cost increases within public healthcare systems around the world (such as the United Kingdom’s NHS).
Despite some extreme volatility being shown in the past five years within the IPMI market, the last two years have shown more stable downward trends. Globalsurance believes this is due to the rapid growth of IPMI over the past five years as a result of the overall the global economy slowing down and the increased competition in the insurance market.
Furthermore, the rapid growth of IPMI has allowed insurers to achieve better statistical results for each region and therefore enabled them to price their plans more suitably for specific areas. Globalsurance expects this pattern will continue across all insurers. With Allianz boasting the lowest five year averages, it is no surprise that they are the only company that has continually made country specific inflation adjustments.
These adjustments were made not only per region, but per country within each region, showing a greater likelihood towards longer-term premium stability. Plans will always show higher rates of retention if clients in low cost regions are not made to bear the cost of other regions with higher medical inflation; plans will also look more attractive for new businesses if the premiums are correctly priced according to the country of the client.
However, insurers having access to improved market data is not the only factor behind the changes in global premium rates and there are other key dynamics at play.
One factor in particular relates to the on going after-shock of the USA and EU financial crisis still being felt on a global scale by many markets today. Even in Q2 of 2013, where the global economy has displayed growth at a modest pace and some markets are once again gaining confidence and optimism, many markets within Asia have slowed down compared to earlier years where they recorded significant spikes in inflation.
Furthermore, the insurance market has also experienced an increase in competition, especially between local insurers, whereby it is becoming increasingly common for more comprehensive options to be made available worldwide, a feature that has typically only been available with international insurers in the past. This is particularly noticeable in Hong Kong and the UAE, both of which are popular destinations for expatriates and high net worth communities and as a result, IPMI providers are striving to maintain their competitive edge leading to decreases in premium rates.
A final factor that has undoubtedly impacted the IMPI market relates to the fact that in the past, insurers were more likely to create ‘blanketed’ premium tables on a worldwide scale whereby the same premium adjustments would have been made across different countries and regions. However, with the ever increasing development of the global community and the continuous growth of expatriate populations in both developing and developed countries, Globalsurance believes the trend in the future will be to ensure that premiums are priced correctly for each individual country; helping to keep the inflation levels as low as possible.