AXA Winterthur in China and Healthcare International have recently released promising insurance increases for 2013. Both insurers published their premium rates for 2013, coming in at 10% and 9.5% respectively (this compares to a long term average of 11% globally and over 12% in China). Although at the higher end of a recent wave of rate revisions from leading players such as Bupa International and Allianz Worldwide Care, the AXA Winterthur and Healthcare International figures are still below the 5 year trend.
AXA Winterthur offers three plans in China; a China only plan, an International plan and a Worldwide plan. Historically, the plans have been good value for money and the recently announced 10% increase continues to support this position. In fact, all key players in the China market who have published revised rates for 2013 have supported Pacific Prime’s belief that the rate of medical insurance premium increases are falling in China to become more in line with the rest of the world. This follows the massive adjustment over the past 5 to 10 years where typically China clients have seen 20% year on year premium rises.
In addition to the October rate revision announcement, AXA Winterthur has also made improvements to certain benefits, namely in regard to Dental. A new dental benefit of RMB 5,000 (circa USD 800) is now on offer as part of the China plan and will have a co-pay of 25%. Furthermore, the International plan will now have RMB 8,000 (USD 1,200) and the Worldwide plan will have RMB 10,000 (USD 1,500) both with the same co-pay. The AXA Winterthur plan is targeted at the lower end expatriate market and higher end mass China market.
HealthCare International has always been a niche player in the International medical insurance market and has focused on delivering offshore only value for money solutions (achievable probably by creating a low operating cost base). The recent revisions in premiums for 2013 is certainly on trend in the market for next year but HCI has also downgraded some benefits in July of this year to achieve this. Namely, they have introduced co-pays at certain facilities in China, Hong Kong, USA, Dubai and France (countries with typically very high treatment costs). The co-pays range from 20-30% depending on the plan in question and apply to both Inpatient and Outpatient treatment as well as being made available to existing and new clients. Further to this, HCI has also reduced the Coverage outside Geographical Area benefit for the Emergency Plus, Standard and Healthcare Plus plans, by dropping it from 60 days to 30 days. Finally, on the same benefit, they have also introduced a co-pay of between 20-30% for treatment (inpatient and outpatient) for all plans.
Healthcare International has always adopted a very broad zoning policy and has not differentiated its premiums based on where someone lives or wants coverage (except for the USA). It would therefore appear that the above changes to benefits are targeted at clients receiving treatment in notoriously higher cost locations/facilities and at those traveling into high cost treatment areas and then making claims. The HCI approach as Pacific Prime sees it is in fact, an attempt to segment the market to give better value to those living in low cost areas such as Thailand, without bringing in a complicated zoning structure. HCI clients located in low cost areas will, to a large degree, not be impacted by the changes while those in higher cost areas may find the plan less attractive. However, this should not be an issue as those clients will be contributing a higher loss ratio anyway, so the above changes are a clever way to segment the market without global price zones.
AXA Winterthur and Healthcare International have performed well this year and Pacific Prime is confident they can continue to do so for the next coming year.