Pacific Prime, one of the largest global distributors of IHI Bupa policies, is pleased to see premium increases for 2013 come in below the 5 year trend, confirming Pacific Prime’s recent opinion of the International Private Health Insurance market that the rate of medical inflation is falling.
IHI Bupa has been one of the leading global medical insurance companies covering expats and high net worth individuals for the past 30 years. It has a substantial client base in Asia and its plans are typically considered by most intermediaries and clients to be among the best in this region. Clients are covered worldwide, including the USA, and are offered guaranteed renewable for life plans, a commitment that most insurers are reluctant to make.
IHI has a recorded premium increase over the past 5 years averaging 13% on its ‘International Health and Hospitalization Plan’ (IHHP, the leading plan sold in Asia by IHI Bupa) however, this year premiums will increase by only 8.5%. This positive rating is in line with other leading international insurers who have recently reported health insurance rate adjustments for 2013, namely Allianz, Aetna and AXA PPP and so far, all key insurers in the market are recording numbers below the 5 year trend and below last year’s adjustment.
Hong Kong and China have recorded some of the highest increases in medical insurance rate inflation around the world over the past 5 years so the recent wave of rates adjustments by these health insurance companies is sure to come as a relief for policyholders.
Neil Raymond, CEO of Pacific Prime commented: “We have had real problems inAsiaover the past few years with the cost of medical insurance policies and the amount by which they go up every year. It is hard to explain to clients why their medical insurance policy is going up at over 10% each year when their salary is not doing the same. But the reality here inHong Kongis that the cost of treatment in leading facilities and by leading doctors has been quickly increasing. Patients and clients recognise this but they do not make the connection to their insurance premium”.
These two key markets in Asia currently have some serious structural problems which are contributing to high treatment costs. For example, in regard to supply and demand, most hospitals in Hong Kong and China could fill every bed and every appointment many times over so facilities tend to test the elasticity of their clients and increase treatment costs. Of course, clients with comprehensive medical insurance plans are covered for this but the hospitals and doctors still end up benefiting and so have more reason to further increase treatment cost.
Furthermore, there is also a tendency to prescribe medically unnecessary treatments, particularly in Hong Kong. One only needs to examine the HK c-section rate to know that surgeons do not tend to hesitate to operate, and this phenomenon occurs regularly across numerous procedures. In light of this, the recent health insurance rate adjustments from IHI Bupa are even more encouraging for policyholders.
IHI Bupa offers several different types of plans in the Asia Pacific market, and although the IHHP plan is the most prevalent, there are other plans available but the rates of increase on these are a little higher. The International Swiss Medical plan (ISM) will see an increase of 11% in 2013, once again below the long term trend but higher than the IHHP plan. The IHI Bupa travel plans on the other hand, also popular in the region (due to the unlimited medical insurance cover benefit), have no reported increase in premiums for 2013.
Pacific Prime is pleased to confirm that, after reviewing the Benefits for the IHI Bupa plans in 2013, there are no major adjustments to the benefits on offer to policyholders. Since the purchase of IHI Denmark by Bupa in 2004, some erosion of health plan benefits has occurred over time to plans that have failed to keep up with inflations, particularly on the outpatient treatment. This has, of course, lead to a decrease in value to clients. However, this type of adjustment is often overlooked as when clients come to renew their policy, they typically focus on cost and how this has changed rather than benefit adjustments.
In this year’s policy wording revision, the coverage is not being downgraded at all. Increased competition in the health insurance market, particularly in places like Hong Kong and China, means that IHI Bupa will have to be focused on delivering value for money to clients in order remain a key player. In Hong Kong over the past 12 months, Zurich, AXA Hong Kong and Cigna Liberty have all entered the market with new plans. While in China, Allianz Worldwide Care and Now-Health are now available onshore and Cigna is aggressively trying to gain market share.
Mr Raymond commented: “I think part of the reason for the slowdown in health insurance rates is due to the global pace of the economy, but I think it is also being driven by increased competition. US insurers are increasingly looking overseas for opportunities and companies like Cigna are very active. We also have seen a lot of activity from AXA and some very credible new entrants like Now-Health. This means the incumbents have to focus on service and value to maintain their position which is ultimately positive for clients”.
The IHI Bupa brand remains very strong in the Asia Pacific region and, among segments of the market, it is still considered to be the best. Certainly for clients looking for lifetime cover from a reassuringly stable health insurance company, it is difficult to overlook IHI Bupa. Pacific Prime still remains very confident in the long term success of IHI but with competitors like Cigna entering the scene, IHI will definitely need to focus on keeping their plans current, comprehensive and competitive. Using their large wealth of experience and exposure will also undoubtedly ensure longevity of their product and its placement in the market.