2014 International Private Medical Insurance Inflation Review
The third and final part of Pacific Prime’s annual Inflation Review follows and reports on the rates of inflation from some of the world's leading international health insurance providers. Rates are tracked in the same countries that the previous 2 parts of the review examined, and include the following seven insurers: Aetna, Allianz, AXA PPP, Bupa International, IHI-Bupa, InterGlobal & William Russell.
This review will shed some light on the larger picture of how inflation rates have been shaping up for 2014. Witnessing blanket regional inflations for three of seven insurers, with AXA PPP and William Russell making slight specific variations and Allianz opting for more precise changes while InterGlobal for the first time in five years reports negative inflation rates. William Russell tops the average inflation rate with a 13.8% increase, Aetna and Bupa close behind with 11.9% and 11.1% increases respectively. IHI and AXA PPP remain in the middle of the group, both lowering averages from the previous three years, while Allianz comes through with the lowest level of inflation at a rate of only 4.8% for 2014.
Aetna Global is still relatively new to the international market, but it's parent company Aetna is one of the longest running insurance providers in the U.S.A. Aetna Global maintained an average of 10.3% across all regions between 2010 and 2014, and the 2014 average came in at a blanket rate of 11.9% across all regions.
Sharing similarities to 2013, Aetna’s upward trend on this years’ inflation adjustment can most likely be attributed to the equal increase assigned across all regions. Had Aetna followed their 2012 model, where more specific adjustments were made per region, Pacific Prime analysts believe they would have been able to boast a yearly adjustment under the global benchmark.
Allianz Worldwide Care, known simply as Allianz, is seeing relatively stable premium inflation rates in 2014 with an average of 4.8% in all countries examined – significantly lower than their 7.7% average in 2013. Out of all insurance providers examined in this study, Allianz has the second lowest average inflation rate over the last five years at a 5.9% increase, largely due to 2014 owning the lowest yearly average inflation of 4.8%, (of the seven reviewed insurers).
In 2009 Allianz labelled their largest increase in any one year with a significant adjustment of 23.2% for Singapore. Since that time Allianz has not seen an average increase of over 10% for any region, and if this downward trend continues for the insurer they will likely maintain their position as an insurer with one of the lower inflation increases for 2015.
AXA PPP averaged premium inflation rates in 2014 at 7.8%, achieved via a blanket increase for all regions excluding Thailand, subsequently bringing the lowest inflation rate since 2011 for the company..
In 2011, AXA PPP aimed at a precision pricing model choosing to be country specific with inflation rates. As a result prices in some areas increased while others decreased quite dramatically, overall the average came in settled at a 5.5% increase. In 2012, AXA PPP returned to utilizing blanket adjustments causing a spike in the average inflation rate to their highest in the past five years at up to 9.9%. Though AXA PPP continued to largely utilize semi-blanketed adjustments, premium inflation rates dropped down to 8.4% with 2013 rates, and continued further to the 7.8% average for this year.
Bupa International - Worldwide Health Options
Bupa International are one of the most recognized names in the international private medical insurance market and despite the prestige of their brand, the inflation rates of their Worldwide Health Options plan in 2014 maintained a level average compared to other insurers, opting for a blanket 11.1% across all regions. 2014 saw an average of a similar increase to past years, bringing the 5 year average up to meet the yearly average in line with rates matching 2013 figures.
The last three years have shown a positive trend in maintaining a steady average rate of premium inflation. Bupa do currently project the highest five year average at a 10.5% increase, Aetna close behind with 10.3%, yet Pacific Prime experts expect rates to remain steady through into 2015.
IHI Danmark, also known as IHI-Bupa are unique in the IPMI market as all plans offered are without option to exclude the U.S.A. for treatment. This means rates of inflation for IHI premiums necessarily remain in accordance with inflation rates for treatment in the U.S.A irrespective of which country the insured resides. Even with this unavoidable addition to pricing, results for all areas have seen their lowest levels of inflation adjustment, with the 2014 average at 7.3% bringing the five year average to 9.3%.
If the other six reviewed insurers were to also include premiums priced outfitted to cover treatment in the U.S.A, they would need to load their premiums by 200-300%. Being the only company without the option to exclude the USA in the cover, IHI have gained a depth of experience that surpasses others who would likely see higher inflation rates, were they to permanently incorporate premiums from the United States.
InterGlobal saw an extremely stable 1.6% increase in 2013 due to there being such large increases the year prior, most notably in Hong Kong, China, and Dubai. The low inflation rate from 2013 followed by the negative inflation rates this year has managed to bring the five year average rate down to 5.8%, the lowest of the global average and just under the Allianz 5.9% average.
Pacific Prime looks to the future to with interest in whether InterGlobal can continue to maintain such low premium inflation rates into the upcoming year.
William Russell’s premiums experienced the highest inflation rates of the seven reviewed insurers with a substantial 13.8% yearly average increase, particularly significant as it follows their lowest ever average of 3.9% from 2013. There was a particular focus for Hong Kong, China and Singapore whose inflation rates rose by 0.8% more than the other seven regions analysed.
With William Russell seeing such low rates in 2012 (5%) and 2013 (3.9%), there was little surprise that inflation would increase once again to encourage a more manageable level of premium. Pacific Prime expects William Russell's inflation rates to remain relatively balanced in 2015, without deviating far from the new five year average of about 9%.