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Pacific Prime to offer re-branded ICBC AXA Ultracare Plan in China

Posted on Nov 08, 2012 by Sergio Ulloa ()

Today is the official launch of the re-branded AXA Minmetals Ultracare International Medical Insurance Plan in China to its new brand name, ICBC AXA Ultracare. The re-branding follows the change in shareholding from Minmetals to ICBC.

This is only one of a number of changes in China for the ICBC AXA medical plan, all of which are steps in the right direction according to Pacific Prime CEO Neil Raymond, he commented; "The ICBC AXA plan was the first true global health plan in china to be onshore and licensed, initially with RSA, then Minmetals and now finally ICBC. During this transition the plan has had its ups and downs but we feel very positive about the current changes".

Changes have mainly been occurring across plan benefits and premiums recently, and of these, all have been considered very positive by Pacific Prime who is optimistic that the plan will perform well in the future.

One of the most notable changes involves the recent announcement that premiums in China will only rise 5% at the rate review (October 2012). This change, is an indication of medical insurance inflation and is very positive news, being a very low rate of increase in China. In fact, as China's oldest global type medical plan, this is the lowest rate that this plan has experienced for the past 10 years.

Increases in the period between 2005-2010 regularly hit 20% as this was a time when the rate of medical inflation in China was the highest in the world and all insurers were typically experiencing year on year premium adjustments at the 15-20% mark. Naturally, this was driven by the cost of access to the leading clinics and hospitals such as the Beijing United Family Hospital and Shanghai United Family Hospital. The current lower rate of increase indicates that the cost of health in China at leading facilities has stabilized (at typical high end global costs) and we are unlikely to see such high rates of increase again.

The ICBC AXA plan is now available on a 'Fully Medically Underwritten' (FMU) basis. This is excellent news for those with pre-existing medical conditions as currently, only Bupa International offers this in China (and this only became available earlier this year). The FMU plan means that those with pre-existing conditions can apply to have their conditions fully covered after underwriting. This is typically subject to an additional premium which is derived based on the additional risk the medical condition causes.

Mr Raymond commented further on this; "I think this is great news for both expats and local Chinese nationals in China. Historically in China, if you were to suffer from a medical condition such as elevated cholesterol for example, it would have been impossible to receive cover and you would be considered uninsurable. Now however, both Bupa and ICBC AXA can cover you. This is a reflection of the development of the medical insurance market in China and how it is becoming much more sophisticated".

ICBC AXA is now one of the only providers globally who can offer both Moratorium and FMU high end international style medical plans.

Not all the news is as positive however and the medical plan has also had some important restrictions placed on it due to poor underwriting results. Previously, the plan was always available to insure children on their own without the parents. This type of plan was very popular with local Chinese nationals but unfortunately, the underwriting results were poor and the plan has been pulled from the market, with the exception of a few intermediaries, of which Pacific Prime is one of.

Mr Raymond noted that "the plan is very open to abuse, particularly on the vaccination section of benefits and in most cases, the sales of a plan was a sure way to make a loss for ICBC AXA. However, Pacific Prime is happy to continue to sell the plan based on good underwriting to limit the exposure of the insurer to the risk of anti-selection".

Despite these slightly negative aspects, there are positive aspects to the plan benefits too. The dental benefit, for example, has now been modified to allow for coverage of cleaning. This has never normally been the case but now claims will be included under the Wellness benefit.

Finally, in a related story to Pacific Prime and AXA ICBC. Mr Andrew Yee, formerly a manager at Pacific Prime has moved to ICBC AXA as head of broker distribution for China Healthcare (via Aetna). Mr Raymond commented that "We are delighted to be working with the new re-branded ICBC AXA and we have always had a strong working relationship with Mr Yee. China is an increasingly competitive and sophisticated market for the International Health insurance but we believe the changes that have been made are positive so far".

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