Contact Us     Corporate     Sign In
Compare Quotes Now

South America International Medical Insurance market shuts down in 2012

Posted on Dec 05, 2012 by Sergio Ulloa ()

For many decades, South America's offshore international medical insurance industry has catered to wealthy, high-earning South Americans and flourished. IHI Denmark was one company that had developed its products and seen especially high levels of success in the region. Despite the previous years of high success and growth, 2012 has proven to be a difficult time due to a combination of new regulations and poor performance of numerous health insurance plans. These unexpected failures have resulted in many of the leading offshore providers in the industry having to pull out from the region.

Bupa and IHI Bupa, with perhaps the largest offshore portfolios on the continent,  have ceased the sales of their offshore plans in the region. Back in 2004, IHI Denmark was purchased by Bupa before the insurer went on to buy AMEDEX Insurance in 2005. Both acquisitions lead to Bupa gaining access to some 100,000 customers in 42 countries throughout Latin America.

Bupa is now looking to change their strategy in the region due to compliance requirements. Many countries in the region have enforced policies whereby international insurance companies may be subject to significant punitive fines if they sell health insurance products without a license. These fines could potentially be measured in sizable percentages of global revenue so with these new regulations, it is understandable why companies would want to change their strategy. To combat this issue, Bupa has responded with increasing its onshore plans in the region.

However, Pacific Prime analysts are of the opinion that the company's offshore plans provided greater value for money and that now, customers may look to local providers for onshore policies. Despite this, customers in the region are typically brand sensitive, so with their already strong standing in the region, Bupa should still be able to appeal to a broad range of potential clients.

Nordic, a key provider that has previously experienced high levels of success in the region has also opted to step back from the Latin America market. While Nordic will still honor and accept the renewal of existing policies, the company will no longer accept new applications, citing the compliance regulations as a major reason behind their decision.

Another leading provider in Latin America that has not been immune to these recent changes in the region is Allianz Worldwide Care. During the past five years, Allianz has seen high levels of success in in the region but in 2012, the insurer adopted a much more selective approach when choosing which countries and what people they would offer their policies and coverage to. One country affected by this was Brazil as Allianz will no longer provide coverage to Brazilians in the country. Despite these changes, Allianz has taken positive steps and created their new plan 'Allianz Global Pass' to specifically cater to people from the region.

For Aetna, another key player in the market, they have experienced a continued strong performance in the region with their onshore plans. Aetna previously avoided the development of offshore plans in Latin America and through this, it has been able to maintain and develop its brand. Additionally, the company has been successful with its service capabilities particularly with direct billing, a feature that is of high importance for clients in the region.

There are undoubtedly many other leading international health insurance providers that have eyed the market in Latin America but unfortunately, several factors exist that have potentially discouraged them from entering. For example, as previously mentioned, South American clients tend to be very sensitive to brands and typically value the tips and recommendations from friends and family. This makes it challenging for new companies to enter the region, especially if they do not have an already existing global presence. Furthermore, since many low-end health insurance products have long been available in the market, offshore providers have found the highest success rates in the very high-end markets and sectors. With this potentially huge risk in mind, an insurer must be very confident in themselves that they will be able to perform well in the market.

Aside from from compliance issues and hefty fines, Latin American plans have also been put under pressure by several other factors: very high commissions (needed to support the master agent-sub agent distribution channel), high health insurance treatment inflation, medical tourism to the US (Latin American customers often travel to the US for treatment) and increasing cases of fraud. In the last few years, many extensive and highly developed fraudulent networks have been revealsed. These networks go far beyond individual people that inflate claims and involved creating non-existing clients, clinics, hospitals and doctors in order to run their scheme. International offshore insurance providers, which do not often have extensive experience in the region and may face language and cultural barriers, have been easy targets for such schemes as a result.

Pacific Prime analysts predict that many of the trends highlighted above will continue throughout 2013. Nannecy Dulin, of Pacific Prime, said: "The Latin American Region has certainly been a challenge in 2012 with many insurers withdrawing from the market or restricting access for certain clients or nationalities. We foresee more of the same next year and the region is going to increasingly require local onshore solutions and intermediary presence to be successful."

While there is still a market for high-income earning clients, who have a developed understanding of the benefits of health insurance, the ability to gain access to these customers will require onshore options with a reputable brand.

Pacific Prime analysts believe that Latin American sales of these offshore policies will continue to decrease in 2013 mainly due to companies making the shift from international private health insurance to local international private health insurance.

Simplifying Health Insurance
Health Insurance Inflation
Health Insurance Inflation
Read our latest report on International Private Medical Insurance Inflation
Compare Quotes
Compare Quotes
Use an online quotation tool to compare health insurance plans on the market.
Contact Us Now
Contact Us Now
Our health insurance advisors will ensure that you get exactly the cover you need.
Insurance Inflation - 2017
Insurance Inflation - 2017
View our latest report on IPMI inflation