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Nordic Health Care 2013 Premium Increases Above Average

Posted on Dec 18, 2012 by Sergio Ulloa ()

Nordic Health Care, a specialist in international health insurance policies has been working with Pacific Prime since 2009 and has become a key partner in the industry. The Nordic Health Care plans have previously been considered among the best in the market however, premium increases for 2013 have now been announced and have come in at 15 percent above 2012 rates. This increase is roughly 40% above those recently published by a range of other leading international providers including Allianz Worldwide Care, Bupa International, AXA PPP and Interglobal.

The Nordic Health Care plans are unique in the health care market in that upon joining the plan, a client remains in the same age bracket going forward so premiums do not increase due to age; however, this does not make premiums immune from steep rate rises. Over recent years, increases by Nordic have been in line with other insurers but this year, the change in cost to clients is above the average and both new plan and renewal premiums will be affected by the same percentage (15 percent). Pacific Prime believes this increase in premiums is down to the rich plan benefits offered by the Nordic Plan.

Neil Raymond, CEO of Pacific Prime commented: "The Nordic Health Care plans are among the best in the market for those looking for comprehensive cover and are particularly attractive to European nationals who like the fact that they are able to stay in the same age bracket going forward so hopefully, premiums do not adjust too much. Unfortunately though, for 2013 there will be a significant step up".

It is important to note however, that when most insurers quote premium increases they exclude the impact of the increase in age, whereas for Nordic renewal clients there will be no increase in age. In consideration of this, given that the increase in age normally accounts for an average of a 3 percent rise in premiums each year, the Nordic increase could in fact, be positioned as a 12 percent increase. While still higher than most other insurers, it is a more acceptable figure than 15 percent.

Nordic Health Care has also historically been very open to accepting clients with a pre-existing condition (in return for a premium loading) and while this has made the plan very attractive to many clients, it has most likely impacted the loss ratio experience of the entire portfolio.

Mr Raymond commented: "The fact that Nordic cover pre-existing conditions has been very positive for many looking for insurance but this also means that policyholders will find it very hard to move away from Nordic to another insurer, even with a 15 percent increase in premiums next year".

One positive outcome regarding Nordic's annual adjustments is that the insurer is known to typically increase its benefits along with its premiums. This is not a common occurrence among insurers and most providers effectively erode the quality of plans overtime by slowing the rate of increasing premiums without adjusting benefits. This is not as easily noticeable for clients, in comparison to premium rate increases, so insurers typically use this method to keep plans profitable.

The year 2012 saw a few other changes for Nordic Health Care, particularly on the compliance side. Recently, Nordic effectively withdrew from the Latin American offshore market for new business (although they continue to honor policies for renewal). The insurer also withdrew from most of its other global markets around the world outside of Europe. This has left a vastly diminished foot print of only Europe and a few other overseas locations, although it should be noted that plans are still available in important locations such as Hong Kong, Thailand and Singapore. Renewals in all locations do not seem to be impacted by these changes, only new applications.

Nordic Health Care are obviously in a transition phase and are trying to find the right balance between compliance and distribution as the list of locations where their plans are sold is in flux and has been changing on a regular basis. This is a process many other leading international health insurance companies have been through and as insurers grow in the market, the balance between the drive for sales and compliance often shifts in such a manner.

Mr Raymond commented: "Compliance is of increasing importance as regulators around the world become more aware of high end medical plans sold from overseas to their locally based residence. Coupled with the growth and importance of many of these markets, insurers are finding the need to regularly readjust their position of where they can sell to and where they cannot. Nordic's current position here is by no means unusual".

Finally a note on taxation; as from next year, all Nordic clients outside of the EEA will be levied a 1.1% tax on their premium. This seems to be specific to Danish tax regulations but may well be the norm in the future for all international insurers as Europe governments seek to balance their books.

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