Bupa International are continuing their expansion into Asia, with a focus on the China market in particular, and several developments have taken place recently. Bupa's first step towards developments within the SME market is to bring their premiums into a more competitive arena for the China market. In order to do this, the insurer has placed a blanket discount of 30% on all China based premiums to make plans more attractive and build the SME portfolio at a similar pace to that of their individual plans.
To compliment the somewhat costly individual plans that are selling well, Bupa believe that having a 30% reduction on their SME plans will help them to win more business. However, due to the unstable nature of such a market, where rapid growth means that plans require flexibility and dexterity to succeed, Bupa may need to provide more than a cost reduction to achieve success with its clients.
The Lifeline plans from Bupa were first introduced to the market over 20 years ago with three basic plan options; the Essential, Classic and Gold plans. Despite these plans each being comprehensive in their own right, the lack of specific plan options within these has been a major setback for Bupa thus far in China, specifically the lack of any options specifically designed for the region.
Typically, insurers offering licensed health insurance products in China will have some form of alterations available for SME groups that make the plans specific to the region, such as a geographical restriction or restriction on certain facilities in China. However, Bupa plans do not allow for any form of alteration until there are at least 100 employees on the plan. In a market where personalisation on plans and premiums seems to prove successful, Bupa will need to explore more ways to provide tailoring options so clients can feel they are purchasing a plan that matches their exact requirements.
In the China market, there have been many ideas about how to make the plans more attractive and suitable to Chinese businesses, each having their own advantages and disadvantages.
One of the first changes requested by several companies is that the geographical area of coverage should be reduced as they believe that their employees only require coverage in China. This initially seems like a positive suggestion, however there are many reasons why this is not the most effective way to tailor a plan.
Therefore, by limiting the cover to China only, rather than worldwide, there would not necessarily be a significant difference in cost as the cost for full cover within China is one of the highest areas for premium anyway.
Firstly, China now plays host to some of the most expensive hospitals in the world, so to price a plan that includes coverage for all hospitals in China will actually require a substantial premium. Therefore, by limiting the cover to China only, rather than worldwide, there would not necessarily be a significant difference in cost as coverage within China is still one of the most costly areas for insurance premiums. Secondly, if a company has a large expatriate workforce, they will generally expect to have the option to receive treatment in their home country if needed. Language barriers and cultural treatment expectations can make receiving treatment in China somewhat challenging, so to maintain employee satisfaction it is often best for companies to ensure that employees have the option to return to their home country for treatment if they desire.
One of the more successful ways to tailor plans in China is to include the option to restrict the amount of cover at facilities where costs for treatment are higher than average, otherwise known as a High Cost Provider (HCP). It has proved very popular for insurers to allow clients to receive treatment at specific HCP's, though with a further co-payment required from the policyholder. For example, the insurer may introduce a 20% HCP co-payment, so a client would need to pay 20% of the actual cost out of pocket.
Further to this, a blanket exclusion for treatment at the high cost facilities could be another option, disallowing any treatment coverage at all at HCP's. This type of restriction has also proved popular as it recognises the fact the many of the facilities range in cost in China and therefore it allows a company to choose the coverage that is the most suitable for their specific situation.
Bupa will need to consider offering these types of options to maximise their success within the China market. Furthermore, they will also require more flexibility within their choice of plan options. At the moment, they do not allow for any tailoring of the plan for any of their three options; Essential, Classic and Gold. However, their competitors allow for plans to be tailored to meet quite specific needs for even the smallest of group plans and allow for the removal or inclusion of benefits such as Dental, maternity, wellness, hospital cash and home nursing. With Bupa's plans being so rigid, they will need to look improving their flexibility to match their competitors and grow their China business.
With the Chinese market developing at such speeds, Bupa need to consider making the necessary alterations to their plans to achieve success, rather than relying on their name alone as they have been able to do in many other markets, such as the Middle East, where their reputation has allowed them to develop their profile in the region significantly.