With insurers racing to grow their IPMI client base, the level of competition in the market has been increasing, and in an effort to sharpen their competitive edge, many insurers are now starting to offer cover options for pre-existing medical conditions in their international insurance plans.
In the past, finding an insurer that would cover a pre-existing condition was a challenge; very few companies offered any sort of coverage. Today, however, the majority of major health insurers are beginning to offer Full Medical Underwriting (FMU), meaning that, by placing a loading on a clients premium, certain pre-existing conditions will now be covered.
If a client has a pre-existing condition and is looking for health insurance, there are typically 5 outcomes that will be offered, depending on the insurer:
- Exclusion: Where all treatment for, related to or a direct result of a pre-existing condition would be excluded from cover. Any conditions developed after the start date of the policy would be fully covered.
- Moratorium: Where treatment for the condition may be covered if the client has not experienced any symptoms or treatment related to the condition within a certain time frame. If symptoms or treatment takes place within this period, the moratorium period will restart.
- Decline: With a serious condition like cancer or diabetes, the insurer will most likely decline the application altogether and not offer any cover.
- Accept on standard terms: If a condition is extremely mild and the insurer finds no risk of further treatment, they may decide to cover the condition with no change in premium.
- Accept with Loading: The insurer will increase the amount of premium, usually as a percentage, to cover the increased costs of treatment due to the existing condition.
In the world of international private medical insurance, it is necessary to put these conditions in place. Insurance plans are typically designed to cover clients against the risk of becoming ill, rather than asking an insurer to pay for treatment after a client becomes ill.
For large corporate plans, where employees are added to a company scheme, it is commonplace for a 'MHD' (medical history disregarded) to be placed on the plan, meaning that all pre-existing conditions are fully covered and calculated in the premium paid. However, for individual plans, if insurers regularly covered pre-existing conditions in full without charging clients more, then the amount of claims paid out would also dramatically increase, resulting in basic premium prices significantly increasing overall.
As an example, when Nordic recently entered the IPMI market, their underwriters were offering cover for conditions that no other insurer would accept. This resulted in the company becoming sought after by clients with pre-existing conditions, and ultimately, premiums became unstable and the company had to withdraw from the market.
For reasons such as those seen in the previous example, it has traditionally been common for insurers to exclude cover for any for pre-existing condition in the health insurance industry, with very few having the capability of offering a premium loading. However, as the global expatriate community grows larger, so too does the amount of clients that have medical history requiring cover. Furthermore, the improvement in treatment for many common medical conditions (such as high blood pressure or high cholesterol) has resulted in more insurers considering offering loadings to increase their client base.
Over the last two years, both Bupa and InterGlobal have started to offer loadings for medical conditions with great success. Furthermore, it is likely that William Russell will also be heading down the same road by the end of this year.
Pacific Prime analysts are positive about this outcome, as not only are there now more options for clients requiring pre-existing cover in their health insurance, but insurers are successfully adapting to the needs of the market, ultimately creating greater long term stability.