After an analysis of the inflation rates set by insurers for 2014 with regards to International Private Medical Insurance, Pacific Prime has found that Southeast Asia continues to show the highest levels of inflation, due in part to some of the costliest private healthcare in the world.
Although it is clear that the South East Asian countries inflation rates have been shrinking, with 2014 figures coming down to 7.1% from 2011’s high of 10%, the average rate increase over the past 5 years nevertheless remains at 8.5%, 0.5% higher than regions in the Middle East and 0.3% higher than the rest of the world.
|SE Asia||Middle East||Rest of World|
One large factor in the overall average remaining high was Hong Kong’s 2014 increase inflation rate of 10.1%, and with healthcare costs in the city rising, IPMI premiums have been forced to follow suit. Private medical insurance inflation has remained prevalent as Hong Kong alone managed to collect a rate considerably higher than the next two countries (in order of increased rate), Singapore with 8.9% and China with 8.8%. All three countries show figures relatively high compared to world average rate of 8.4%, which appears low due to figures from countries like Kenya (7.5%) and Dubai (8.0%).
The contributing factors in these recent inflation rates seen across Southeast Asia are a growth in high net worth local citizens, aging of local population, influx of high net worth locals and growing or stable numbers of expatriates. These factors have created a demand for new high end medical facilities, something that has not yet been met in all high cost Asian countries. China has moved in the right direction regarding this, and announced an initiative to establish foreign-owned hospitals in several cities and provinces, as well as setting a goal of having private hospitals contribute 20% of the country's hospital bed capacity by 2015. Yet while promising to manage healthcare costs, there is still not enough evidence to support whether the introduction of new facilities will be enough to bring China's healthcare costs under control, and China, Hong Kong and Singapore in particular require a certain focus on their specific healthcare cost trends as they correlate strongly to future IPMI inflation rates.
Insurance providers are seeking to influence some control over the rate of inflation in Asia. In Hong Kong for example, Bupa acquired the largest provider of healthcare services to corporates in Hong Kong, Quality Healthcare Medical Services. With a network of 100 multi-specialty centres and 500 affiliated clinics Bupa are aiming to understand the market at a local level and affect their inflation rates according to the actual needs of Hong Kong residents. William Russell in particular are an example of the divide between Southeast Asia and the rest of the world, showing a rate increase of 14.2% for China, Singapore and Hong Kong, while leaving the rest of their countries at a (while still high) lower 13.6% increase.
The demand for high quality medical services amongst expatriates and high net worth individuals in an increasingly expensive region of the world is a factor that distinguishes Asia’s average of inflation when compared to the rest of the world.