Growing global mobility and legislative changes in destination countries popular with emigrating Brits mean there has never been a better time to be selling international PMI. Peter Carvill investigates. Click here to download pdf
As increasing numbers of UK citizens choose to live abroad, it appears that the old saying of the world getting smaller has come true. A consequence of this has been that sales of international private medical insurance (PMI) have increased throughout 2007 and been more active than domestic PMI. And with new factors having come into force during 2007, with more to follow in the near future, it seems that those IFAs selling international PMI may be in for a boom year in 2008.
Looking ahead to next year, many insurance professionals believe sales of international PMI are likely to continue growing after a reported 10% to 35% increase in sales throughout the last 12 months. John Pritchard, international business development director for Interglobal PMI, for example, predicts that: "The market for international PMI will continue to grow and consolidate."
The increase in international PMI sales can be attributed to a number of factors, the most dramatic of which has been the introduction of legislation in countries that are popular for Britons moving abroad, which makes the buying of international PMI more or less compulsory.
Both Abu Dhabi and Dubai passed laws in 2007 that made it mandatory for those entering from abroad to possess a valid working visa and PMI, ensuring that foreign nationals would no longer be reliant on state healthcare. Similarly, both France and Spain passed similar mandates that exclude foreign nationals under pensionable age from utilising state healthcare except in the event of an emergency. Under France's policy, which came into effect at the end of September, foreign nationals who would be under the pensionable age in their home country and not working lost the right to free state healthcare in France after being resident there for two years. Spain's approach is marginally stricter in that any EU citizen under pensionable age has no right to medical care beyond emergencies. Greece, similarly, has no free healthcare for retired people entering from another country.
An increase in the numbers of people leaving the UK to work in different climes has also pushed up international PMI sales. Between 1996 and 2005, according to the Office for National Statistics, the number of UK citizens relocating abroad each year rose by over 77% from 318,000 to 565,000 with the largest increases in numbers occurring in 1999, 2001 and 2005.
A minor increase in sales for customers living in the US has been reported. With the US healthcare system coming to the forefront of public attention again, it appears that those travelling to the US have begun to recognise the need for international PMI when stateside, and choosing to purchase cover in the UK, taking advantage of the strong dollar-pound rate of the past year.
Opportunity knocking
So where are the opportunities for IFAs selling international PMI? Insurance professionals gave the examples of families moving abroad; those choosing to retire abroad to the new hotspots of Eastern Europe, and specifically places such as Bulgaria, Croatia and Poland; employees relocated through multinational corporations; high-net-worth clients in the UK, for whom international PMI may be a good alternative for domestic; and the cross-selling of international PMI with other financial packages.
Andrew Apps, director for global sales and business development at Goodhealth, says: "International PMI is not rocket science at all." Yet the main obstacle in selling the cover, according to a cross-section of the insurance industry, is often the attitude of IFAs.
One problem is the perceived difficulties in communications where many IFAs are wary that something may become lost in translation. "They are sometimes intimidated by a perceived language barrier," says Apps, "despite the sale and business of international PMI being conducted mainly in English."
Andrew Wilson, sales and business development director for Medibroker, echoes the sentiment that the main obstacle in the uptake of international PMI lies with the intermediaries: "IFAs have to be prepared to do the job right. Talking to one or two insurance companies isn't going to allow you to provide the best advice for your client's needs."
Local variation in medical provision and the greater use clients make of their international PMI were also named as hurdles in the business. Wilson cites the variants of treatment as a factor in selling international PMI, claiming that the industry was only now beginning to diversify its products after years of treating international PMI as an extension of its domestic equivalent, "Getting away from the 'one-size-fits-all' way of thinking and offering more diverse packages is a significant development".
Apps also draws attention to the difficulty of negotiating costs in the destination country, especially because, as the popularity of international PMI increases, so too does the customers' propensity to claim on their policy along with the price of medical bills: "One problem is greater usage. People are claiming more on their packages, and the cost of treatment is rising and making it harder to negotiate prices."
Once IFAs see past the barriers of selling international PMI, the market itself appears to offer great opportunities for business expansion. Primarily, according to Apps, this is because of the huge as yet untapped potential of the cover compared to the much more limited UK market: "Domestic PMI has everyone chasing the same business," he says.
The benefits to be reaped from selling international PMI can be worth the extra effort though, as the rates of commission tend to differ from other products. "IFAs are used to seeing big commissions and the like, but that commission drops after the first year. With the 'vast' majority of international plans, the commission percentage paid in the first year is repeated every year thereafter," says Apps.
Clarion call
Now is the time to get involved though, according to Carl Carter, managing director of IMG Europe, who says that, "with the increase in overseas mortgages and the fact that an IFA is often well placed to spot the sale even before a broker, there has never been a better opportunity for an IFA to offer international PMI".
Agreeing with Carter, Apps further reinforces the need for IFAs to begin concentrating on international PMI sales immediately, saying: "The IFAs who are into the business of selling international PMI now are the ones that are going to make the money. Clients need to be provided with a complete package. The opportunities are there for the other IFAs to move in on an IFA who's not doing much health insurance."
The general prediction though is that international PMI sales are going to increase rapidly in the near future, particularly in the developing markets of Eastern Europe, South Asia and South America. Moves in the Middle East towards legislative measures barring foreign nationals from state healthcare are also good news for the industry.
Paula Covey, director of customer service for Bupa, believes international PMI can be the next big market. She says, "The world is getting to be a smaller place, and people are taking a more serious look at their own health so international PMI is the way forward."
Pritchard takes a measured view of the future, underlining the change within the industry required in order to profit fully from any increase in the market: "The market for international PMI will continue to grow and consolidate, due to ever-increasing global mobility, coupled with a need for more region or country-specific offerings to fulfill the needs of increasingly stringent local legislations and to service the needs of different market segments."
Karen Teasdale, senior marketing controller for Axa International, also predicts a rosy future for the market, saying, "there is a lot of opportunity for us and, pardon the pun, I think international PMI has a very healthy future."
As the world becomes smaller and people are travelling and emigrating more, it seems that international PMI has a promising future, at least for those IFAs who are already in the market, or will be entering it in the near future. n
