International PMI is a careful mix of local know-how, global scope and international presence. Karsten Steffgen outlines the details of a successful approach to IPMI
For years international private medical insurance (IPMI) had been an area of constant growth within the health insurance and protection industry. Yet this market was hit by the global economic crisis and brokers have been concerned about the future of their IPMI business for good reasons.
But as the global economy begins to recover, companies are looking abroad to gain a competitive edge in the longer term. They send their own experts with solid experience from other locations to lead projects and transfer knowledge, as well as relying on local talent.
Recent reports show that many multinational corporations believe that the number of expatriate workers will increase over the coming years. This indicates huge opportunities for brokers to increase their IPMI portfolio.
As the mobility of the international economic community is increasing, so demand for first class international health insurance is growing but so are the challenges. Anyone who has set foot on the stage of international business knows that performing there is often complex and always dynamic.
Different cultures, different health care systems, diverse health risks, ever changing legislations and the ever increasing cost of medical treatment – what structures and set ups are needed to mirror this environment?
The industry is moving away from mere – easy to replicate – benefit tables to the next stage of maturity in the international healthcare market which is all about quality of service and containment of cost. High level of utilisation, increases in the cost of health provision and a boost in volume of large cases are driving medical inflation to its current 15-25% a year.
Effective cost controls, professional claims settlement and an assurance of qualified diagnosis and effective treatment, require global presence, international expertise and local know-how. These go beyond local strategic partnerships.
IPMI is so much more than providing comprehensive outpatient, inpatient and dental insurance cover throughout the world. Brokers need a partner who is familiar with the healthcare system of the new country and who knows the local structures, as well as knowing the right people to contact. Efficient information management and a competent customer service set-up are an absolute must.
In a truly international approach to IPMI we are talking about a genuinely international market with local management – which can be steered, where costs and quality can be fully monitored and controlled.
Strategic partnerships and in-house expertise
The IPMI sector is growing rapidly and the activities of an insurance provider cannot be limited to a few countries or regions. The implementation of a global network is a must for every insurance company. Partnerships (for example, local insurers) to address the regulatory challenge and find fronting arrangements in specific regional target markets are an inevitable necessity especially in the large corporate sector.
For those regions or countries with no local entities insurers will need a locally licensed insurance company, fully compliant with local rules and legislations. Insurers without local partnerships are exposing themselves to risk. They will need to act swiftly.
The question is how solid and strong the already installed network of a provider is, or how long it will take the provider to set up a sufficient world spanning network. Nearly all services including: risk assessment, underwriting, medical consultancy, case management services, medical evacuation and repatriations, as well as claims management, can be covered by external service providers. However, they need to be integrated to ensure the customer is serviced in exactly the same way as if he dealt directly with the insurance company.
These international hubs need to secure a seamless continuation of service. With partnerships there will always be a question about the capacities and costs to monitor and control, for example, local regional directors to control local providers.
Direct local presence will always be an advantage. But not every provider has access to a global presence of 5,000 employees at 26 locations like DKV Globality. Few will be able to rely on ready-made partnerships around the world enabling them to be legally and properly licensed.
These factors allow a provider to have a real focus on in-house expertise, to minimise the dependence on third parties and to maximise synergy effects.
For smaller competitors it is much harder. The costs of providing an administration platform for large corporates requires significant investment. Entry barriers include sophisticated claims mechanisms, comprehensive processing systems and online facilities which all need substantial ongoing capital expenditure.
Successful IPMI will always be the combination of longstanding experience (if possible in all relevant sectors of primary health insurance, health reinsurance and health services) and local expertise. The challenge is always to make the knowledge of local experts available globally via a horizontal network and to ensure a consistent quality throughout this network. This requires systems that ensure that the whole process is high quality, reliable and streamlined. In particular, the issue of quality control in information retrieval can be very thorny.
True progress evolves when knowledge, ideas and technologies converge. The need for this type of networked thinking is especially pronounced in the evolving global healthcare market. Especially in IPMI good communication is more than crucial.
There is an increasing demand for borderless health insurance among multinationals. Insurance providers need to mirror this demand with a world spanning network of local entities bringing in their on-side networks with providers and face-to-face knowledge.
What drives the business and creates real value for the customer is the efficiency of sharing information. Onsite know how, brought together in a worldwide pool, and sharing information, means that staff are better equipped and can deliver a better standard of service, while time wasting and errors are minimised. Streamlining working practices and improving consistency will also reduce costs and improve administration efforts. Precisely this capacity for pooling knowledge and skills should be an integral part of any truly international approach to IPMI.
These network effects increase with the size of the network.
Large organisational structures restrict flexibility but do not necessarily contradict the flexibility and service ethos that is still the key factor of any IPMI business strategy. What it takes is having the service capabilities to manage the business on a personal level. The target for every provider should be to offer the control and power of an insurance group plus the flexibility and VIP customer support of a clearly focused expat center of excellence.
Unique, focused and truly international
There are more than 30 million expatriates currently living and working worldwide. The market volume exceeds €2.5bn (£2.05bn). Expatriates are typically young, well educated and financially independent. They represent a low risk and are often double insured. Business placed from the UK is largely driven by well established companies (sectors include oil and gas, defense, professional services, financial services and mining) which have significant operations abroad.
These companies are advised by the presence of specialist healthcare brokers who focus on international healthcare. This is why the worldwide expat market continues to provide one of the most lucrative revenue streams for brokers working in the health insurance industry. The IPMI systems and its providers have to mirror this demand ensuring the access to the right kind of health insurance cover supporting those brokers as they grow the overall international PMI market.
The quality of service provision, global reach and local know-how of IPMI providers must not only be tested by multinationals but also by brokers to find the right partner for their clients.
With today’s ever changing market conditions brokers should rely on a partner with an extensive worldwide footprint to offer consistent advice all around the globe. Only a clear market focus, solid customer and market experience, its own experts around the globe and the full power of a worldwide network will deliver cost-effective solutions as regulation and compliance further increase.
Karsten Steffgen is marketing manager, global marketing at Globality
