The days of automatically providing top-of-the range international private medical insurance (IPMI) cover to expatriate employees are a thing of the past, says Debra Williams. In challenging times, how should advisers direct clients to best maximise value from their healthcare programmes?
The global economic recession has impacted a number of businesses in the UK - and their survival and recovery can be partially attributed to the way they manage risk. This puts brokers and intermediaries squarely on the front line, as assessing risk is never more important than when a company is contemplating price over value.
The international healthcare market has been dealing with such issues for quite some time. Rising claims and high administration charges have caused premiums to increase. Because of the spiralling costs of global medical protection, the tide has long turned against full-cover healthcare policies. Solutions to combat this market trend, while still delivering value, are critical.
Many companies have economised by turning to budget schemes - only to find that these programmes don't necessarily serve the needs of their expatriate employees. When looking to protect key assets - in the shape of vital employees operating on the global stage - there is no scope for cutting corners on healthcare protection. Budget healthcare plans often concentrate on the low value benefits but fall short on high value cover. No one should take a second look at a budget international private medical insurance (IPMI) plan that doesn't include the highest possible ceilings for larger claims and global, elective non-emergency treatment. Also essential is a strong evacuation package and access to a wide range of healthcare professionals and private hospital rooms, especially important in many developing countries.
An important trend in the IPMI market has been the renewed emphasis on products that protect higher levels of assets, tackling the most costly health risks and maximising value through a range of self-pay elements including excesses and deductibles. Higher excesses also help to focus the policyholder's mind on the real value and role of an IPMI policy - protecting the policyholder and their assets by maximising the level of healthcare received when a significant medical problem occurs.
Partnership arrangements have been at the heart of these developments and most leading IPMI insurers now offer access to a network of hospitals and general practitioners to help keep medical bills under control, together with a ‘hands-on' service provision. When this works, it results in the whole system flowing better, which helps to decrease clinical costs, ensure a regular flow of patients to preferred doctors and hospitals and maintain medical standards. And it also impacts premiums, which is extremely important to clients who continue to be challenged by the economy.
To give an example of how self-pay works to the benefit of clients, let us look at an expatriate executive working in a developing country, where lack of infrastructure leads to exposure to a wide range of risks. For instance, in South America there are fewer adequate outpatient facilities for cancer patients than in more developed countries. The typical healthcare solution in this instance is either a personalised, local private care service or medical evacuation. Both options are very expensive but would be covered under a good asset-protection IPMI policy.
At the other end of the scale, local medical provision for minor ailments can be effective and easily arranged in the developing world. It is also relatively inexpensive. However, these small claims of £50 - £200 are not cost effective and push up premium costs quite disproportionately. So it is far better for the policyholder to take care of these bills on the spot and have the insurer cover the more serious conditions.
Protection policies can provide flexibility to meet the individual needs of clients and policyholders from both a benefits and cost perspective. This includes the addition of cover such as maternity provision or dental care. Further flexibility in product design, both at the onset and upon renewal, can take into account distinct local variations or role changes as policyholders move from country to country.
This movement toward more precision and a better understanding of the value, limitations and cost effectiveness of healthcare cover has strengthened the bond between insurers and brokers, as well as between brokers and clients. The lower premiums associated with these plans also allow for international healthcare protection to be offered to middle management. It was previously reserved for top-ranking executives.
The structure of these plans and their straightforward benefits also makes them easier to sell than traditional IPMI products, which often call for an intimate knowledge of local medical provision. Consequently, more brokers and intermediaries are moving into the IPMI market because it fits nicely within their overall asset-protection strategy for corporate and individual clients.
However, brokers that primarily focus on domestic PMI, and are extending their services to meet the needs of corporate clients with employees working overseas, should not automatically assume their existing insurers can fulfil the role. IPMI has seen a number of significant changes and it is important to look carefully at the cover and exclusions offered by insurers. Also, policyholders may be better served if the insurer has a local office that can manage and meet the needs of local clients and policyholders. A wider view of the asset-protection IPMI market may well produce a better value solution for clients.
That said, this is a market in which many more UK brokers and intermediaries can make a significant impact. The availability of online product delivery, including fully functional online systems, can greatly assist brokers and intermediaries in meeting the needs of the marketplace. Aetna Global Benefits, for example, offers intermediaries and clients a comprehensive step-by-step quotation to documentation process for select healthcare cover, which can take as little as ten minutes to complete. Web-based processing simplifies selling IPMI cover for brokers and intermediaries and most are familiar with the benefits of on-line transacting - quicker, smarter systems, less costly paperwork and streamlined commissions.
Online information and training has also made a significant impact on the IPMI market. In addition to offering online product processing, insurers' websites can also provide brokers and intermediaries with the information and tools they need to advise clients and help them select the right products for their employees. Knowledge and training of IPMI have always been seen as the biggest barriers to brokers and intermediaries entering the market, but now all the needed data can be found on the insurers' websites.
Nonetheless, although the sophistication of online systems has taken much of the complexity out of selling IPMI cover, it is still sensible to advocate on-site training for brokers and intermediaries entering the market. The most progressive, leading insurers will give this support freely and help with the learning curve in the early stages of a new agency agreement.
Training on the technical aspects of IPMI will quickly provide benefits to a business by adding to the scope of services offered to clients. The rewards of IPMI business may come in year-over-year renewals and the fact that the same flat rates of commission are typically paid until the policy lapses. Like-for-like premiums don't vary dramatically from one insurer to another (even though rates - and therefore commissions - have risen in recent years). Consequently, the policyholder is less likely to shop around and the renewal transaction is more straightforward. So once a new book of business has been built up, it's very easy to manage cash flow effectively.
Most brokers and intermediaries would agree that their primary role is to protect their clients' assets, and therefore the health of expatriate employees and their families. Asset protection, in this instance, means knowing both your clients and the overseas environments in which they live. A close collaboration between brokers and intermediaries and a progressive IPMI insurer can help to fully identify these risks and supply the value-for-money solutions that clients demand in the current economic environment.
Debra Williams is managing director, Europe at Aetna Global Benefits
