International private medical insurance is being lauded as the next big growth market, but as Peter Madigan discovers, there is a lot for healthcare advisers to learn
Much has been said in recent years about the opportunities for strong growth in the international private medical insurance (IPMI) sector.
In contrast to the ailing domestic PMI market in the UK, both IPMI advisers and providers are optimistic about the burgeoning possibilities available in the international healthcare market.
Although a veritable chorus insists that the market is growing impressively and will continue to do so for several years to come, there are no independent figures to verify such statements.
IPMI providers are located all over the world and as yet, no research firm has attempted to ascertain how much the market is worth or indeed, whether it is expanding.
Different challenges With industry figures from the domestic PMI arena making discouraging reading, healthcare advisers may now be turning their eyes beyond British shores in search of fresh business.
Despite what many would assume to be a natural affinity, IPMI is quite literally a world away from its UK cousin and PMI advisers would be foolish to suppose experience in the British market, however extensive, means that they are automatically qualified to advise on international healthcare.
It may be tempting to think of IPMI as a closely related product to domestic health insurance, but the reality is they are very different.
While providing individuals and groups with healthcare is the aim of both types of cover, the methodologies and underwriting involved in the two sectors differs greatly.
"When assessing a risk we would look at location, with regard to political and economic stability along with health standards and criminal risk," says Susan Landers, product development manager at Allianz Worldwide Care.
"In addition, we would look at industry considerations such as health and safety controls, accident risk, the employee grade and the nature of the work itself," she adds.
In some respects the IPMI proposition is the opposite of the UK offering.
When setting up an IPMI plan there are a raft of factors to be taken into account that would be of little importance on a domestic policy.
Conversely, in the majority of cases, IPMI applicants are not asked whether they smoke and smoking status does not play a part in underwriting.
The main reason smoking is disregarded is due to the importance of the local cost of treatment as the major price element in IPMI schemes.
"While risk is important, the main factor is the local cost of healthcare which explains why the US is the highest price region. The majority of IPMI providers price on a zone basis and group countries at a similar healthcare cost together," says Ed Watling, sales manager at IHI Danmark.
Cost of healthcare is the overwhelming factor in determining premiums but this is by no means the only one.
Geo-political factors such as civil unrest, war and political instability can severely heighten the risk of injury or attack, requiring hospitalisation.
Individuals or groups going to high risk areas can find the cost of securing cover astronomical.
"When assessing an application, we look at the location of the insured; we have a number of restricted locations where we cannot accept business. These locations are based on advice given by the Foreign and Commonwealth Office," reveals Paul Andrews, business development manager at William Russell.
"Currently, Iraq is a restricted location and all applications by people going there are assessed on a case-by-case basis." Volatile areas Although some providers refuse to cover highly unstable or volatile areas such as Iraq or Afghanistan, this does not mean that securing cover is impossible.
Workers who may be going to these regions for a lucrative salary should be prepared to pay a similarly inflated price for their health cover, however.
"From IHI's perspective there are only two countries currently classified as high risk – Iraq and Afghanistan.
At present, individuals or groups based in these countries would be subject to a risk loading of 300%," says Watling.
"So for example, the standard rate for 40 engineers insured at age 35 would be $53,344 for hospitalisation, outpatient and medical evacuation. Yet because of the extra risk in Iraq, the 300% loading increases the premium to $213,376." War and civil strife are not the only issues that drive up treatment costs in various regions of the world.
"Health costs are higher in Hong Kong than in the rest of Asia but maternity cover is particularly expensive," claims Andrew Apps, managing director for international PMI at Goodhealth Worldwide.
"Traditionally, affluent Chinese couples attempt to conceive nine months before the start of the Chinese new year and then travel to Hong Kong to have the baby induced on a certain lucky day.This inevitably pushes up costs." Occupational hazards Occupation is another issue that has a bearing on the policy terms of an IPMI plan, another crucial difference from the domestic healthcare model.
While on the whole, individuals seeking IPMI will not be asked questions regarding their employ ment situation, groups working in certain industries may be excluded or find themselves restricted to heavily loaded rates.
"While we do not take occupation into consideration on our community rated policies, we do have some special schemes for oil workers and seamen," says Paula Covey, head of marketing for BUPA International.
In fact, restrictions for high risk occupations seem to be commonplace.
"We have limited restrictions on occupations such as the armed forces, police forces, hunters and safari guides, professional divers and offshore workers," reveals Andrews.
Indeed for some offshore workers, the value of the services included in the cover they can secure makes one question whether it is worth taking cover out at all.
"Offshore workers will find it difficult to obtain cover due to increased risks associated with evacuation from a boat. In these circumstances they would be offered occupational loading or an exclusion on the evacuation from the ship," says Andrews.
If the evacuation from a boat or oil rig is excluded from the plan, what value would an IPMI policy actually have? Surely having access to the best hospitals and treatments would be meaningless if your cover could not facilitate your evacuation.
Other insurers claim there are ways around such difficulties.
"You could call in International SOS and get them to carry out the evacuation and then allow the insurer to take over when they get to shore. The company would then reimburse SOS for the transport of the patient," says Apps.
If IPMI is to take off as the next lucrative area of healthcare then advisers now have the possibility to immerse themselves in this potentially lucrative market.
What is clear however, is that intermediaries who do not take the time to get to grips with the intricacies of the global healthcare scene, will quickly find themselves out of their depth.
While even a novice adviser will be able to set up an appropriate scheme for a retired couple moving to Spain, sorting out cover for a large group of engineers going to Iraq or elsewhere would be something quite different altogether.
Nonetheless, if the IPMI market emerges as the saviour of the private healthcare sector, as many predict it will, the intermediaries who have taken the time to acquaint themselves with the field may find themselves handsomely rewarded.
