Few advisers consider International PMI, says Paul Weigall, yet it is a business ripe with development opportunity for intermediaries.
With many advisers finding business conditions tough, there remains one bright area in the protection market where sales and income are proving resilient to recession – yet it is surprisingly an area which is not targeted by many intermediaries specialising in protection. It appears selling international private medical insurance (PMI) to expatriates is seen by many advisers as a specialist niche – whereas in reality it is a profitable business sector which could deliver much needed growth to many practices.
According to the BBC, an estimated 5.5 million Brits live permanently abroad – almost one in 10 of the population and there are thousands of businesses which send employees on overseas postings each year – and do not forget that many businesses are also bringing foreign executives to the UK as well. For all of these people international PMI is not a discretionary purchase – it is a must have product.
Anyone taking an expatriate posting, or moving overseas to live, needs effective international PMI which will respond to a medical emergency and provide day to day medical care. While access to high quality private healthcare is readily available in most western countries, the cost of treatment can be prohibitive without insurance. Expat postings may also be to countries and regions where healthcare is more limited and access to emergency medical evacuation is essential.
Don’t be fooled
Do not be fooled into thinking that reciprocal medical rights across the European Union restrict the market for international PMI within mainland Europe. Standards of care vary across the EU, rights for automatic treatment are limited, and in many European countries there will still be charges for care, so international PMI remains essential for all expatriates.
We have all heard over-hyped stories of expats abandoning their cars at the airport and returning home, and of course there will be those who retired abroad who are struggling as the exchange rate has turned against them – but the reality is that the vast majority of expats are staying put and the demand for international PMI remains unabated.
So why is it that many UK advisers are failing to capitalise on this healthy protection market? It seems in most cases that it is a fear of the unknown – in terms of how to identify and sell to new clients – concerns about perceived product complexity – or an inaccurate perception that it is a small niche market.
Reaching the expat market for international PMI is more straightforward than many other business sectors as clients tend to identify themselves. Consider your corporate client base – many employers will have overseas staff, simply asking them about their international staff is likely to generate a number of new business leads. Also review individual client records – some will already have overseas addresses and each year a number will move abroad to retire or for work – do not see this as a lost client, but as an opportunity to advise them on additional international protection. Also, consider business development outside the existing client base – being able to offer local businesses expertise in international protection will make an adviser stand out from the norm.
Advisers should not be concerned about committing time to learning new products.
International PMI is very similar to its domestic cousin and any intermediary already advising on health plans will find the products familiar. In common with domestic plans, there are a wide range of benefits and cover options available on international PMI plans and some can be tailored to the individual requirements of clients or groups, meaning advisers can offer a valuable service by identifying the right plan and level of cover.
Today the majority of international PMI plans are underwritten on a moratorium basis, with any pre-existing medical conditions excluded from cover for the moratorium period. This is by far the most straightforward way to buy cover, but it is important to make sure that the client understands that if an existing condition flares up during the moratorium that the insurer will not pay.
A limited number of providers still offer full medical underwriting of international PMI. Some argue that it provides greater clarity to clients with complicated medical histories about conditions which are covered or excluded at the outset – but the reality is that pre-existing conditions will still be excluded and this approach may result in the permanent exclusion of conditions which could be covered in time under moratorium plans.
International group schemes can frequently be underwritten on a Medical History Disregarded (MHD) basis. Here, every expat member of that employer’s group scheme is covered in full – irrespective of any pre-existing medical conditions. Insurers can afford to ignore pre-existing conditions on groups because the increased risk they are exposed to on claims from a small number of employees is balanced against a greater premium income from the total workforce.
For this reason insurers demand that a minimum number of employees sign up to MHD schemes. This would usually be a minimum of 10 employees
Unknown risk levels
Individual MHD plans for expats are rare because the insurer could be taking on an unknown level of risk on an individual with a poor medical record – however some providers will offer MHD to individuals if they are transferring from an MHD group scheme to an individual international plan with the same insurer.
Different insurers’ approach to underwriting group schemes vary considerably – and specialist providers will frequently offer better terms – or tailor bespoke plans designed for individual employers and affinity groups. By getting to know individual providers, it is possible to understand their approach to tailoring individual schemes and will be better able to advise corporate clients.
The geographic breadth of cover on plans can have a significant impact on cost and the starting point for advisers is to establish the geographic cover needed by their international clients. Due to the high cost of treatment in the USA, worldwide policies can be very expensive and there is no need to provide this breadth of cover to expats who will not travel to the US. Some premium quality individual PMI schemes will offer cover to clients who travel occasionally outside their normal region for a limited number of days each year – and this can be a valuable additional benefit to clients who may travel occasionally to other areas of the world. Within group schemes it is generally possible to tailor geographic cover to suit different workers’ postings – so the level of cover received matches the countries individuals will visit.
Costs can also be managed through voluntary excesses or no-claims bonuses, which are available on some plans or by paying annually rather than monthly. Also make sure that clients are not paying for benefits they do not need – for example many plans automatically include maternity benefits, which will clearly not be needed in all cases. Others plans offer family friendly rates, so make sure that your expat clients get a policy which can be tailored to their needs.
Take time to drill down into the details of the benefits. For example all quality International PMI plans offer emergency evacuation to the nearest high quality medical centre, but not all will allow the patient to be accompanied by all their family members.
Also consider the insurers’ approach to treatment of chronic conditions. Some schemes exclude cover for chronic conditions which could leave your client facing big bills if they develop a long term illness during their expat posting.
Finally, consider additional benefits. For example, some international PMI plans are now available which respond to security emergencies as a result of political and civil unrest or catastrophic weather incidents. If clients are likely to be based in less stable jurisdictions they will be grateful for the cover provided by emergency security service specialists, such as Red24.
Despite the worldwide recession, employees are continuing to send key workers on expatriate postings and many individuals are emigrating to find a better lifestyle. As a result the demand for international PMI remains unabated and provides a lucrative market to advisers. By targeting this market and building a reputation for advising on international PMI – you will soon find that you can extend this capability to other lucrative international and offshore products such as pensions and offshore funds or bolt-on expat products such as travel insurance or personal accident protection.
Paul Weigall is head of sales at InterGlobal