Taking on International PMI business can stave off competition from other market sectors and be a profitable addition to a business' line up, says Andrew Apps
With an increasingly competitive UK domestic private medical insurance (PMI) market, many brokers are starting to find their business being attacked. This comes not only from a loss of business due to the soaring cost of premiums as some of their clients choose to downgrade their cover, or even stop their cover altogether, but from an increasing hunger from competitor colleagues looking to support their own book of business.
It seems that everyone at the moment has another story of doom and gloom about the UK PMI market. There are tales of more competition, less client loyalty and, an ever increasing mound of paper work stopping brokers from getting on with the job. Fortunately there is a light on the horizon and it’s out there waiting for IFAs looking to new markets.
The demand for global medical expenses protection continues to see rapid growth. It stands to reason that international PMI hasn’t been immune from the global economic downturn of the past 12 months, but it has been less dramatic and is already seeing a sharp recovery, particularly in those countries where there are perhaps limited or inadequate state healthcare facilities readily available.
it’s not rocket science
Put bluntly, international PMI is not rocket science and if an adviser is already comfortable selling UK domestic PMI, then they are more than half way there. The chances are also that such a broker would already have a sizeable book of business right in front of them. One of the most annoying aspects of the situation is that this business could well be looked after by a competitor, simply through the failure to ask one simple question of a corporate client. “Do you have any employees overseas?”
If they do, what arrangements have they in place to protect their health? Does the current provider meet local legal requirements? Are they getting value for money? Are they getting the service they deserve? These are obvious questions perhaps, but often overlooked. A further spur to this business is that if someone else is looking after a client’s international PMI, there is every chance they could go after the UK PMI business too.
It is often a surprise how many companies have staff working overseas. It may not be huge in number, perhaps just a couple here and there, but they all add up and they all need medical cover. Delve deeper and often a broker will find that the cover employees currently have (if any) is inadequate for where they are living, or over priced because it has not been purchased as part of a group programme.
There is no question that the days of sending vast numbers of staff overseas on highly expensive expatriate contracts is something of the past, but IFAs are constantly amazed at how many SME groups are out there and needing help.
For those not already in the international PMI market, getting started is simple. There is no need to get on a plane, or to speak another language (the common language for international PMI is English) and there is no need to know it all, at least not to begin with. As long as an adviser knows the basics, and is prepared to invest time and a small amount of the marketing budget in a simple website or updating site, they are in business. The main point is to ask providers for help.
Big is not always best
It’s a world of choice. All IFAs already know the names of the main international providers, some of them they are already working with every day. However, in this market, big is not always best. Many brokers will find that many of the smaller, perhaps lesser known providers are often able to offer a more flexible, hands-on approach to international PMI. Something that is frequently a key buying issue to the expatriate who may be living thousands of miles away from home, unfamiliar with the culture where he is now living and unable to confidently speak the local language.
Being ill at home and needing medical attention can be unnerving at the best of times, but being on the other side of the world can be downright scary if you don’t have the support of a good medical health provider.
IFAs starting out should choose a panel of providers with whom they can build a relationship. It may seem an obvious statement, but all too often this simple rule is forgotten. Problems do happen and there will come a time when both sides will need each other – an urgent cover placement at 4.45pm on a Friday afternoon, help with a claim issue for a client living in Mongolia or that ‘special’ favour when something doesn’t go quite according to plan.
Getting to know the providers is key to working with them and keeping the relationship fluid. There are a number of international providers to choose from, from the well known to the less well known, each offering its own brand of expertise and experience, which can often be the solution that a client is seeking. It is, after all, a global market.
Providers will have a good understanding of what’s going on in each of the markets in which a clients workforce may be working, and the changing legislation that seems to be a constant thorn in everyone’s side. It is wise to find out which providers are best suited to writing individual risks and which providers offer a flexible solution for SME groups rather than assuming that one package fits all. It is surprising how often they differ.
So, assuming that first initial jump into the international market has been made, where is the business? Where are the main markets?
The expatriate world can be divided into five key markets. Europe, Middle East, North & Latin America, Africa and the Far East, with each having its own peculiarities, difficulties and demands.
The next big thing
Europe is in the main a highly regulated market with strong social healthcare systems already in place, but the emerging markets of Central and Eastern Europe are starting to see substantial growth. The Middle East, particularly the Gulf region (and despite its recent economic difficulties) continues to be a major source of expatriate business, particularly given the trend towards introducing compulsory medical insurance for foreign nationals. Further afield, the Far East is seen the next ‘big thing’ along with India and South East Asia, so the opportunities for developing a growing client list for international PMI have never been better.
Of course closer afield, there is an enormous market right here on our doorstep. For many expatriates living and working in the UK, the usual choice is to join their employer’s domestic medical insurance programme. But this will not provide the option to seek treatment back in their home country where their families are based, something that most people will want when undertaking surgery, so the relevance of international cover becomes all the more important.
And it pays to be in the international market too. With a higher premium base rate and more often than not, flat commission terms, brokers can quickly build a profitable client base that will continue to grow each year. If the service proposition is right, there is considerable client loyalty in the IPMI market and the clients that join today will often remain for many years to come.
If you don’t look after your client’s international PMI, then someone else will.
Andrew Apps is a director at ALC Health