As international mobility improves and more people choose to live and work overseas, Tim Slee explains the effect this is having on the demand for international PMI
While international private medical insurance (PMI) was once the preserve of senior employees sent to work overseas by large corporations, its definition has broadened considerably in recent years. Not only is there now an increasing number of smaller employers with staff working abroad, but sales of international PMI are being boosted by the growing number of individuals with second homes overseas and those choosing to retire abroad. Regulatory changes on the horizon within the European Union (EU) and further afield in the Middle East look likely to drive up sales. The result is the international PMI market is decidedly buoyant with Bupa International estimating double-digit sales growth in 2008.
So what lies behind this growth in expatriate health insurance? Globalisation with employees now working overseas is one clear factor, along with international mobility, with an increasing number of individuals looking to live or work abroad to expand their experience and explore other cultures. The world is simply becoming a smaller place.
Indeed, according to the most recent data from the Office of National Statistics, 207,000 people left the UK in 2006 to work or live overseas, with the most popular destinations including Australia, Spain and the United States. The 'second home abroad' phenomenon is also boosting the market with nearly 70,000 UK citizens according to estate agents Savills owning a property in Spain. Add to this the rising tide of Britons looking to retire abroad, set to reach six million by 2020, it is clear the definition of the expatriate market has broadened significantly to encompass more than just one person working on long-term overseas assignments.
Changing legislation in the Middle East and the EU may have a positive impact on the international PMI market. In Dubai and France, which both have well developed expatriate communities, the governments are looking at limiting expat access to state healthcare which is resulting in many people now looking at international PMI to provide a safeguard against costly medical treatment.
While the growth opportunities here are clear, the expatriate market is complex. On the corporate side, the risks and costs associated with sending staff overseas are growing and employers are increasingly expected to provide a raft of accompanying benefits when they do so. Indeed, many employers now look beyond the basic cost of expatriate health and assistance policies, placing greater emphasis on working with a global provider that can offer an all-round service capability for their staff. This means a company with the service infrastructure, capabilities and experience to handle the special requirements of an expatriate - something local medical insurers are often unequipped to offer.
The divide between individual and corporate expat markets is highly fragmented and consists of many sub-groups. To set this in context, Bupa International deals with 115 separate nationalities across 190 countries and has over 767,000 expatriate customers.
High expectations
Innovation is becoming a hallmark of the market, with customers on the corporate and individual sides expecting more from their policies. This means insurers not only need to develop targeted products but also look for relevant ways to add value for existing members.
Chronic disease cover provides a good example of this. According to the World Health Organisation, chronic diseases such as stroke, heart disease and diabetes are the leading cause of mortality across the globe. Diabetes frequently makes headlines as the estimated worldwide sufferers increase rapidly, putting huge financial strain on health budgets. This is especially true of type 2 diabetes which is linked to obesity. Diabetes UK estimates three million Britons are diabetic, a trend that is just as relevant elsewhere in the world.
Indeed, peace of mind ranks as one of the top three factors expatriates give for taking out international PMI, alongside knowing their insurer has local market knowledge and excellent service delivery standards. It is essential insurers provide a service that responds to these expat priorities.
Opportunities for ifas
With clear potential for the international PMI sector there are real opportunities for IFAs who are prepared to get to grips with market complexities so they can provide the knowledge and experience to advise clients effectively.
Once this hurdle is overcome and the necessary FSA regulations have been complied with, selling international PMI can offer IFAs great rewards. Indeed, some intermediaries already recognise the potential of the market and have successfully developed the two lines of business - domestic and international PMI - thereby offering a wider solution to clients. For others, international PMI is a good entry point for establishing broader relationships with expatriate clients. As a guide, Bupa International currently estimates over half of all new International PMI business goes through intermediaries.
Over the last decade, the international PMI market has undoubtedly experienced rapid growth and this is expected to continue. With the continued rise of overseas corporate assignments coupled with the rise of high net-worth individuals seeking international healthcare, the market will only grow in the hands of experienced providers and intermediaries.
Tim Slee is global sales director at Bupa International.
