A compelling force


Many countries have a form of compulsory PMI for expats, providing sales opportunities for intermediaries. Paul Weigall irons out the wrinkles

Around the world developed and developing countries are struggling with the cost of delivering the highest quality healthcare to their citizens. Ageing populations, better survival rates, the emergence of new and expensive medical treatments and an increasing expectation of the quality of medical care among populations around the world are sending the cost of healthcare soaring. We only have to look at the protracted battle to deliver President Obama’s healthcare reforms through Congress and The Senate to understand what an emotive issue healthcare has become.

For governments facing difficulties in funding healthcare for their own citizens, the last thing they want is a large number of expatriates putting even more pressure on publically funded medical services. The result, inevitably, is an increase in the number of countries demanding that expats coming to work in their countries hold high quality private medical insurance (PMI) before they will grant a working visa.

A number of countries, such as Holland and Saudi Arabia have already introduced compulsory PMI and others, such as Dubai have been debating the issue for a long time and it is likely that there will be compulsion in the near future.

While growth in compulsion is inevitable over the long term, it is not an easy decision for a jurisdiction to take. Many countries and regions compete with each other to attract the best expat brains to deliver important commercial developments and others are reliant on expat workers for the delivery of public and domestic services or for the construction of major infrastructure projects.

Competition for expats also means that no country wants their approach to expat healthcare to be the same as another jurisdiction’s system. They all want to control the cost of expat care to their healthcare system, but equally do not want an exodus of expats – or for employers to refuse to send expats to their country due to the cost of healthcare.

Dubai, for example, has announced plans to make private medical insurance (PMI) compulsory for all expats however, its introduction has been postponed on a number of occasions, possibly due to concerns about the impact such a policy will have on the expat population which Dubai relies on for much of its construction and many services.

For the intermediary advising an individual expat or corporate group, understanding the nuances of cover and regulation in each region is essential. Some countries still provide access to limited public healthcare for expats, others will demand payment before any care will be given and others, such as Europe have reciprocal arrangements which provide access to certain levels of care to citizens of other EU countries.

While the picture may be complex, the changing face of healthcare provision in countries around the world creates a real business opportunity for intermediaries. The need of individuals and corporate groups for top quality independent advice has never been greater. With clients needing certainty in the delivery of emergency healthcare when they need it, the opportunities for intermediaries to sell and up-sell international private medical insurance have never been better.

Let’s take a quick tour of some of the compulsory and partially-compulsory insurance systems which have already been introduced.

In Abu Dhabi, if expats do not have an approved medical policy, they cannot get a visa or work permit, open a bank account, rent a house, or register children at the local school.

In Australia, expats who enter the country on a working visa or who have applied for a permanent visa are entitled to access the Medicare system, which works in a similar way to the UK’s National Health service and is funded through the income tax system.

However, there is also the Lifetime Health Cover system, designed by the Australian government as an initiative to keep the cost of health insurance manageable for older members. Premiums are loaded depending on the age an individual joins the scheme and to avoid a loading, new migrants must take out PMI by the first anniversary of the date they registered for Medicare.

In France, anyone who subscribes to the French social security system will receive around 70% of their medical fees but reimbursement varies and additional costs have to be covered personally or through medical insurance. Reciprocal arrangements are available for citizens of other European countries.

In Germany around 90% of the population subscribes to the public healthcare programme, Krankenkasse, which is mandatory for all but a minority of people earning above a certain income level. To get a visa or residence permit expats have to be insured and will have to be able to provide the documentation to prove it. Again reciprocal arrangements are available within Europe.

In Holland, while reciprocal care for EU citizens is available, it is compulsory for everyone to have a basic level of private medical insurance, known as basisverzekering. Expats are free to choose their own health insurer and under the system a Dutch insurance company cannot refuse coverage, regardless of age or state of health. The system covers a certain level of care.
However expats would be well advised to top-up their cover to ensure that they have access to all the medical treatment they need.

In January 2006, Saudi Arabia made health insurance compulsory for expat workers and employers are responsible for providing cover to their staff and may be fined or banned from recruiting staff if they do not comply with the rules.

Whether an expat is intending to move to a country where insurance is compulsory or not, high quality international PMI is a ‘must have’ purchase. The cost of medical treatment is rising all around the world and with real pressure on public finances, access to publically funded healthcare for expats is becoming far harder. Expatriates have to accept that they either take out PMI – or face the real possibility of being unable to access healthcare when they most need it.

The numbers of British living and working abroad is now significant. In fact, according to the BBC an estimated 5.5 million British live permanently abroad – almost one in 10 of the population – and there are thousands of businesses which send employees on overseas postings each year. All these people moving abroad will need high quality expat protection – but this large and profitable market is still surprisingly untapped by the vast majority of UK IFAs. With one in 10 British citizens living abroad, that could mean almost 10% of the typical IFAs client base could be thinking about living abroad. Helping these people with their international protection planning could be big business.

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 – don’t see this as a lost client, but as an opportunity to advise them on additional international protection. Into the bargain, consider business development outside your existing client base – being able to offer local businesses expertise in international protection will make you stand out from the norm.

Selling international private medical insurance presents a real opportunity for financial advisers serving the expat market – consumers need advice as the range of plans, benefits and costs is wide. The market is far from commoditised and high quality advice can help an expat to identify the plan which is right for their circumstances and their pocket. With increasing compulsion around the corner, the need for well informed professional advice has never been greater.

Paul Weigall is head of sales and marketing at InterGlobal

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