The increasing success of international private medical insurance is being matched by a rise in fraudsters targeting the market. Andrew Apps outlines the problem
One of the great joys of the international medical insurance industry is that the market is experiencing a period of double-digit growth year on year at a time when the UK domestic market is, at best, flatlining.
This is a time when the demand for international private medical insurance (IPMI) has never been greater, and the opportunities for UK and IPMI brokers have never been more exciting.
IPMI tends to follow the world economic landscape, especially where the money flows, which attracts the expatriates community – and with it the need for medical insurance. The rapid emergence of Southeast Asia as a financial powerhouse has not been lost on our industry, as the number of expatriates and high-net-worth local nationals has seen dramatic growth.
Take Singapore, for example, where just over 15% of the population are now classed as USD millionaires and the country is the sixth most expensive place to live in the world.
Healthcare costs are rising. Even for something as routine as childbirth, the cost of treatment can vary enormously from country to country. From as little as £1,470 in Kenya and £2,000 in the United Arab Emirates to an average of £5,400 in Singapore and £12,200 in the US, that moment of joy when a new baby arrives can be an expensive event – particularly when the parents have to pay for it from their own pockets.
As such, PMI has become a ‘must have’ for the expatriate seeking a new life overseas.
For the intermediary that focuses its interests in the international arena,
the opportunities have never been better. With an increasing number of governments around the world (such as Saudi Arabia, Abu Dhabi, Dubai, Germany and the Netherlands) having already made, or looking closely at the idea of making, PMI cover an integral part of a foreign worker’s work or residency permit application, the future looks bright for IPMI.
Of course, all new businesses have to contend with local regulatory issues, but this is not a barrier. Picking the right partner can assist the navigation through the regulatory maze so that brokers can concentrate on advising their clients and managing their expectations in the clear knowledge that they have the right information about what needs to be done and how to do it.
So it’s all good news then? Not necessarily. As in almost any walk of life, when a market starts to see rapid growth, one of the byproducts of success is an increase in fraud – and this is no different for the international medical insurance community.
It’s a sad fact of life – and one that has far-reaching consequences on the industry as a whole – as costs start to spiral and policyholders look ever more closely at their renewal premiums.
The brutal fact is that medical insurance fraud costs the industry in the region of £230bn globally each year. To put this into perspective, this is equivalent to more than twice the NHS budget, enough to build more than 2,300 new hospitals or more than the entire GDP of all but 29 countries out of 190 across the world. It is wasted money that could be put to much better use.
Of course, fraud comes in many guises. It’s not just about overcharging by a small number of unscrupulous medical specialist or healthcare centres in some far-flung city, although historically this has been the main area of concern.
Keeping a patient in hospital longer than is absolutely necessary; taking three X-rays when one would be more than sufficient; or having an IT system that allegedly has to charge a minimum spend on every item used by a patient, which sees every aspirin being charged at a £1 a throw – these are just some of the games that are played.
However, a more sinister type of fraud is starting to be felt around the international market with the emergence of what can only be described as professional criminal gangs using IPMI to generate funds.
There have already been instances where IPMI policies have been bought for fictitious people who then claim for fictitious surgery, which is performed by fictitious specialists in fictitious hospitals. It’s not exactly rocket science, but what is interesting is that these gangs are starting to use the ‘long con’ – setting up policies and letting them run two or three years before making any attempt at a claim.
Small incidental claims of relatively low value are made at first, often falling under the claims assessor’s radar. These gradually increase in value, while remaining low enough to avoid any immediate obvious detection that would warrant an investigation. When multiplied a few times, such claims can start to amount to considerable sums.
In 2001 the industry came together to form the Health Insurance Counter Fraud Group (HICFG), with the goal of working together to prevent and detect fraud within the health insurance industry. Co-operation across the industry has grown, with most of the international medical insurance providers now involved, resulting in a number of overseas fraudsters having already been identified attempting to scam multiple IPMI providers, often at the same time.
By working together and sharing intelligence, these cases are presented to the criminal courts – and convictions have been secured as a direct result of the industry’s efforts to stamp out fraud. And with formal relationships now in place with similar bodies in the US, Europe, Canada, Australia, the Middle East, Southeast Asia and South Africa, it’s getting harder for fraudsters to operate.
Of course, the best way to combat medical insurance fraud is to have procedures in place to deter and identify it before the very first penny is paid out. Fraud education and training of claims assessors, calling patients to verify the treatment they are about to receive, checking the details of healthcare specialists to confirm their existence and questioning any bill that looks suspicious are very much the day-to-day processes that every company goes through.
ALC Health, for example, always asks clients to review their bills, ask questions about what has been charged and to understand what they are and are not covered for so that no one is left out of pocket.
Opportunities to innovate
So what should the industry do? Healthcare costs around the world are continuing to rocket, and with the quality of healthcare in many emerging countries lagging far behind that found in most industrialised nations, there is ample opportunity for health insurers to innovate.
The key for any IPMI provider is to make choices about where its competitive advantage lies and then to maximise the use of the financial, technological and business tools that are available to develop and create the products its customers actually want. Gone are the days of a one-size-fits-all approach.
What is clear is that the buyer has become a great deal savvier than ever before. The internet, not surprisingly, is having an enormous, and positive, effect on the way business is transacted. Social media is one obvious example, as it has enabled many of the smaller specialist IPMI providers to increase their market awareness like never before.
The big brand is no longer the obvious answer, and small companies can often give brokers a real advantage in terms of product flexibility, pricing structures and high-quality service delivery.
The future is in the hands of the market; IPMI is a market that can’t and shouldn’t be ignored. Any broker working solely in the UK domestic arena should review its client portfolio and assess how many of its clients have staff based overseas.
With higher commissions than are offered for UK-based business and with greater policy longevity, brokers that get it right will reap the rewards.
Andrew Apps is director at ALC Health and former deputy chairman of the Association of International Medical Insurance Providers
Engage Health Group guide
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