International private medical insurance

Despite the past year throwing a stumbling block in the guise of 11 September, the international private medical insurance (IPMI) market has managed to remain buoyant over the last 12 months.

Experts appear to hold different views as to what effect the events of 11 September had on the market.

Carolyn Paul, director at à La Carte healthcare, believes growth in the IPMI market has diminished as a direct result of events in the US. She says: 'The market capacity is shrinking which, in turn, means the rates are hardening, as is flexibility. The market is shrinking due to the events on 11 September, people are thinking carefully about what markets they want to be writing in now and insurance premiums are much higher now than they previously were.'

However, Peter Saunders, head of sales at BUPA International, believes that despite a glitch immediately after the disaster, the market has held up well. He says: 'International insurers overall had a very strong year. We saw the introduction of new players in the market, thus increasing healthy competition. It continues to be a huge market despite the effects of 11 September. There was an initial sharp downturn in sales, but there has been little effect since then. Our customers still talk to us about their concerns about travelling, but it does not seem to affect their behaviour.'

Larry Bulmer, chairman of The Association of Medical Insurance Intermediaries, agrees: 'The events of 11 September did not really have an effect. Most people with IPMI are already placed overseas, it probably had more of an effect on travel insurance.'

Bulmer also noted an increase in company marketing activities last year, which he believes is a sign of a growing market. Although he does add that there has been an increase in the number of people purchasing IPMI policies overseas. 'A lot of IPMI is now being purchased locally,' he says.

This could mean extra work for IPMI providers here in the UK over the coming year, as they strive to retain clients and keep their market share.

Aside from the effects of 11 September, one of the biggest issues facing insurers is the level of cover given to chronic illnesses, with some experts calling for this type of cover to become mandatory on IPMI plans.

Cover for chronic conditions is standard practice over in the US, and UK brokers want to see the same happen here.

'Some policies cover chronic illnesses and some do not. This should be a basic benefit. Chronic illnesses need to be covered because expatriates do not have the back-up of the NHS while overseas,' says Bulmer.

As a result, expatriates should be aware of the benefits they are entitled to if they are working overseas ' without the NHS safety-net, they must ensure they know their options if struck by a chronic condition. Paul says: 'Expatriates do not have the NHS to fall back on, so if they do suffer a chronic condition they can be left high and dry.'

Unfortunately, Paul says it will be some time before all policies include this vital benefit. 'The chronic issue will still take another two or three years to sort out,' she says.

The flexibility of IPMI products is also an issue, which needs to be considered, according to Paul. She says a lot of providers are now offering standardised products, which are not suitable for all clients, and that flexibility needs to be maintained in order to provide the best possible products.

'It is important that insurers are able to offer some sort of flexibility rather than repackaging standard benefits which do not always apply to people. A lot of providers are selling packages where they choose the level of cover they think the customer wants. Clients want to be able to choose the level of cover that suits their requirements,' she says.

Level of service is also becoming more important. Sarah Marfleet, senior marketing controller at PPP healthcare, says that it is vital that IPMI providers offer a customised service to their clients. She says: 'All quality providers should set their own service standards to aim towards. Claims should be paid promptly, queries responded to without delay and emails replied to with an even shorter turnaround time.'

This is particularly important in this market as the sales process can be slow. As policyholders rely on their cover for all their healthcare needs they have to be sure they have chosen the best product.

'Brokers need to be patient ' it is a slower process than other forms of insurance. People want to be absolutely certain they are getting the right product. In the UK, people have the NHS to fall back on,' Bulmer says.

Stable times ahead

The year ahead for IPMI is set to be stable, according to experts, with new players entering the market at a steady pace.

'We are likely to see new entrants into the market over the next 12 months. It has been quite a volatile market but it should become more stable,' Paul says.

Bulmer agrees and is optimistic for the group IPMI market: 'The pace will be steady rather than spectacular this year. Opportunities lie in the growth of the corporate market. I can see affinity and voluntary sales becoming more active.'

Saunders says BUPA has noted a marked trend over the past three years, of increased IPMI business through intermediaries, a trend, which it wants to continue. However, he believes the future will see some of the smaller companies targeting corporate clients with the larger groups targeting specific countries.

'Over the next few years, I believe the smaller players will concentrate on the traditional business lines, group or company schemes in the 'normal' expatriate locations, for example the Middle East or Hong Kong. The larger groups will look to broaden their distribution base by tie-ups and joint ventures in specific countries or regions.'

But while the market for IPMI is set to grow, it is also likely to become more complex. However, this spells good news for brokers.

'The market for international health insurance products is becoming increasingly varied and often more complicated. This is one reason why more and more people are turning to brokers to provide them with the most appropriate products and services,' says Saunders.

Marfleet agrees: 'As the range of products and services being offered by international health insurers continues to expand, an intermediary who can steer their clients through the maze of options, being clear of the needs of their expatriate customer, will be highly sought after.'

Adele Burton is a staff writer