A longer-term plan is vital for IPMI’s sustainability, but immediate actions can ease the inflationary pain, hears Owain Thomas.
Investing in full-scale preventative healthcare programmes is critical for the international health insurance market to reduce pressure on claims and premium inflation and help make the sector more sustainable.
This is likely to be a longer-term approach and current industry structures mean it is tricky to get enough buy-in from employers, advisers, insurers and healthcare providers.
However, Health & Protection’s House of Lords’ Roundtable heard there are key moves that can help arrest the current trend of soaring premiums, including working closely with third-party administrators and utilising data wherever possible.
Howden senior consultant international Sharon Sunners acknowledged that rising medical inflation was particularly prevalent in certain regions such as Asia and while clients were aware of it, they did not always want to take action.
“It’s very prevalent with clients of mine, particularly in high-cost regions like Singapore and Hong Kong, where inflation is skyrocketing at the moment,” she said.
“It’s a challenge because clients understand the double-digit increases are not really sustainable – if you’ve got a significant premium already and have a 15% or 20% increase compounded every year, the premiums can quickly run away, so this is something clients are asking for advice and support on.
“However, when the insurers start enforcing their reasonable and customary clauses, then you get pushback from clients to say the CEO is really unhappy because they’ve got a shortfall and the claim has not been paid in full.”
Tightening-up on claims
Sunners agreed this was an important place for the industry to step in with insurers tightening payments and advisers being in communication with clients.
“I’ve definitely seen some of the insurers tighten up on the reasonable and customary rules,” she continued.
“It’s a good thing because it helps to keep premiums sustainable, but I am seeing pushback from clients and then we have these difficult conversations at renewal.
“So they need to understand that how they behave through the year will impact their renewal pricing.”
The role of third party administrators (TPAs) was also raised with the importance of using those able to be efficient and keep a lid on costs being highlighted.
“It’s important for a good insurer to have a very good TPA behind them in different parts of the world as that helps to bring down the costs,” said Goldstar Healthcare director Kshama Patel.
“If they don’t have a good TPA, then half the job’s not done and the claims just increase exponentially.
“I’ve seen across the board that if they have a good TPA, or sometimes they have their own network, there can be a big discrepancy in terms of cost management compared to those who don’t.”
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Data clarity
Data availability and quality was one subject raised by the panel which could notably help improve cost management and ease conversations with clients.
However hurdles remain in ensuring this can be done successfully and at scale.
For example, while in some geographic regions there is a wealth of data to illustrate typical costs for treatment and procedures, in other locations it can be rare which means reasonable and
customary cost enforcement becomes very difficult.
Furthermore, being able to share data with clients and members is often challenging.
“A lot of our clients are SMEs and I struggle when insurers increase the premium, but because of SMEs’ size they don’t really disclose the loss ratio,” said PIB Employee Benefits principal consultant Takako Nagata.
“It’s very difficult to explain to clients their premium is increasing more than 20% because they use it and then they will ask, where is the data, and we can’t provide it.
“So the conversation becomes so difficult if you don’t have any data to prove that they actually spend a lot on the scheme.”
Credit card benefits
UnitedHealthcare Global director of client management and broker support Claudine Audin acknowledged the difficulty here was it being dependent on the size of the scheme and resulting GDPR implications, but was sympathetic to the situation.
“I agree with you; for anything that is exceptional, there needs to be some element of data sharing, even if it is just a high-level loss ratio,” she said.
“The problem is then people ask what claims are making that? So it’s a bit of a balance.”
She fully agreed on the need for good quality TPAs and healthcare provider networks, but highlighted one particular local quirk in Singapore, where people are using credit cards a lot to pay for expensive treatment because they then benefit through loyalty schemes and points.
“So it is about member education and how you engage with the client to get their employees to understand the implications,” she continued.
“Cost is always going to be an issue, but we shouldn’t be reducing benefits, we should be educating people on how to access the plan and use it to the best of what’s available.”7
Shifting models
There was an understanding from attendees that the current situation was not likely to be sustainable in the longer-term and that other models of paying for and providing healthcare would need to be pursued.
WTW senior director of health consulting Jessica Plewes noted that insurers were already looking at healthcare provider benchmarking to understand the costs and outcomes they were funding.
“For example, we already see in Saudi Arabia they are going into an outcome-based funding model, so we’re looking at different funding models to try and control those costs” she said.
Plewes added that even in locations like Australia where there is a set minimum fee schedule for Medicare, the challenge for insurers is that specialists can charge more and insurers do not always see this depending on their contracts.
This brought the discussion to the potential of fully enacting preventative healthcare approaches throughout the IPMI market.
This was a major theme from insurers and advisers responding to Health & Protection’s annual IPMI Report, with both sides believing it was vital for securing the future of the sector.
Marsh global mobility solutions UK leader Dave Hilton agreed this was a huge opportunity for clients, brokers and providers to invest in mutual results for all sides – but it needed long-term buy-in.
“Part of the problem is still the incentive because they are only 12-month terms,” he said.
“If it’s a 12-month contract and an insurer invests £100,000 into helping a client manage the health and the behaviours of their people, the provider has a risk of that client moving away next year and not reaping the benefits of it.
“So that is a bit of a deterrent to getting the investment from the insurer.”
Bluestone of London director Nadia Jafar argued advisers needed to play a critical role here.
“That part of the incentives is something we as advisers need to really work on deeply with our clients, because we don’t want them to have a policy for one year and then go elsewhere,” she said.
“The educational part is, whether you’re in the corporate, SME or individual market, saying this is the impact of you staying with the provider and the providers working with us.”
Market pioneers
It was noted that taking this approach could be difficult and would need strong connections with all parties as while there was the expectation it would save money, there was no guarantee what the return on investment would be.
However, UnitedHealthcare Global’s Audin emphasised: “You’ve always got to have those sorts of pioneers”.
For some populations, particularly high-net worth individuals, longevity is the word being used rather than prevention, but it is the same theme most resonating.
“Often what they can’t buy or control is their health and wellbeing moving forward,” explained Cigna Healthcare International Health head of global individual broker sales UK and Europe Steve Martin.
“How do you evolve that to make it more relevant for a particular type of customer and make them understand what the value is?
“What we don’t do enough of is communicate more of the benefits available and that’s the key. There’s so much good stuff in preventative wellbeing benefits, but we don’t want to think about
it enough.”
Another part of the spectrum that preventative healthcare can influence is understanding and engaging with high-risk individuals, learning from other parts of the insurance world.
“With life insurance they do a health screening essentially before taking out a policy and maybe there’s a way of making that work because then you would have data to understand where people are falling down,” said Vizion Health founding partner Matt Howells.
“If you’re doing a questionnaire or in-person health screening you’d get an understanding of risks like how many units of alcohol people drink in a week? Is this a company fuelled on booze and are there improvements that can be made?
“You would have a bigger impact because it would have the underwriting impact and then they would see more immediate value from the policy; these are the markers which need to be improved on and as a result this is what we would recommend and what the insurer is going to include for you.”
Cultural fit
Deeper datasets could provide richer insights for clients and insurers alike to help guide health benefit decisions, including education, engagement and nudges to more appropriate behaviours.
However, preventative approaches do not look the same in all cultures, as IMG head of strategic relationships Amanda Olore highlighted.
“Would these all be expected to be part of preventative healthcare, depending on where you are?” she asked.
“When you’re working with a large corporate with all those offices across the globe, being adaptive to local requirements is difficult.
“How do you create what the HR wants, which is one product and a communication plan to service everyone, but also adapting it to what maybe one office might want to hear about and be more interested in engaging with?
“I’m not saying that we shouldn’t try, but it becomes more complicated than just a case of here’s one market, here’s what they need.”
Olore noted that working in different parts of the world she had noticed it was easy to disengage parts of an organisation or certain locations if these things were not implemented and communicated correctly.
But insurers are trying tactics to shift members more towards preventative health approaches.
For example, Cigna Healthcare’s Martin noted the insurer had begun contacting customers of a certain age about their health and wellbeing benefits, reminding them about health checks which have not been used yet.
The panel agreed there was certainly a long way for the industry collectively to go, but there was acceptance that in terms of end members, enacting preventative healthcare was pushing at an already open door.
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