Data transparency, longer-term contracts and sharing responsibility are the keys to easing premium inflation and controlling costs, Abigail Montrose hears
Premium inflation and cost management are the biggest concerns and greatest challenge for the international private medical insurance (IPMI) market.
Providers are forecasting premiums will rise by around 10% per year for the next three years, while Intermediaries are having to communicate this to their clients who increasingly are asking them to justify these rises.
And the expert panel at Health & Protection’s House of Lords roundtable heard these continuing increases are proving particularly expensive for clients who buy IPMI rather than domestic insurance.
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“If you look at an equivalent sized domestic and international schemes, the domestic scheme is probably in the tens of thousands of pounds whereas the international scheme is running into hundreds of thousands,” said Partners& client director James Henson.
“So 10% on tens of thousands is bad, but it’s manageable. However, 10% on hundreds of thousands soon adds up and that’s the issue we’re facing.
“Clients are definitely getting more cost conscious. Whereas before they would say: ‘I like the insurer, just renew the policy.’ Now they say: ‘We can’t keep on paying these costs.’”
As a result, clients are now demanding more than they did before.
They are scrutinising cover and intermediaries are having to jump through more hoops with insurers to get them what they need.
Calls for more data
To justify sharp increases in premiums, intermediaries need more data from insurers so they can explain why premiums are rising so steeply.
“Clients are asking for more justification around pricing,” said Lockton senior vice president and global mobility lead Joe Barnes.
“We’re probably facing higher increases in the SME market than we are with large corporates and so we need more information because clients are requesting more,” he said.
Aon principal consultant – global benefits Tristan Cleaver, agreed.
“We have a huge problem with inflation. There are lots of solutions but the number one on my list is data. Many of the insurers are responsible with the data they give but it’s just not enough,” he said.
“I’ve had so many cases. I had one last month where a 100% increase was being put forward on an SME. I did some digging and the reason was an ongoing high claim.
“In the end I said to the client, you’ve got a 100% increase, and that’s a really good deal. I was able to say this because I had the data to back this.
“But it took me a really long time to get the data, and I really had to squeeze blood from a stone to get that.
“Knowledge is power and I think this is something for me that has to change and it has to change quickly in the SME market for more data to come through,” he added.
Insurers are aware of this argument and open to supporting advisers where possible.
“One thing we have found quite successful is to share claims experience as much as we possibly can so you can give advice to clients,” acknowledged IMG global head of IPMI Kevin Melton.
Take advantage of wellbeing initiatives
One area of innovation in the IPMI market which can also help reduce inflationary pressures is wellbeing.
Increasingly insurers are offering such benefits to help people improve their health and act proactively to reduce claims.
But as IMG head of strategic relationships Amanda Olore highlighted, it is not always easy to get people to take advantage of these initiatives.
“We have all these wellness propositions but there’s only so much we can do from the insurance side,” she said.
“Everyone wants to manage their own health and says they will do it their way. We can give people the tools. The question is, are they going to make use of them?”
Indeed, monitoring and supporting more use of the wellbeing benefits offered by insurers was cited as one area where employers and individuals can look to make savings on IPMI policies.
Engage Health Group head of international benefits Penny Pemberton believes if insurers could share uptake and utilisation information it could help employers and individuals reduce costs.
“The data link there would be really crucial if you could understand how wellbeing is driving the reduction in claims for your medical insurance policy,” she said.
“And that would be utopia, wouldn’t it? But I don’t know any insurer that can really provide that level of detail.”
Encouraging preventative action
Several suggestions were put forward on how to encourage clients to increase take-up of wellbeing benefits.
These included insurers investing more in initiatives and offering compulsory annual check-ups. The annual check-up could help people manage their health and alert them to any potential lifestyle changes they might need to make to improve their fitness and wellbeing.
“Obviously healthcare innovation costs money; it’s down to us as insurers to try to manage that cost and the preventative side is key to that,” said Cigna Healthcare International Health head of global individual broker sales, UK and Europe Steven Martin.
“This year we’ve introduced a robust health and wellbeing benefit.
“So, for example, if a 50-year-old male has not had their prostate cancer screening test yet, we’ll email them and say: ‘You’ve got this benefit, please go ahead and do that’.
“Or if they’ve not had the annual health check yet, here’s how they can book that in with us – this is a benefit they can use instantly, it helps them and it helps us.
“And hopefully we’ll reduce the cost moving forward as well.”
Another way suggested to keep costs down is to introduce mandatory virtual screening before a policyholder sees a private GP.
This could reduce private GP claims as policyholders would only be referred to a private GP if after the screening it was decided they needed a face-to-face consultation.
Longer-term commitment to invest
Insurers are keen to increase the take-up of their wellness benefits and to encourage people to change their behaviours so they have a healthier lifestyle, which should lead to fewer and cheaper claims.
But innovation and the introduction of new initiatives such as screenings require investment and to make this worthwhile, insurers will want to see a return on their investment.
With IPMI contracts typically renewed on an annual basis, this means insurers are often hesitant about investing in new innovations if the client could leave them the next year.
Mercer Marsh Benefits multinational global mobility solutions leader UK Dave Hilton argued longer contracts could encourage providers to invest in these initiatives and benefit clients.
“Getting people’s behaviours to change is not a short-term thing,” he said.
“The same goes for health screening. You need two or three years of that to really make a tangible difference.
“So the market probably needs to think about asking clients to commit to two- or three-year contracts so there is then an incentive for the carrier to invest in some of these innovations that make a tangible difference.
“Otherwise, we’re having these really good conversations, but nobody’s putting their money where their mouth is,” he added.
In return for signing up to a two- or three-year contract, clients would need two assurances from insurers, Hilton said.
These would be transparency of pricing so they know exactly how any premium increases during the period would be calculated and a clear idea of what innovations or investments were being made.
Aon’s Cleaver strongly supported the idea and believed the two things can be linked together.
“I totally agree that the pricing structure over a three-year period is a good idea, but I think it should be linked to health and wellbeing,” he said.
“So, for example, you get a maximum 10% increase each year if you have X number of engagements in these health and wellbeing benefits, and we see the data or something can be measured against it.
“If members are not engaging in that and as a result claims are going up, then there are higher increases.
“Again, you’re putting the onus back on the client but there needs to be a bit of give and take – you invest in health and wellness, you take the time to invest in promoting this benefit and the reward is more sustainable pricing,” he added.
Cross-sector co-operation
Promoting these benefits was seen as the job of the whole industry – providers, intermediaries and employers.
The panel argued providers need to promote the benefits, services and tools they offer. Intermediaries need to ensure clients are aware of the advantages of making the most of these wellness services.
Then where appropriate, employers need to be encouraged to ensure employees know how to make the most of their membership.
As ever one of the challenges is how wellbeing and screening programmes are communicated and engaged with, which is likely to vary between people from different countries and cultures.
“What’s relevant differs from country to country,” said Lockton’s Barnes.
“We work with a private equity company that wanted to put a GP in every office. We tried to do it in Hong Kong and the Feng Shui couldn’t handle it.
“So there is an inherent issue with having a simplistic approach of one size fits all that it doesn’t really work, but you can drill down into the individual countries.
“That’s where our role as the adviser steps in more, perhaps more so than the insurer, because we can help develop and bespoke those communications,” he added.
Consumers vs corporates
But there is also a reality that while some clients are happy to pay for the best policy money can buy, for others the key issue is cost.
“There’s quite a big distinction between the informed large corporate or larger SME client and a consumer that is just looking for the cheapest products out there,” IMG’s Melton explained.
“They want something that’s going to give them peace of mind so if they are taken ill in whatever location they’re in, that the service is an easy claim process, there’s a hospital that is fit for purpose near them, and they are getting value for money
“We have a lot of consumer clients where price has to be a consideration, perhaps more so than the actual volume value proposition.
“It is a challenge for providers to recognise that, but at the other end of the spectrum, with an informed client, the more the employer can engage with their employees and make them aware of the benefits along with the provider, clearly that’s the right thing to control costs.
“But there is a distinction between the consumer market and the larger corporate market,” he concluded.
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