Key to understanding the highly dynamic and complex Latin America market is buying-in to its many differences and cultures, hears Owain Thomas
Dynamic and with strong potential growth trends, the Latin America international health insurance market appears a generally positive one to be involved in.
However, being home to more than 600 million people in more than 20 countries, it would be foolish to brand this extensive region as one homogenous mass, and those involved understand it needs special, localised attention.
As attendees at Health & Protection’s first Latin America international private medical insurance (IPMI) roundtable in Miami agreed, when the pendulum of fate swings in either direction here, it swings hard.
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“IPMI is growing in Latin America, mainly in the number of policies being sold, not so much the amount of premium,” explained Redbridge chief medical and risk management officer Dr Boris Garcia-Zakzuk.
“One of the reasons behind that crowded market is insurers are making plans that have less coverage and lower cost so are accessible to more people.
“Of course, there are also more people aware of the need to have supplemental coverage because the coverage in their home countries is not as good as it used to be or is deteriorating. They want to have the opportunity to come to the United States or other locations for treatment too,” he added.
There was widespread agreement that the market was growing and could continue to do so but the panel acknowledged it was not clear sailing the whole way.
David Capote, LATAM president of Trawick International, was one of those who added it was a “very dynamic and complex moment”.
“There’s a lot of competition, there’s a lot of new market entries, which are also driving prices to become more of a key purchasing factor,” he said.
“Overall it’s growing for what Doctor Garcia-Zakzuk identifies; definitely due to the situation on the ground, there are countries and coverages where healthcare situations locally are just not adequate.
“In places like Venezuela, you see people want to buy cover for access to the US or to Europe.
“So it’s definitely a growing market, but we do see there are pressures on prices more than ever in this market, it’s much more of a commodity than it was before.”
Mobile populations
Another significant reason for the positive growth prospects is the increasingly mobile population who are willing and able to travel far more, especially for healthcare.
This combined with a desire for flexibility and for options outside their home nation is proving a boon to the industry – and for once it appears regulations are helping.
However, the fight for business between insurers is increasingly causing issues for intermediaries, as Robert Parra, president and CEO of Suprabrokers noted.
“People travel more and everything is international, they move all the time and there is a need to have portable coverage,” he said.
“Regulations are also getting more flexible because it’s necessary and people move because they don’t like to be trapped in a certain country, so yes the need and demand for IPMI is growing. But there are other issues such as prices going down and there seems to be a fight between insurers taking business from one to another, so it’s a difficult situation.”
Luciano Garrido, chief revenue officer of Best Doctors Insurance, concurred that there was a lot more awareness of international health insurance and recognised the complex insurer situation.
“We all agree there is a lot of mobilisation with a lot of people moving around and looking for portability,” he said.
“And I agree with Robert because there are local and international insurers now that cannot offer the portability of true IPMI, where it’s easier for the customer to carry the policy wherever they go, even if they start living abroad.
“Now, with all the nomads moving all over the place, it’s easier for them to buy IPMI than buying a local policy.”
‘Extremely volatile’ market
The significant evolution of the market is having profound effects and making it a somewhat unstable place, at least compared to recent history.
Increasing competitiveness is usually welcomed, and in the USA there are calls from advisers for greater insurer competition, but where this competition is less controlled it can generate problems.
“It’s a market that has changed throughout the years and one of the things that is very different now is that it’s extremely competitive,” said Lourdes Peters, CEO and chairman of intermediary firm World of America.
“It’s a market that’s become extremely volatile right now because there are so many companies in the market, so many choices and so many people doing what we’re doing.
“It used to be there was a select group of people very aware of the products and the markets and how to go in and develop the chain of sales – now everything is on the table.
“You’re competing with not only international options, but also with local sales people that have local insurers with reinsurers behind them, giving them a utility in the United States.
“It has become extremely competitive and pricing is an issue as well. The dynamics of the business has changed over the years, it’s still very viable, it’s great business but it has changed drastically in the last ten years,” she added.
Hearing these experiences, Flywire strategic account director for insurance Manny Lopez highlighted and recognised the common themes of complexity, growth, global expansion and pricing pressures being felt within the industry.
“When you expand into different markets, there’s the complexity that comes with cross-border collection,” he said.
“The different payment requirements, the different regulation in each market and multiple jurisdictions.
“Then the payment formats to collect in these countries that you’re expanding to brings a different level of complexity to corporate finance and treasury teams.”
He noted that addressing all these could improve the customer experience and lower the cost for insurers, which could help reduce pricing pressures and ease market expansion.
‘Pendulum swings hard’
Alongside these overarching trends, the panel emphasised that understanding the local dynamics within each country was vital to succeeding in Latin America.
While there were some commonalities, it was recognised as being unfair to group the whole region together under one umbrella.
Furthermore, expecting the same strategies to work everywhere or being reliant on one core business model were seen as recipes for failure.
“From someone newer into this space, the interesting thing for me compared to other markets that we’re in is the word dynamic,” said Trawick International founder and group CEO Darryl Trawick.
“To someone that hasn’t grown up in it, looking at Latin America as just Central America or South America is not fair.
“As an outsider, using a broad brush and painting it as one thing, it’s not, it’s a dynamic market, there’s so many things going on and it’s not all equal.”
For example, Trawick noted that being closer to the US would mean differences in product design and expected performance, while political interests can have a massive and immediate effect on the market.
“There’s so much politics placed into what is going on in a given country, for example the dynamics in Venezuela, and from the outside, I see the pendulum swings really hard in different directions,” he continued.
“That can change something from not a market to a market really quickly.
“So the dynamics and understanding there’s not a single solution that applies everywhere, that it’s very different and constantly changing, has been something that’s interesting for me to learn.”
‘Survival is very slim’
The extreme swings in direction with rarely a pause in the middle were recognised as being vital for intermediaries to manage.
“As far as brokers are concerned, and Robert and I have been seen at all, having that pendulum going from one side to the other is difficult,” said Peters.
“Unless you’re diversified as we are and you have multiple distribution channels throughout, the rate of survival is very slim.”
And these extreme opposites can be active across the region at different times in different locations.
Peters continued: “We view our business just as an insurer views it and we have to because if it’s good in Mexico now, it could be really bad because of the monetary situation in Brazil. Or if Venezuela is in crisis, maybe Bolivia just shut down.
“So unless brokers are as diversified as insurers are, the success ratio is slim and you’re going to be struggling with your mono-market.
“Being in our position gives us a much broader stroke to be able to put some effort in one market versus another and let it lie and then come back, because that’s the way the market flows.
“Every country has to be approached in a completely different way; some have great insurance institutions, others that have absolutely none, others like Costa Rica have had to clean cobwebs off the books and create an insurance industry.
“So everyone is completely different, each one is a different country with different legislations, with different ways of looking at it and different cultures and different approaches,” she added.
As with other regions the use of technology is ever present in Latin America and can also be a source for growth if harnessed correctly.
“Even though it is a very competitive market there is a huge opportunity,” said Trulydata Technology president Jesus M. Delgado.
“Taking into account that you are now targeting people that are more related with social media, young people that are more toward the internet and all the tools that technology is providing, that is a huge opportunity for all to take advantage of those tools and get to a broader market.”
Furthermore, when looking inwardly the industry also has a lot to gain from better utilisation of technology to manage all the variations found in those countries, such as supporting multiple languages or benefit regimes.
Deglado added that by investing in technology platforms it was more efficient to manage multiple variations and this could reduce costs further.
“Every company should start taking advantage of the artificial intelligence (AI) tools and all the capabilities that AI will provide,” he continued.
“For sure in two years the ecosystem will change dramatically in terms of technology and that is something every company can take advantage of.”
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