US international people movements are being driven by geopolitical changes creating a market in great flux, Owain Thomas hears.
Geopolitical elements can have a significant effect on global mobility even during quiet times, however the current activity is dominating people movements into and out of North America.
As a result those working in the international private medical insurance (IPMI) sector are seeing a highly volatile market for individuals and corporates.
The industry leaders gathered for Health & Protection’s USA roundtable in New York highlighted the impact of this on their clients and organisations.
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International Citizens Insurance president Joe Cronin explained the trends the organisation had been seeing over the last year had been shaped by the political climate.
“We see US citizens increasingly choosing to move and to live outside of the US for a variety of reasons,” he said.
“Then on the flip side is the negative impact of new policies and the challenges of getting visas for foreigners coming into the US and how that’s going to impact our business as a whole.
“Right now, about 15% of our business is foreigners coming into the US and we were seeing a negative impact earlier on this year.
“That seems to have rebounded over the last two or three months, but it’s definitely impactful and we’ll see what happens over the next 12 to 24 months,” he added.
Among the most notable falls in activity, Canada to the US is down by around 20% to 30% this year, Cronin estimates, although this varies by country with some more and some less.
The firm focuses its advice on individuals and a growing portfolio of small to medium enterprise clients, along with a host of international students.
It is this latter population that has shown a particularly notable drop in activity.
“I know for some international schools their enrolment of first year international students is down 50% or more,” he continued.
But while those challenges can be tricky to face, it can often open-up opportunities in other areas, and the trigger for much of that activity is very clear.
“The two or three days after Trump’s election we saw more leads coming to us of US citizens who were interested in getting quotes and pricing for international health insurance for moving abroad,” Cronin said.
“It was record numbers, more than we had ever seen historically for a 48-hour period. That has levelled off and some are just dreamers, but not all of them and it is an increasing trend generally.”
Mexico, Portugal and Spain
Gregg Manning, COO of International Citizens Insurance agreed with these trends and highlighted Mexico, Portugal and most recently Spain as some areas of growing interest, along with some Southeast Asian countries.
To better address this the firm is tweaking how it works and who it is working with.
“One of the things we’re fearful of is more localisation of plans, being required to be licensed in those countries and people wanting to have someone on the ground there to talk to,” he said.
“Our main base is US citizens, so we’re trying to be smarter about what we’re quoting, what we’re offering from insurers, different plan makeups and down to demographic-like tendencies on deductibles.”
For the larger organisations their motivations and driving factors are different and often dictated by budgets and other geopolitical policies.
As Lockton Companies senior benefits consultant Tara Black explained, multiple industries ranging from Outside of Continental United States (OCONUS) government contracting to non-governmental organisations (NGOs) and inter-governmental organisations (IGOs) have all been affected but differently.
“We’re seeing the impact on the OCONUS side where people are hoping some funds go to their divisions that have shrunk in the last few years, so there may be some opportunity there,” Black said.
“Then from the NGO and IGO space they’ve been heavily impacted by some of the policies put into place.”
She noted this was even causing stresses just from a pricing perspective and across the group benefits market, with renewals coming through, cost is a high priority.
“With some of the shrinking budgets, especially in the NGO and IGO space, and with our markets primarily manually rated, those demographic impacts are really impacting what we’re seeing in the renewal rates,” she continued.
“Primarily those left on the plan have been older populations for whatever reason and so with a trend somewhere between 10% and 12%, we’re seeing 15% and 18% renewals. And while those are on average, we’ve seen some at 80% which I haven’t seen in ten years in the industry.
“I think that’s speaking to less premium coming in,” she added.
In-bound arrival concerns
Furthermore, matching the individual and student markets, political decisions are also acting as a brake on in-bound activity from employers.
As Vera Mira, principal – expatriate benefits COE at Mercer Marsh Benefits Multinational Advisory highlighted, she was seeing fewer in-pats entering the country from her clients.
This has been particularly notable since high-profile actions and raids by government immigration agencies on major employers and workplaces.
“There’s been a couple of contracts we’ve been dealing with, in particular one plant where they’re deciding to stop those contracts,” Mira said.
“They’re afraid of their employees coming in to train Americans, but then getting prosecuted.
“So we’re seeing a lot of in-pats that were planning on coming in now saying they are not doing it, so that’s driving up cost.”
“We’re also seeing contracts like defence contractors that were expanding and going abroad to the Middle East, but with the Israel conflict that’s now being placed on hold as well.”
Start-ups and SMES
There are some brighter prospects in the market however, with growth coming in other industries and locations for group schemes.
Insured Nomads CEO Andrew Jernigan noted the insurer was finding a lot of traction with technology start-ups coming directly to it
“They’re not as broker dependent, they don’t have a HR person oftentimes. They’re going online and going to artificial intelligence (AI) services asking, ‘how do we do this?’,” he said.
“Or they’re using a broker that isn’t globally savvy and they’re having to put it together and that’s more and more the case.”
But Jernigan suggested this was an area where advisers might be able to create specific propositions and find roles for themselves.
“So how are these companies going to find someone when they’re talking to a brokerage firm that only does domestic coverage?” he continued.
“The growth opportunity is with these companies that have 50 or 100 employees and are hiring contractors or bringing on a new employee in Columbia, Johannesburg, Singapore and so on.
“They want to include benefits for those five people, but they need to be almost local benefits.
“That’s going to continue as people outsource more and treat people as employees but try to figure out how to do benefits for that one off person, instead of sending an army of expats.
“They can’t get a group solution they are used to for two or three people or a family of five and one single person going off somewhere else.”
For Trawick International, SMEs are also a core growth market with technology and energy firms being among the most vibrant industry sectors.
However, Anders Blak, business development director at the insurer, noted there were also some significant demands it was meeting for clients.
“We also see more companies which want to cover their spouses, but not necessarily about expats – it could be third country nationals or local nationals,” he said.
“There have been surveys which said the biggest reason for assignment failure was spouses and partners not adjusting, so the spouse coverage is very important for us, much more so than in the past.
“That goes along whether it’s a higher account group or just a few employees.”
Africa opportunity and risk
In terms of geographic expansion, Africa, which has long been tipped as an up-and-coming destination, is generating a lot of interest for attendees.
“That continent is key and we are developing more partnerships there,” Blak continued.
The panel agreed the continent was creating much interest in terms of opportunities for expansion and as a location for clients.
However it comes with significant risk factors such as inflation, currency devaluation and the payment of premiums – which other insurers have previously faced.
As Insured Nomads’ Jernigan noted: “With East Africa, especially with some of the currency devaluations, some of those premiums are just not getting paid.
“So there’s greater risk in some of the developing countries to make sure you actually get the money for the plans you sell.”
And Lockton’s Black highlighted the significant scale of fraud, waste and abuse on the whole continent.
Insurers therefore must go into the continent with their eyes open, potentially using deductibles and co-insurance in situations they typically would not have done to limit abuse losses, while technology is being employed to help tackle fraud.
Flywire strategic director, insurance Manny Socorro highlighted that when talking to insurers the theme of cost mitigation was always a critical one.
This can include streamlining payment systems or allowing premiums to be paid in one currency and ultimately received in another.
“I’m also seeing a lot of companies that are trying to go to Guernsey, for example, to set up shop,” he added.
Download the roundtable supplement by following this link.
