The growing cost of medical insurance has been on the global industry’s radar for a while now, with the Mercer’s ‘Health Trends Around the World Survey’ finding that inflation in 2018 was, on average, 9.7%.
The country with the highest rate was Argentina with a staggering 41.1%, and the country with the lowest inflation was Portugal with 1.6%.
But the Mercer report also suggested that similar increases are expected for 2019, and even higher for 2020.
“Currently, a 10% annual increase for inflation isn’t uncommon,” Ed Watling, employee benefits consultant (healthcare) at Mattioli Woods, told International Adviser.
“When age-related increases are added to this, rates are potentially growing at 12–15% per year, meaning that premiums are likely to double within about six or seven years.”
A head-scratching matter
Marco Giacomelli, chief executive of Generali Global Health, told IA: “Controlling premium inflation is an ongoing issue for the international private medical insurance industry.”
But he believes there are ways to tackle this challenging problem.
“By creating a more personalised approach to health and wellness, insurers are able to empower the individual member to stay well and avoid the need for regular medical treatment.
“A wide range of tools are now available to help members’ stay well including health risk assessments, employee assistant programmes, second medical opinions and personalised medical testing.
“Plan design, for example, is important to give members the option to self-insure through excesses and deductibles or buy reduced cover levels in exchange for lower premiums. Medical provider networks are carefully managed with pre-agreed fees for specified treatments.”
Technology to the rescue?
Many believed that the introduction of technology within the health and medical insurance sector would have been a game changer not only in terms of innovation, but also in lowering premium costs.
Giacomelli added: “Technology has been integral to the process and has helped to not only ease the administrative burden for insurers but also deliver new initiatives and methodologies such as digital wellness tools for members and more exhaustive methods for identifying fraudulent behaviour.”
But technology does not come free of charge.
James Pearcy-Caldwell, co-founder of financial planning firm Aisa International which includes the OpesFidelio network, told IA: “Technology does not make things cheaper, it makes them more efficient and productive.
“Within healthcare, this may mean it assists in appraising health matters faster, but at a cost to the provider of the technology.
“Third parties benefit by using this efficiency to better target their own market, but it does not affect the basic rules of life and death, and premiums are determined by this rather than technology at this juncture.”
According to Mattioli Woods’ Watling, there are steps clients can take to lower the burden of insurance premiums.
“It is always useful to check what benefits the policy provides and whether they are being used (and valued) by the employees. Many international policies work on a ‘menu’ model, so it is possible to remove benefits that aren’t needed or used.
“Tailoring the benefits to specific needs will ensure improved value for money.
“Although I wouldn’t recommend regular switching of insurers, I do feel that it is important to carry out a full market review every two or three years to benchmark the premiums and ensure that the current insurer’s rates/benefits remain competitive.
“The market is constantly changing, and it is important to keep in step with the latest developments.”