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ESSENTIAL READING FOR TRAVEL INSURANCE INDUSTRY PROFESSIONALS

International Travel Insurance Journal

6 Page 22Page 18 Page 20

ISSUE 48 • JANUARY 2005

ITIJITIJAustralia’s peak consumer rights body hasaccused the country’s travel insurance companiesof charging up to 400 per cent more for policiesthan insurers in the UK. By Miles Clarke in Sydney

Research by the Australian Consumers Association(ACA) found Australian insurers charged 200-400per cent more for their top cover than their UKcounterparts. But travellers can save a lot by surfing the Net forcheap deals, according to the association’s ChoiceMoney and Rights magazine. “While we didn’t do comprehensive Australia versusUK policy comparisons, we found Australian insurerscharge 200-400 per cent more for their top cover,which can cost over AU$200,” the magazine said. Catherine Wolthuizen, Senior Finance Policy Officerfor the ACA, said the difference in prices wassignificant and even the cheapest Australian policy thatthe magazine looked at was still considerably moreexpensive than the cheapest under-50s UK insurance.“It begs the question: why are Australianconsumers paying so much for their travelinsurance?” Ms Wolthuizen said.She added that several companies claimed therewere big differences between the Australian andUK markets and they maintained that Britishpolicies had hefty excesses and that Australianinsurers provide higher levels of cover and facemore expensive claims. One factor behind theprice of Australian policies was the heftycommissions paid to travel and insurance agents.“Travel agents can receive commissions of morethan 50 per cent of the premium and traditionally80 per cent of policies were sold through travelagencies, when compared to the Internet,” MsWolthuizen said.Ms Wolthuizen concluded that savings could bemade by Australian consumers if they logged on tothe Internet. “The good news is that the Internetnow gives you a better chance of finding a cheaperdeal,” she said.While not all policies were discounted online,savings could be found, but it was important forconsumers to understand the policy and what itcovered, she advised.

Aussies accuseinsurers of rip-off A continued, steady revival of the world’s

business travel industry, outpacing supply inseveral markets, has been predicted by theAmerican Express Global Business Travel Forecastfor 2005. By Milan Korcok

The travel industry report emphasised thatalthough the pace of growth will vary by regionand country, air and hotel prices will riseincrementally next year, but intensifyingcompetition in the airline sector – particularly from

low-cost carriers – should suppress any significantincreases in the overall costs of business travel.The report forecasts that global economy/shorthaul air fares will rise up to three per cent andinternational business fares from two to five percent on average for 2005, while hotel roomrates for both mid-range and upper-rangeproperties will increase from one to three percent on average.“Economic recovery is fuelling business traveldemand around the world, with particularly strongdemand between Europe and North America,South America, and across the Pacific,” saidMatthew Davis, Director, Global ConsultingServices, American Express. “An industry-widerebound has been dampened only by slim marginsfor the major North American airline carriers.”Following are highlights of the American ExpressGlobal report, by region:

US and Canada marketsIn the US, typical business airfares are expected torise by one to three per cent and internationalbusiness class fares by two to five per cent.Canadian domestic economy class fares will stayflat or drop, while international fares will grow twoto five per cent as in the US. In general, increasesin trans-Atlantic traffic and an improved globalbusiness environment will generate higher airlineprices internationally. Increased competition in thetrans-Pacific marketplace will likely temper anymajor price increases.As for hotels, standard corporate rates areexpected to increase in the US in 2005 by up tothree per cent, continuing the upward trend theindustry has been experiencing over the past 18months. In Canada, rates will also rise up tothree per cent.The car rental industry too is experiencing a turnaround. Average daily car rental costs can beexpected to increase up to two per cent as a resultof increased demand and higher supplier costs.However, competition, particularly from theInternet, will temper any significant price increasesnext year.

Global survey forecasts steady travel growth

continued on p.2

Remed Assistance and the Red Sea DoctorsAssociation may not exactly be Wyatt Earp or theClancy Brothers, nor could you describe the RedSea resorts in Egypt as Tombstone, but a ‘shoot-out’ (or more like, a ‘bun fight’), has begun andsmoking guns are aplenty. Ian Cameron reports

The saga began when Remed Assistance were sentin, on behalf their Russian and Ukrainian insurancecompanies, to pursue a vigorous campaign of cost-containment on the medical front. A letter sent by Remed to doctors at hotels andvarious medical facilities in Egypt reminded themexactly of what is and is not covered under the

policies and warned against over-treatment, whichwould, you may assume, seem reasonable enough.However, the letter goes on to say: “A tourist pays forhis health insurance an average of 50-70 cents perday. By this reason (sic) insurance companies try toreduce treatment expenses (especially in complicated

Bun fight at the Suez Canal

continued on p.6

WHAT’S INTHIS ISSUE?

REGULARS

News 1Grapevine 6Company brief 8Insurance matters 10Health matters 13Editorial comment 14Travel matters 14News analysis: Catch 22 16World markets: Chinese whispers 22Letters 24Smile corner 24Dick’s hotline: Living abroad safely 24Hot spots 26Profile 27Service directory 28Diary dates 34On the move 35Contributors 35

FEATURES

Insurance fraud 18Growing fraud plagues health insurers and consumers

Watching the sundown 20Travel insurance and the elder traveller

ITIJ TEAMEditor-in-chief: Ian CameronEditor: Richard ForsythDeputy-editor: Sarah LeeEditorial assistant: Leonie BennettDesigners: Eli Butler

Chris MarkeUS correspondent: Milan KorcokIndia correspondent: Saby GangulyLegal correspondent: Dick AtkinsConference manager: Denise ClementsProduction: Adele BrownProduction assistant: Helen WattsAdvertising sales: Vernon Harman

David FitzpatrickFinance: Pauline Lloyd

Helen Parker

Cartoonist: Chris Duggan

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ITIJITIJInternational Travel Insurance Journal

NEWS2

International Travel Insurance Journal www.itij.co.uk

An Algerian court has sentenced five Germantourists to six months in prison and a fine of nearlyUS$500,000 for stealing ancient objects from aprotected site. The group, all aged from 32 to 53,were at first believed to be missing in the SaharaDesert and a massive manhunt was undertakenamid fears Islamist rebels had kidnapped them.It was then revealed that thethree men and two women hadmanaged to give their guide theslip while visiting the TassiliNational Park, which is a vastworld heritage site near theNiger and Libyan borders. TheGermans were later discoveredcamping in the desert about300km from the border withNiger with 130 archaeologicalartefacts in their possession.The court in Djanet, southeastof the capital Algiers, imposed afine of 35.2 million dinars –US$489,000 – on the Germantourists.

German touristsjailed for theft

Two people were killed and 19 were injured (sixon the critical list) at a Bollywood concert held inColombo, Sri Lanka, after a grenade was tossedinto the crowd. The concert, held on Saturday 11December, starring Bollywood film actor ShahrukhKhan, turned into a scene of horror when thegrenade exploded in the VIP part of the audience.A Sri Lankan photojournalist and an employee atthe star’s hotel died. In all, 25,000 people attended the Temptation2004 concert, but there had been protests fromthe Buddhist community as it fell on the anniversaryof a revered monk.There followed a political explosion when PresidentMs Chandrika Kumaratunge accused aparliamentarian of the main opposition, the UnitedNational Party (UNP), and some monks of theJathika Hela Urumaya (JHU) for carrying out theattack.“As Head of State, your speeches are so important,and if based on incorrect information, could sendvery wrong signals,” protested a respondingstatement by Jathika Hela Urumaya (JHU). “Hence,it behoves you not to resort to such amisinformation campaign. The JHU has nothing todo with this incident.” Security staff have been questioned in an on-goinginvestigation into the incident.

Bollywood concertattacked in Sri Lanka Europe

In Europe, economy fare fluctuations for intra-regional travel are expected to range from minusthree per cent on the lower end to one per centon the high end, while business class fares on longhaul/intercontinental routes will increase byapproximately two to four per cent.

Pricing trends will continue to be volatile and varysignificantly by country market. Intense competitionin the UK and Western Europe, primarily driven bylow-cost carriers, will continue to drive downpricing on specific short haul, domestic and intra-European routes.Hotel pricing is expected to increase up to threeper cent in the mid range and up to four per centin the upper range properties across Europe nextyear barring significant political or economicdisturbances. But strong room supply, coupled withmixed increases in demand are likely to limit anydramatic price increases in 2005.

Latin America and theCaribbeanAirline industry trends acrossSouth and Central America arebeginning to echo the patternin other regions, particularlyNorth America. These includeinroads made by low-costcarriers, recovery in businesstraffic and expansion ofcapacity. Across the region,economy class intra-regionalfares will rise from two tothree per cent, and businessclass/ intercontinental fares willrise by three to five per cent.Argentina, Brazil and Chile arelikely to see flat to someincremental growth ineconomy class fares andbusiness class as a result ofgrowing traffic. Here, too, more and more regionaland global airlines are entering the market, breakingup many of the national monopolies that havecharacterised air travel in Latin America for so long.As for hotels, rates in most of the key business

markets are expected to rise incrementally in 2005.The hotel industry across the region, however,continues to feel the effect of a buyers’ market andinstability in some regional markets. Many marketsthroughout this area are expected to experienceflat to negative growth for the rest of 2004.

Asia PacificAmerican Express is predicting a three to four percent increase in discount economy fares across theAsia Pacific region in 2005 along with a four to fiveper cent increase in business class/internationallong-haul fares, attributed to growth in travelactivity, improved airline services and increasingdemand. These increases will be tempered,however, by discount economy fares.Asia has experienced “phenomenal activity in thelow-cost arena,” says the Amex report. In Indiaalone, 10 low-cost airlines are in the planning stage.Low-cost activity has also been strong in Thailand,

Singapore and Australia,and new entrants aremaking inroads in Japan,China and the Gulf states.In the Asia-Pacific region,hotel rates will rise fasterand higher than in otherregions of the world, saysthe report – two to threeper cent increase in mid-range rates and three tofour per cent in upper-range hotel rates.Economic growth rates inIndia and China are alsodriving occupancy rateshigher and supply will belimited for the short term.In particular, the fastest-growing economies andthose most severelyaffected by the shocks ofthe past few years will beunder the heaviest pricingpressure in 2005.Hotels in this region havelimited capacity toincrease or decreasesupply quickly. Eventsafter September 11 havereduced current andfuture supply levels in

many cities. Now, with the Asia recovery in fullswing, the limit of supply in proportion to demandis expected to increase pricing as growth in theaviation market spurred by low-cost competitionand increased liberalisation will drive demand.

– continued from p.1

Global survey forecasts steady travel growth

American Express’ Regional Forecasts for Global Business Travel Prices in 2005

Region Air HotelDomestic/Short International Mid Range Upper RangeHaul (Economy) (Business Class)

North America 1-3% 2-5% 0-3% 0-3%Asia Pacific 3-4% 4-5 % 2-3 % 3-4 %Europe (-3)-1 % 2-4 % 1-3 % 0-1%Latin America & the Caribbean 2-3 % 3-5 % 1-2 % 0-2 %

Insurance mogul Michael Segal had 26 convictions,ranging from racketeering and fraud toembezzlement, overturned by a Federal judge inthe US on 13 December, but the most seriousallegations were upheld. Prosecutors said he had looted a restricted accountat Near North Insurance Brokerage Inc. to fund hislavish lifestyle.US District Judge Ruben Castillo declared thatprosecutors had failed to present adequateevidence regarding seven counts of making falsestatements. Segal asked for a new trial on thestrength of this, but his request was denied.Segal may still face up to 20 years in jail whensentenced on 23 February.(see also News Analysis p.16 Catch 22)

Insurance fraudsternot off hook

The terror group ETA has returned with a renewedcampaign of violence as seven small bombs detonatedin Spanish Leon, Avila, Santillana del Mar, Ciudad Real,Malaga Valladolid and Alicante on 6 December.Telephone warnings from the separatist groupalerted officials of the bombs, significantly set off onthe anniversary of Spain’s constitution. The well-

timed simultaneous explosions blew up in coffeeshops, parks and other public places and 18 peoplesustained minor injuries. In all but two of thebombed locations, police had enough time to clearthe areas so that no-one was killed.ETA have kept a low profile since the Madridbombings by Al Qaeda that killed 191 people and

appalled the world, but the Mondaybombings were a sign of ETA’s return.ETA is responsible for over 800 deathssince the late 1960s, and it is hopedthat the national revulsion that Spaindisplayed in the aftermath of the Madridincident will deter the organisation fromcommitting more murder in the nameof their political cause. “ETA wants to sow fear. It wants todraw attention, but cannot afford to killpeople. That’s why they set off bombsthe size of a bar of chocolate,”explained former ETA member TeoUriarte, who now leads a groupworking for peace in the region.

ETA return with bombing campaign


NEWS4

The airplane crash in Indonesia on 30 November,which killed 25 people and injured 40, has beenblamed on bad weather.The Lion Air MD-82 jet flying from Jakarta skiddedoff a runway in heavy rain after landing in Solo incentral Java. A spokesperson said the plane hadbeen hit by a strong tail wind as it landed. There were over 140 passengers and crew onboard. The pilot, two flight attendants and theplane’s mechanic were among those that died. “People were screaming Allahu Akbar! (God isgreat) when it skidded off the runway. It finallycame to a halt after hitting a graveyard next to therunway,” one man told local television. Indonesia’s worst air disaster took place in 1997,when a Garuda Indonesia Airbus crashed on theisland of Sumatra killing all 234 people on board.

Indonesian air crash

American Homeland Security Chief Tom Ridgeshas stepped down from his post. Ridges isresponsible for the hard line on border security,especially at airports, since 9/11. He will be

known for promotingtechnological solutions foridentifying foreign visitors and forhis efforts in making US bordersmore secure.In his resignation letter Ridgesstated: “There will always bemore to do, but today, Americais significantly stronger and saferthan ever before.”Ridge told reporters: “Thepresident has given me anextraordinary opportunity to servemy country in this incredibleperiod since September 11, 2001.“I think we’ve accomplished a

great deal in a short period of time. We haveto be right a billion-plus times a year... Theterrorists only have to be right once.”Ridges was the first ever Secretary of theDepartment of Homeland Security, overseeing180,000 personnel and was highly praised forhis work by President Bush.He won’t step down until February but hissuccessor will be named before he goes.

Ridges steps down

It sounds unbelievable but police at Paris’s Charlesde Gaulle airport are investigating what has beencalled a‘scandalous’airport securityincident. On the 3December, policeofficers hid ablock of plasticexplosives in abag – belongingto anunsuspectingpassenger – aspart of anoperation to trainsniffer dogs; theywere ‘mislaid’ and (at the time of writing) are stillmissing. French authorities have reportedly warned dozensof airlines that the devices may have made theirway onto one of the flights, but assure that theexplosives cannot be set off without a detonator.Police spokesperson, Pierre Bouquin, said theexplosives, if detonated “would not be enough toblow up a building,” but would probably be enoughto blow a door from a car.“This is not part of traditional practices,” saidInterior Minister Dominique de Villepin. “I’d like tobelieve that this was isolated and the product of anindividual initiative.”Police believe the explosives left Paris on one of the90 planes that left the airport during the two-hourperiod – including flights to Italy, Japan, Brazil andthe US.Police hope that the passenger will contact theFrench authorities on discovering the devices. At atime when the threat of terrorism is still very muchin people’s minds, the French police can only hopethat the explosives turn up soon.

Lost in a suitcase

The World Travel and Tourism Council (WTTC)has released the 2004 World Travel and TourismCompetitiveness Monitor, which providesinformation on a country’s competitiveenvironment for travel and tourism. Governments, policy makers, travel and tourismcompanies, travel insurers, investors and academicsuse the monitor, which is grouped into eightcategories. The new statistics shows that Brazil andIndia are the most price competitive countries andthat quite a few countries need to pull up theirtourism socks, including the UK and South Africa.The Monitor can be accessed at www.wttc.org andallows users to compare countries from a selectionof over 200, or look at an overview of anyparticular country. It’s a traffic light system, whichoffers an at-a-glance analysis of the data with aboveaverage, average and below average results codedgreen, amber and red respectively.

Competitivenessstatistics

Malaysia is tipped to be thefirst Asian country to operatea space tourism centre by2010, with plans to build amulti-million-ringgit spaceportfacility in Perak.According to reports, BristolSpaceplanes Limited said itwould take two years todevelop a demonstrator ofits sub-orbital space plane,two more to build aprototype and another twofor flight-testing beforepassenger flights could start.

The first spaceport will be established at Mojave inthe US, which they hope to be operational in 2007. The project to promote space tourism in Malaysiais estimated to cost RM480 million (US$126million). The spacecraft – the Ascender – thatwould take tourists to space for RM70,000 on a90-minute return journey, will also be built in Perakif the federal government gives the go-ahead. Asiantravel insurers will obviously welcome the business.

Malaysia to launchspace tourism

Travelex in the UK has announced plans towithdraw from the assistance industry and closeits Travelsolve assistance operation in 2005,which is based in Peterborough. Although nofirm date has been set, it has served notice onits existing clients and is expected to ceaseoperations around June.Travelsolve was launched in 2002 and thefledgling company quickly became a seriousplayer in the market with the acquisition of theportfolio of business of (then named) GEFinancial, which included Lloyds TSB andThomas Cook.GE’s loss of the Thomas Cook account to AXAlast year, and their recent decision to pull out ofthe travel insurance market, effectively madethe decision for Travelex.Travelsolve Director Karen Brine admitted thedecision had been a difficult one, but a strategicreview of the assistance business hadhighlighted limited opportunities for growth inthe sector in which Travelsolve were involved.The 50 plus staff who are employed byTravelsolve are all expected to be transferredto other jobs within Travelex.Travelex will continue its involvement in theindustry with its insurance services based in theUS, which are unaffected by this decision.

Travelsolve throwsin the towel

Price competitiveness:shows the tourism priceindex across countries:-BrazilIndiaEthiopiaSri LankaPakistan

Infrastructure: level ofinfrastructuredevelopment:-MaltaSingaporeBarbadosBelgiumNetherlands

Human resources: usingdata regarding lifeexpectancy, illiteracy rates,education, employment,population, training skillsand gender indicators, itshows the competitivenessof the quality of humanresources in each country:-AustraliaBelgiumFinlandNetherlandsNew Zealand

Environment: awarenesstowards environmentalaspects of development:-French PolynesiaNorwayFinlandPanamaSpain

Human tourism: measuresthe achievement ofhuman development interms of tourism activity:-FijiMaldivesSeychellesVanuatuIceland

Openness: the extent towhich a country is opento international tourism,trade openness and taxeson international trade:ArubaMacao, ChinaHong Kong, ChinaCyprusAntigua and Barbuda

Technology: advances inmodern technologicalsystems andinfrastructure:-San MarinoMonacoSingaporeLuxembourgMalta

Social: data from dailynewspapers, personalcomputers, television setsand total crimesrecorded:-NorwayJapanSwedenUKHong Kong, China

Top five countries 2004 in each category

www.itij.co.uk International Travel Insurance Journal

NEWS 5

After several years of languishing in the dumps,virtually all sectors of North America’s travelindustry are showing significant increases indemand for 2005, with some expected to reachor exceed the record levels hit in 2000. Andthough some weak spots remain, it does appearthe long-hoped-for recovery is here. By MilanKorcok

According to the annual forecast of the TravelIndustry Association of America (TIA), overalltraveller spending by domestic and internationalvisitors in the US will increase by 6.9 per cent by theend of 2004 to nearly $593 billion, with anadditional 5.3 per cent added through 2005 to bringoverall travel-related spending to $625 billion by theend of that year. Further projections show a 4.6 percent increase to a total of $653 billion of travel-related spending in 2006.In addition, two of the hardest hit sectors – domesticbusiness travel and international inbound travel – areexpected to see their first real increases sinceSeptember 11,2001, with US residents taking nearly144 million business trips by the end of the year –an increase of four per cent over 2003 – and afurther increase of 3.6 per cent in 2005 to nearly149 million trips.Speaking to TIA’s annual Marketing Outlook Forum inScottsdale, Arizona, Suzanne Cook, Senior VicePresident of Research and Technology for theassociation, said: “It’s clearly good news that businesstravel is showing thebeginnings of recovery thisyear and will continue in2005.“The gains have been drivenprimarily by a strongereconomy and fewer travelrestrictions by corporateAmerica,” she added, statingthat improved businesstravel has also encourageddemand for both air traveland hotel rooms.The Air TransportAssociation has recentlyforecast a five per centincrease in air passengers bythe end of the year, andSmith Travel Research haspredicted a four per centgain in hotel room demandthis year.The TIA forecast noted thatafter falling steadily for threeyears, international arrivalsto the US are forecast toincrease 7.5 per cent thisyear and nearly five per centin 2005 – translating intomore than 43 millioninternational arrivals by theend of 2004 and almost 46 million in 2005 andalmost 48 million in 2006. These numbers still

remain below the record high of 51 billion arrivals in2000, however.Spending by international travellers in the US isprojected to increase 11.2 per cent by the end of2004 to nearly $72 billion, an additional eight percent in 2005 to over $77 billion, and to 82.4 billionin 2006, getting back to the record $82 billion spentby international visitors in 2000. The rebound in international visitors since 2003 is asharp contrast to the erosion in arrivals in the threeprior years. In 2001 there were 12.8 per cent fewerarrivals than in 2000, in 2002 an additional 7.2 percent fewer than the previous year and in 2003 anadditional reduction of 3.7 per cent. That broughtinternational arrivals down to 40.4 million in 2003.But in 2004 there was an estimated gain of 7.5 percent, followed by forecast gains of 4.8 per cent in2005 and 4.5 per cent for 2006 – bringing thenumber of total international visitors to 47.6 billion –more visitors than ever.The brightest part of the travel picture remains domesticleisure travel, which has steadily increased despite theaftermath of 11 September, the lagging economy, thewar in Iraq and high gas prices. TIA forecasts leisuretravel volume will grow 2.9 per cent this year, up from a1.9 per cent increase in 2003, and increase by anadditional two per cent in 2005.“While some recent shifts in consumer preferences,such as a desire to travel closer to home remainvalid, Americans are now returning to their moretraditional habits,” said TIA’s Cook.

North American travel booming

As the US dollar remains at an all-time low against the euro ($1.34) andcontinues to erode against sterling ($1.94) and other major currencies, foreignvisitors to the US continue to experience great bargains as their money goes alot further than it did when the dollar wasstrong. According to the Federal Reserve,the Greenback has been down more thannine per cent against a basket of majorcurrencies over the past six months.According to North American travelanalysts, not only are hotels in New York,Miami, Los Angeles and other majordestinations seeing strong upswings inbusiness from European travellers, so aresecondary markets such as New Orleansand Charleston in South Carolina.Ironically, though a weak dollar shouldtheoretically keep Americans at home –away from high-priced euro destinations,bargain basement round-trip airfaresbetween high traffic destinations such asNew York and London or Miami andParis are easily offsetting the currencydifferentials and encouraging Americans totravel abroad despite the higher europrices. More Americans are also lookingto package deals to help mitigate thehigher cost of hotels abroad.

Travellers and insurerswith Caribbean andtropical aspirations takenote: the world’s leadinghurricane forecastingexperts are predicting aslightly above-averagehurricane season for theAtlantic basin in 2005,and though they don’texpect a repeat of thedevastating 2004 multi-storm assault onFlorida, they do foresee a 30 per cent aboveaverage probability of major hurricanes makingmore landfalls on some part of the US coast. ByMilan Korcok

Releasing their annual Atlantic Seasonal Activityreport (for 2005), the Colorado State Universityresearch team, headed by William Gray, professorof atmospheric science, predicts that the 2005hurricane season, which begins 1 June, will haveabout six hurricanes, 11 named storms, 55 namedstorm days, three intense hurricanes (in the three tofive Saffir/Simpson scale range), and six intense

hurricane days.The memorable2004 season saw 15named storms, andnine hurricanes – sixof them intense.The four storms thathit Florida andadjacent statescaused $21 billion ininsured losses,covered by 2.2million claims. No

estimates are available for insurance losses in theCaribbean islands, also ravaged by the same storms– primarily Grenada, Jamaica, Dominican Republic,Grand Cayman and The Bahamas.Tropical weather systems become ‘storms’ when theirsustained circulating winds clock 35 miles per hour,and hurricanes when they reach 75 miles per hour.Head of the forecasting team, Dr Gray, has beenmaking his annual forecasts for 22 years and,according to most experts in meteorology, has inthat time achieved a remarkably accurate record.His forecasts are traditionally seen as a bible in the

Another active hurricane season predictedfor 2005

continued on p.27

In the UK capital, London, Metropolitian PoliceChief Sir John Stevens announced that a plot tocarry out a devastating terror attack on the city thescale of the Madrid train bombing had beenstopped. He said that terrorism was a major issuefor the UK and more poignantly he stated: “Therisk of an attack to London has not changed; anattack is still inevitable.” Exact details of the terrorists’ plans have not beenreleased as hundreds of people are to be put ontrial. “I can’t discuss it because of court proceedings,but, yes, we have stopped a Madrid.”The Madrid commuter train bombing on 11 Marchkilled 200 people and shocked the world with itsbrutality. It was a clear reminder that this sort ofterrorism post 9/11 was not just targeted at theUS, and was not a one-off atrocity, but part of anongoing campaign targeting several countries.It appears that although a large attack was preventedthere has been a string of other incidents that weresimilar, and British intelligence are battling againstterrorists’ plans on a disturbingly regular basis. Thelatest story circulating in the UK press is that Al-Qaeda is suspected of scheming a maritime attackinvolving a ship, but this is not easily confirmable.“We have had to work extremely hard, we’vethwarted attacks…” confirmed the Police Chief.

London thwarts‘Madrid’-style attack

The US consulate in the RedSea port of Jeddah wasattacked on 6 December bythe Saudi Arabian branch of al-Qaeda. Eight people werekilled in the shoot-out – fiveemployees at the consulate andthree of the gunmen, althougha fourth militant died later fromwounds.Western business people havebeen targeted in the regionsince 1 May and, so far, 43have been killed from theintensified campaign byterrorists. Companies involvingwesterners in Saudi have beenmoving staff in fear of attacks.In the meantime, the US issending special agents to propup security in Jeddah and othercities, according to AndrewMitchell, spokesman at the USembassy in Riyadh.

Al-Qaeda behindUS consulate attack

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Buying a martini in the New York AlgonquinHotel might just leave you shaken and stirredwhen you receive the bar bill. The hotel isnow offering a $10,000 martini to anyonethat feels like a luxury tipple. ‘What elixir ofingredients can ever justify this price?’ youmay well ask. The martini has a loosediamond at the bottom of the glass sodrinkers should be careful not to sup it downtoo quickly. On the first week of beingavailable there were no takers but the martiniis said to be the talk of the town. It’s not the kind of drink you can accidentally sliponto your hotel expenses for those worried abouta late night error of judgement. To order this martiniyou will need to first choose your diamond at least

72 hours before you can enjoy the beverageand you must meet with theserving staff in person soas the drink does not goto the wrong table.

Hotel offers$10,000 martini

A taxi driver in San Jose, Costa Rica, shotand wounded a man who was wearing aplastic Bin Laden mask as a ‘practical joke’.Leonel Arias was jumping out in front of driversin a narrow street in his hometown of Carrizalde Alajuela, 20 miles north of San Jose. The facthe was wearing the Al Qaida leader’s disguiseand carrying a pellet gun meant the taxi driverwas let off of prosecution as it was accepted bypolice the shooting had been an act of self-defence.The foolish prank had been a source ofentertainment for the man all afternoon, but whenhe jumped in front of the taxi he got a surprisehimself – two shots to the stomach. One thing’s forsure: Bin Laden wouldn’t last long in Costa Rica.

Man shot in BinLaden disguise

With America’s global popularity in question, itseems that some US travellers have been havinga hard time on their journeys to foreign shores.However, a company in the US has come upwith a way round this – a ‘disguise package’ forwould-be Canadians.The disguise package consists of a t-shirt andlapel badge bearing the traditional Canadianmaple leaf and a reference guide entitled Howto speak Canadian, Eh?, instantly turning the

Americans into pretend Canadians!Bill Broadbent, head of the firmwww.t-shirtking.com, said: “It wasnot meant as a slight against theUS or Canada. Some peoplemight not mind [the hostility] butothers just want to be onvacation. So we were jokingthat they could just go asCanadians and that just kind of

evolved.”

A man, who was unableto purchase a Qantas air

ticket from Los AngelesInternational Airport toAustralia because he didn’thave a valid credit card,

took matters into his ownhands by stripping naked and

running across the runway,eventually jumping onto a moving

jumbo jet. When cabin crew were alerted to what wasgoing on, the pilot stopped the jet and the manwas persuaded to get out of the wheel well. He

was then arrested for trespassing. An airport spokeswoman is quoted as saying:“This was an extremely dangerous thing to do. Ifhe had continued to cling in there with theaircraft taking off at over 320kmh, he might havefallen out and could have been sucked up by theengine. If he had survived that and was in thewheel well when the landing gear was retracted,he could have been crushed by the mechanism.And, if not, he very likely would have frozen todeath during the 15-and-a-half hour flight at9,150 metres whilst wearing no clothes.” As toprecisely why the man felt the need to get nakedis anyone’s guess!

Several Continental Airlines executives are beingcalled for questioning over a 44-cm long strip ofmetal that fell from a DC 10 aircraft on to therunway at CDG-Roissy airport only minutes beforethe Concorde flight took off and crashed on 25July 2000, the French daily newspaper Le Parisienhas reported. By Barbara Casassus from Paris

Quoting undisclosed sources, the report said thatJudge Christophe Regnard is also targeting theairline itself in his investigation into manslaughter,and that the move is equivalent to filing charges,even though these will not be specified until thefirst questioning is over. The metal strip from theengine hood seemed to have been repaired ‘in a

way that wasincompatible’with theregulations,and was madeof titaniuminstead of asoft metal, thereport said.The metalburst a tyre onthe Concorde,causing a pieceof the landinggear to piercethe fuel tank,which caughtfire.

Two previous examining judges, Michel Bergéreand Carine Tasmadjian, also found that the metalstrip did not comply with the regulations. The Concorde’s crash into a hotel at Gonesse inthe Val-d’Oise outside Paris killed all 113 passengersand crew, as well as four people on the ground. Ithelped signal the end to the Concorde’s career.Citing a source close to the case, the newspaperadded mysteriously that the US airline is not aloneto be under fire, and that others could be charged‘not only on the other side of the Atlantic’. Thatforeshadowed a French judicial report a few dayslater, which said that structural flaws in theConcorde also contributed to the accident andechoed some of the conclusions of a report fromthe French civil aviation board in 2002.Continental Airlines has denied all responsibility,however. “We strongly disagree that anythingContinental did was the cause of the Concordeaccident and we are outraged that media reportshave said criminal charges may be made against ourcompany and its employees,” said Continentalspokesperson Rahsaan Johnson. “We are confidentthat there is no basis for a criminal action and wewill defend any charges in the appropriate courts.”

Concorde crashmaybe manslaughter

Yet another train disaster has occured in India, thistime in the northern state of Punjab. In all, 28people were killed and 47 injured when twopassenger trains collided at Mukerian village.Railway officials and emergency services descendedon the site to help trapped passengers.“I heard a loud crash, almost a big blast. I ran out ofmy house to see smoke all around. Men andwomen from our village rushed to the accident sitewith ladders to try and get out as many people aspossible,” said eyewitness, Kamla Rani.“The cause of the accident is not known,” saidRailways Minister Yadav. An inquiry should soon beunderway to find out how this crash happened.India’s railways are largely outdated and manuallyoperated. There are consequently a relatively highnumber of train crashes, the most recent being inJune and involving a derailment near Bombay. Inthat incident, 14 people were killed.

28 die in Indiantrain crash

As Americans grow fatter, thenation’s airlines are forced tokeep pumping more andmore expensive fuel intotheir tanks to keep all thatblubber in the air and it’scosting a lot of money. MilanKorcok investigates

According to the US Centersfor Disease Control andPrevention (CDC), theaverage weight of eachAmerican flyer increased by10lb through the 1990s,requiring 350 million extragallons of fuel and costingairlines $275 million just forthe year 2000 – when jet fuelcost half what it does today.That represents approximately two per cent of alljet fuel consumed that year.The CDC warned that aside from the monetarycost, the extra fuel used to transport this extraweight added 3.8 million tonnes of carbon dioxideemissions and other pollutants to the planet’satmosphere.Dr Deron Burton, a co-author of the CDC report,published in the American Journal of PreventiveMedicine, said: “The obesity epidemic hasunexpected consequences beyond direct healtheffects. Our goal was to highlight one area that hadnot been looked at before.”Another study released by the CDC showed that

adult Americans are roughly an inch taller than theywere in 1960, but nearly 25lb heavier on average.Accordingly, the average weight for men aged 20 to74 was 191lb in 2002, and the average weight forwomen in the same age group was 164.3lb.According to the CDC, at least 65 per cent ofAmerican adults are overweight or obese,compared to 56 per cent who were overweight orobese a decade ago.Airlines are already aware of the need to fly lighterand are desperately trying to shed extra weight bydumping bulky magazines and other extraneousitems and replacing metal cutlery and heavyfurnishings with lightweight plastic. But paying

passengers present another problem.Most airlines see the task of carrying heavies aspart of the cost of doing business. However,Southwest Airlines now requires very largepeople to buy second seats. So far, it is the onlyone that does so and the determination aboutwho qualifies for a double seat is a judgmentleft to the ticket agent at the boarding counter.In 1995, the Federal Aviation Administration(FAA) average weight guidelines apportioned180 to 185lb per adult passenger depending onthe season (more for winter clothes), and 25lbfor each checked bag. But after the 2003 crashof a US Airways commuter flight at Charlotte,North Carolina, was attributed to excessweight at the back of the plane, the FAA added10lb to the average passenger weight estimateand 5lb for eachchecked bag.Airlines traditionally

use gross weightestimates based onpassenger numbers todetermine how muchfuel will be needed onany given flight.Suggestions thatpassengers be weighedon check-in haveoccasionally beenmooted in variousquarters, but no airlineappears willing to bethe first to try.

Fat flyers gobble precious fuel

GGRRAAPPEEVVIINNEECanadian disguisekit

Naked stowaway


NEWS6


NEWS 7

In a stunningturnabout, afederal jury hasruled that thedestruction of theWorld TradeCenter (WTC)’sTwin Towers byterrorist attackson 11 September2001 must beconsidered twoseparate events,and SilversteinProperties Inc.,the majorleaseholder at thesite, is thereforeentitled to $2.2

billion from nine insurers rather than the $1.1 billionan earlier court had decided upon. By Milan Korcok

The previous court action in May had ruled that thetower attacks constituted one occurrence. Reactingto the court’s decision, developer Larry Silversteinissued a statement saying that “the destruction ofthe Twin Towers by two separate airplanes at twoseparate times was two separate occurrences and…these insurers have an obligation to pay their fairshare to help make lower Manhattan whole again.”The $2.2 billion award is but part of the totalinsurance payout Silverstein was hoping for as thedouble occurrence verdict relates only to policieswritten by nine of the WTC’s two dozen insurers.Fifteen others, representing another $2.42 billion incoverage, were found liable for only oneoccurrence in another phase of the litigation. If the two separate occurrences verdict is upheld(appeals are considered likely) it virtually guaranteesthat Silverstein will have the wherewithal toconstruct the proposed 1,776-foot Freedom Tower,expected to be the tallest building in the worldwhen completed by 2009, and a second 65-storeyoffice building at the same site. Additional officebuildings have been envisioned by Silverstein andother investors.Originally, Silverstein had hoped for a $7 billionpayout from insurers based on his interpretationthat the two attacks justified two separate payouts.However, in the Phase 1 trial, a jury ruled that 15insurers and re-insurers had bound to coverageunder a form that specifically defined the TwinTowers destruction as a single event. That form waswritten by broker Willis Group Holdings and was

known asthe WilProp2000.Silverstein isappealingthat singleoccurrenceverdict.The nineinsurersbound bythe doubleoccurrenceverdict are Allianz A.G., $432.6 million; IndustrialRisk Insurers Unit of GE Insurance Solutions,$237.8 million; St Paul Travelers Cos, $210.6million; Royal and SunAlliance Group,$127.8million; Gulf Insurance Co, $64 million;Zurich American Insurance Co, $45.6 million; TIGInsurance Co. $9.1 million; Hartford FinancialServices Group, $2.5million; Tokio Marine and FireInsurance $1.6 million. The $2.2 billion award is seen as more than a cashinfusion into the Silverstein’s development plans. Italso offers momentum for private developers andinvestors who have remained shy of the WTCproject until now because of rising vacancy rates inlower Manhattan.Some of the insurers are considering appealing thetwo occurrences verdict. They also look forward toan appraisal process that will revisit the issue of lossamounts. Some insurers are looking for appraisalsto substantially lower the loss amounts, thus theirown liability.Officials have estimated that it will cost more than$9 billion to rebuild the trade center completely, acomplex that is owned by the Port Authority ofNew York and New Jersey. According to PortAuthority commissioners, Silverstein’s legal bills haveso far cost an estimated $125 million.Insurance experts have contended that the twooccurrences jury verdict may also have a profoundeffect on how insurance policies are developed andwritten. For example, the Florida hurricanes weretreated as separate occurrences even though theyripped through the same localities, devastating thesame properties, and did so only days apart. Hadthe cumulative damages occurred within 72 hoursthey would have been considered one event, andwould have saved property owners the cost ofmultiple deductibles.They also anticipate premiums for propertycoverage in the area will rise considerably if thetwo-occurrences verdict is upheld.

World Trade Center developer wins doublethe prize

Tourists to Cuba have beenadmonished to leave Americandollars behind and bring onlyeuros, British pounds, Swissfrancs or Canadian dollars forspending in this embargoedCaribbean nation. Approximatelytwo million international touristsare expected to visit Cuba thiscoming year. By Milan Korcok

As of 8 November, the US dollar,which had been used as legaltender throughout Cuba since1993 alongside Cuba’s peso, waswithdrawn from general circulation.After that date all businesses thathad accepted the dollar began taking only the so-called convertible peso in establishments operatingin hard currency.Convertible pesos bought by US dollars are nowsubject to a 10 per cent tax, but are not taxed ifbought with other currencies. Neither individualsnor companies will be able to make US dollardeposits at Cuban banks, but any accounts currentlyholding US dollars will be respected and can bewithdrawn in either convertible pesos or US dollars.The Cuban peso, used throughout the economy, isnot convertible in the world market and cannot beused in hard currency shops or businesses, makingit valueless outside Cuba.Banning the dollar from general circulation is parteconomic ploy and larger part political counter-punching by Cuba’s President Fidel Castro, whocontinues to chafe under the ever-tighteningAmerican embargo. What he calls: “America’simperialist economic warfare.”Recently the US Federal Reserve fined Swiss bankUBS $100 million for transferring newly printeddollar notes to Cuba. The island desperatelyneeded these to keep up its foreign currencyreserves and it has used them to buy food, fuel andmedicine.International economists have broadly characterisedCuba’s economy as a basket case, with much of theisland’s infrastructure in disrepair – especially so inthe wake of recent hurricanes, power and watershortages.Economists have reasoned that Castro’s ban on theUS dollar will help him siphon up millions ofgreenbacks that Cuban businesses and individualshave held privately, as they were given until 8November to convert them to pesos free of the 10per cent tax.Before that date Cuban mattresses were known tobe stuffed with US dollars – some ‘diverted’ fromthe $3 billion tourist trade, most collected fromremittances sent by relatives abroad, which allowedCubans to buy goods in hard currency shops theycouldn’t get in their peso-only economy.It has been estimated that the remittancesamounted to some $1 billion a year – the great bulkof from the US. It has been estimated that theCuban émigré population in the US totals some 1.3million. Castro has encouraged Cubans to ask thosesame relatives not to send US currency, whichwill be taxed 10 per cent if redeemed throughlegal channels, but euros, pounds sterlingor Canadian dollars instead.Cuba’s tourism minister ManuelMarrero said he does not expect themove away from the US dollar tomaterially affect the nation’s touristsor visitors, as three quarters arefrom non-US dollar countries – 28per cent from Canada, 40 percent from Europe, and seven percent from the UK. He said effortswould be made to make the eurothe standard issue currency in andaround Cuba’s six major beachresorts.

Cuban tourists toldto forget USgreenbacks

cases) to the minimum…We kindly ask you to informus before making the following operations –intravenous injection, investigation, X-ray…”Some of the local medical community, who havebanded together under the banner of the Red SeaDoctors Association (RSDA), are so infuriated bythis and other complaints that in an unprecedented

move they have decided to decline to treatclients of Remed. The RSDA has sent

out a letter to a number of touroperators, insurance and assistance

companies, informing them of their decisionnot to have any further dealings with Remed

Assistance.Remed Assistance, a Turkey

based assistance company,who are part of the IAG

(InternationalAssistance Group) are

accused by the RSDA ofalleged non payment of bills and

insistence on what the RSDA haveidentified as ‘cheap and poor quality treatment’.

Several of the doctors within the association havealready filed their own legal actions against Remed.

The association spokesperson, Dr Hesham Hamed,a director of El Salam Hospital, says that the RDSAalleges that Remed “give instructions [to doctors],which…if followed, would subject the doctors [andpatients] to major professional risk.”Remed flatly deny the charges. They say that they aremerely applying ‘best practice’ for cost containment onbehalf of their insurers. “All reasonable, pre-approvedand officially invoiced bills are paid by Remed. Fictiousbreakdown of services subject to tax evasion or againstthe Egyptian laws will never be paid,” defended AtillaErdag, Operations Manager of Remed. “Remed or anyother company cannot instruct doctors … As acompany (we) would never risk intermediating forpoor or unsatisfactory treatment that would end upwith customer dissatisfaction (sic) …” Remed also have said the actions of the RSDA have“in some sense … strengthened our relations withour partners … [who] are better convinced that weare effectively avoiding the overcharges, over-treatment, malpractice … to our partners benefit.”Whatever the truth of the matter, clearly the ‘bunfight’ is in full flow and accusations will no doubtcontinue to fly. There hasn’t been this much actionsince Cleopatra sent her fleet to Ephesus …


Bun fight at the Suez Canal

Larry Silverstein

Reverse insurancebiddingSoftware developed by Brent Bannerman aims toopen up the insurance-buying game, wherecompanies seeking insurance can show insurersexactly what they want and be told by insurancecompanies, through competing bids, what it will cost. Bannerman has been trying to sell his reverse-insurance buying package, IE-Engine, for years. Itworks by corporations using the software for writingup detailed insurance requests and submitting themover the Internet to insurance companies, whichthen bid on the contract for ever-declining prices.IE-Engine allows each of the bids to be rated onprice and service.“I couldn’t believe that in the era of the Internet,insurance purchasing didn’t have an openmarketplace,” Bannerman said. So far, the software is only configured for theemployee benefits sector, but it seems to be doingwell, and in light of the Spitzer probe, it might justtake off in other sectors.

Towergate and Folgate mergerTowergate Underwriting Group and The FolgatePartnership (an intermediary) in the UK are mergingto create The Towergate Partnership. The timetablefor the integration will be completed by the end ofMarch 2005, subject to regulatory approval. Peter Cullum, founder and head of both companies,commented: “I believe the old insurer/intermediarymodel of the 1980s is no longer able to meet thechallenges of the 21st century. Our ‘value triangle’,symbolizing our aim to deliver to all of ourstakeholders remains central to our continuingsuccess… Whilst there will invariably be some costsavings, the main benefit is one of leverage.”

Ebookers exclusivecontract awardedFollowing a competitive tender, ebookers.com, theonline travel site, has reappointed AIG Europe (UK)Limited as sole provider of the company’s range oftravel insurance products. AIG will also provideinsurance to the two other brands within the ebookersUK group – Travelbag and Bridge the World.These three travel websites all specialize in mid andlong-haul travel. Holiday and business travelinsurance has become an important part of theirproduct range and their comprehensive coverincludes single and multi-trip, annual, gap year,winter and adventure sports.

Crawford branchesout in SwitzerlandCrawford & Company International, Inc is pleasedto announce the expansion of its operations incontinental Europe, with the establishment of abranch office in Zurich, Switzerland. The company’sManaging Director of Continental Europe, MiddleEast & Africa, Mark Harman, said: “Some of our keyinternational clients are located in Switzerland…Webelieve that having a local office offering localservices in Switzerland will benefit our existing andpotential clients.”Switzerland, he went on to explain, has aninsurance market that is looking for innovativesolutions in the claims area. Crawford & Company,a wholly-owned subsidiary of Crawford & Companybased in Atlanta, Georgia, will be offering technicalclaims services, as well as claims solutions for marketparticipants that are confronted with higher volumesof lower value claims.

Fairness pledge

In the wake of Spitzer’s allegations against theinsurance industry, BC Group, LLC, has pledged toconsumers that they will be unbiased and notinfluenced by commissions paid to BC Group, LLC. John Cook, President of BC Group, announced thepublication of their ‘Fairness Pledge’ to travelinsurance consumers: “In today’s environmentconsumers need to know that we will always fairlydisplay travel insurance products on our site withoutbeing biased by the level of commission that wereceive from our partner insurance companies. It’sfor this reason we decided to publish our owncompany policy as a pledge to our current andfuture clients.”The Fairness Pledge states: “BC Group, LLC … willnot steer you to plans that offer us higher or bettercommissions. At all times we will fairly andaccurately show all plans from our partnercompanies so that you will be able to choose based

on your needsregardless oftheir profitabilityto ourcompany. Wewill make nodistinction basedon ourcommission.”


COMPANYBRIEF8

Flying into a rageThe UK’s first air rage insurance cover has beenlaunched by Chubb Insurance after the companycommissioned a report on the growth, causes andimpact of this often frightening and dangerousconduct, defined by the International Air TransportAssociation as ‘unruly, disruptive and potentiallycriminal behaviours by a relatively small minority ofairline passengers’. The report was written by tworenowned criminal psychologists and was part of alarger review by the company on the risks faced byits high net worth clients. Consistent with findings from British Airways (BA),incidence of air rage has increased dramaticallythroughout the late nineties and into the twenty-firstcentury. BA’s figures were, however, slightly moredramatic, showing a 400 per cent increase in suchincidents during the three years since 1995 whensmoking was banned on flights. Despite theseshocking statistics, up to 10 per cent of the world’sairlines do not require air rage incidents to bereported.Other factors attributed by Chubb’s report tounruly behaviour aboard airplanes include excessivealcohol consumption, flight delays, dissatisfactionwith in-flight service and issues regarding recliningseats. It also suggests airlines provide better trainingfor their staff for dealing with disruptive passengersand suggests some tips of their own for how to dealwith air rage perpetrators.Professor Canter of the University of Liverpool, oneof the report’s co-authors, commented: “Whileviolence on all forms of transport is increasing, airrage has greater potential to cause disruptionbecause of the safety issues associated with airtravel and the isolation of passengers and crewduring the flight.”Chubb’s policy includes up to £10,000 for expensesrelated to an air rage incident including medicalexpenses, psychiatric services, rest andrecuperation.

A burgeoning market for individual health insuranceis inexorably being carved out of America’shealthcare system, monopolized until now byemployer-based group plans. Milan Korcok reports

According to a newsurvey released by theKaiser Family Foundationthink tank, current effortsto shift consumers intotax advantaged medicalsavings accounts can onlyaccelerate the growingtrend to buy individualhealth insurance productsdirectly from insurers.Tax-deductible medicalsavings accounts have been a consistentcentrepiece of the Bush Administration’s healthreform policy.In 2002, only about 6.6 per cent of the non-elderlypopulation (16.5 million people) were covered byindividual health insurance, while 65 per cent(163.7 million) were covered by employer-basedgroup plans. But growing unemployment, whichstrips people of their health insurance, and theinability of small and medium-size employers tokeep pace with soaring health costs, are changingthis balance and forcing individuals to become theirown buyers.

Speaking at the release of the Kaiser report, MitchRoss, Vice President of Producer Sales for BlueShield of California, said that 10 years ago, abouttwo-thirds of Americans received their healthinsurance through an employer, but today that

number is closer to 50 percent; and 15 years ago abouttwo-thirds of early retirees notyet eligible for Medicare wereguaranteed health coverageuntil age 65, while now, onlyabout a third have thatguarantee, he said. “These arepeople who are falling throughthe gaps between employerinsurance and Medicare (thefederal health insurance

programme that kicks in at age 65), who need toturn to the individual marketplace.”Ross said also that nationally, about half the smalland mid-size employers are reducing theircontributions toward health insurance for theiremployees and their dependents. “In 2004…healthcare costs are expected to go up 12.5 maybe14 per cent,” and that is more than employers invarious surveys said they can absorb, said Ross.Consequently, 80 per cent of employees and 30per cent of employers believe they’re going to haveto make ‘dramatic’ changes in their health benefit

Market for individual health insurancegrows in the US

continued on p.26

With 46 million international visitors expected inthe United States in 2005, the most sinceSeptember 11, 2001, the soaring cost of health careis forcing travel insurers to demand moreaggressive cost containment of the servicesprovided to their customers.

Why, they say, is health care so much moreexpensive in the U.S. than in other countries? Why,when you get a bill from an America hospital arethe prices so high? And what can be done about it?

Understanding Local MarketsAmericans spend more on health care than anyother industrialised nation —about 15 percent oftheir Gross Domestic Product, or $6,176 per capitain 2004. That’s 150 percent more than most otherdeveloped nations, with the next highest spenders,Germany, Switzerland, Canada and France clusteredin the 10 to 11 percent range of GDP. Unlike other industrialised countries, the United

States pays for its health care largely from privatesources—private health insurance, professional feesand service charges, deductibles, co-payments, out-of-pocket spending. Fifty-five percent of America’shealth care is paid for this way; only forty-fivepercent is paid by publicly-financed programs likeMedicare. It is essentially a market-driven, supplyand demand system, with feesand charges varying from regionto region, within specialties, andfrom hospital to hospital. Asingle cholecystectomydiagnosed and performed inManhattan might well financetwo or three in agriculturalNebraska. Since 1996 Global Excel hasbeen dealing with suchdisparities in structuringcontracts designed to giveinternational insurers access tothe cost containmentadvantages, savings, re-pricing,medical case management,claims analysis and 24 hourassistance services that are routinely available toAmerica’s domestic insurers.“At Global Excel Management, it is because weunderstand these dilemmas that we can protect ourclients from the pricing volatility in Americanhospitals and clinics and safeguard their bottom line

while doing business in this potentially hazardousmarketplace,” says Brian Allatt, Global Excel CEO.

Gaining Negotiating PowerAll American hospitals, whether for-profit or non-profit, have listed “retail” rates but most willnegotiate substantial discounts for their bestcustomers. The biggest discounts go to those whocan provide them with the most profitable streamof patients, sometimes as a trade-off for receivingpreferred provider status in a given region or area. In the last three or four years, with demand foremergency room and inpatient beds nearing orexceeding capacity in many locations, hospitals havebecome very tough in their contract negotiations,and discounts must be hard fought. In spite of thesechallenges, substantial savings are still achievable.

Contain. But Manage Well.Obtaining discounts is only part of costcontainment. Unravelling diagnostic coding andmaking sure the fee charged reflects the severityand extent of the condition being treated isfundamental to effective case management.Delivering patient satisfaction is paramount. But so isthe ability to intervene and control treatmentmeasures according to medical necessity andreasonable treatment expectations. For example, apatient entering an emergency department in NorthDakota with a

complaint of

chestpain, at aprojected treatment cost of $10,293 for thatdiagnostic code, could very easily graduate to a

cardiac catheterization with stent at$54,584, or even to a coronary bypassat $109,233 if case management is lax.Of course, the charges for that sameclinical progression in California wouldbe even more astonishing with the chestpain diagnosis being charged at $30,453,the stent at $116,726, and the bypass at$278, 656. These are listed retailcharges—not the net fees that should beachievable by negotiation.

American Hospitals: Provide More,Charge More, Keep More.Hospitals absorb the greatest share ofany nation’s health care costs. Accordingto the Organization for EconomicCooperation and Development,American hospitals cost three timesmore per bed day than hospitals in otherindustrialised countries. Studies showthat is attributable largely to the greaterconcentration of technology, personneland services brought to bear on patientadmissions. The median staff to bed ratiofor a patient admitted to hospital is 4.6 inthe United States while for OECDcountries it is 2.1. Though mostAmerican

hospitals are non-profitinstitutions, they are privately funded, notgovernment owned. Thirteen percent are for-profit,investor-owned institutions that are expected toreturn satisfactory dividends to their owners. Thenon-profits may not be expected to returndividends, but if they intend to remain competitive,

they must not operate in the red for too longeither. Regardless of their ownership status, all hospitalscompete with each other for patients, for preferredstatus in their communities, for technologicalsuperiority, for qualified personnel, for financial

stability. All hospitals must also deal with theproblem of uncompensated care, whichaccording to the American HospitalAssociation, amounts to between 5 and 6percent of a community hospital’s totalexpenses. With about 44 million Americansunprotected by health insurance, hospitalsmust look to other sources, such as insuredpatients—domestic and foreign-- to offsetthose substantial deficits.

Being In The Right Place.Forging comprehensive networks of hospitalsand doctors that can be immediately accessibleto millions of travellers from all continentsrequires an intimate knowledge of the overallmarketplace, local institutions, and the realitiesfaced by insurers and, above all, their clients.Put another way, it means having the rightpeople on the ground, in the right place, at theright time. “By representing 65 clients in over 20 countriesaround the world, and managing approximately55,000 travel-related emergencies per year,we recognize clearly how important it is toknow the local hospital market in Puerto Plata,in the Dominican Republic, as well as inCharleston, South Carolina,” says John Spears,Global Excel vice president of sales andmarketing. Since 1996, Global Excel has focussed onachieving the precise balance betweensuperior patient satisfaction and maximum costcontrol in the volatile American marketplace,as well as the expanding markets in Canada,Mexico and the Caribbean.

Containing Health Costs in America

“Global Excel has knowledge and expertise inthe highly complex U.S. healthcare market thatmost British travel insurers see as shark infestedwaters. It would take us many years to getnear their level of knowledge or to replicatetheir relationships with healthcare providersand PPOs. Global Excel makes sure we payreasonable charges for services rendered. Theyensure the needs of our customers are met,but always with an eye to the bottom line.”

Andy JugginsDirect Line Group Limited.

Croydon, Surrey, UK


ADVERTORIAL 9


INSURANCEMATTERS10

Australia’s non-life insurance industry has beengiven a stable outlook for 2005by ratings agency Standard &Poor’s. “Advances inunderwriting quality, operationalefficiencies and the pressurefrom shareholders forappropriate returns will ensureunderwriting profits aremaintained in 2005,” said CreditAnalyst, Michael Vine. “It isunlikely that the insurance cyclelows of past years, driven byprevious ownership and marketdynamics, will be repeated inthe next downward cycle.”

Standard & Poor’s noted: “In 2004, the non-lifeinsurance industry enjoyed favourable conditions,with premium rates sill at healthy levels, relativelylow claims frequency and continued control ofexpenses and claims cost size. Competition andincreased capacity in the commercial lines andcorporate property sectors continues to placepressure on premium rates, but personal lines areexpected to hold firm.”

Australia holds firm

American International Group (AIG) has agreed topay £126 million to help settle allegations that thecompany helped clients to commit accountingfraud, but it will avoid criminal prosecution.AIG will pay $46 million in an accord with theSecurities and Exchange Commission (SEC) tosettle allegations of civil securities fraud over several2001 transactions it made with PNC FinancialServices Group Inc. that allegedly helped theregional bank artificially inflate its earnings. It has alsoagreed to pay $80 million in an accord with theJustice Department that allows it to avoid

prosecution and resolve an investigation into thePNC matter and one involving mobile phonedistributor Brightpoint Inc. AIG Chairman Maurice ‘Hank’ Greenberg, in astatement issued by the company, said: “Thiscomprehensive settlement brings finality to theclaims raised by the SEC and the Department ofJustice. The role of the independent consultantcomplements our own transaction reviewprocesses. We welcome this enhancement to ouroverall risk management and control mechanisms.”

AIG escapes criminal prosecution

Terry Probert, the head of the Life and Healthdivision of Swiss Re, said that South Korea inthe Asian insurance market (which has a betterposition over Japan and China) will grow byfive to six per cent in the next five years.“Japan is an already developed country ininsurance penetration and density. China israpidly growing with very high expectations,but its uncertainty is much higher. Korea issomewhere between them,” he stated.As of December, Swiss Re works with 10non-life insurers and 14 life insurers in Korea,but has no new business links underconsideration.“Asians, including Koreans, traditionally prefer lifeinsurance to non-life insurance. But, surprisingly, itsinsurance market has showed great potential tobecome the second largest in Asia after Japan andseventh largest in the world… Changingdistribution channels such as bancassurance,telemarketing and home shopping will be keygrowth drivers for life and non-life insurance firmsand, in turn, for reinsurance firms,” Probert added.

Korean insurancemarket has promise Spitzer has issued another set of subpoenas to

insurers, this time investigating whether theyimproperly dropped professional liability cover forlawyers. St Pauls Travelers, CAN Financial, GE’s EmployersRe, Hartford Financial, American Financial and ArchInsurance have all received additional subpoenas. The insurers involved have passed no commentapart to say that they will co-operate fully with theAttorney General’s investigation.

Yet more subpoenasurich Financial Services Group has announced thatZC Specialty Insurance Company, a US subsidiaryof Zurich, has reached a comprehensive

settlement with the trustee for the Senior LivingProperties Trust, resolving all pending litigationbetween the parties arising from the bankruptcy of theSenior Living Properties nursing home chain operatingin Texas and Illinois. This settlement agreement issubject to approval by the US Bankruptcy Court forthe Northern District of Texas.

.M. Best has announced that it has assigned afinancial strength rating of B+ and an insurercredit rating of bbb- to Lebanon-based Arab

Reinsurance Company S.A.L. (Arab Re), with theoutlook on both ratings stable. Best indicated that itexpects Arab Re to generate profits between $3 and$4 million in both 2004 and 2005.

ondial insurance company has been grantedauthorisation by the Financial ServicesAuthority in the UK for the provision of non-

investment insurance contracts, including motorwarranties and roadside assistance.

ortis Insurance business’s net operating profitmore than doubled from €411 million to€996 million in 2004. Excluding Assurant and

Seguros Bilbao, net operating profit increased from€150 million to €915 million.

.M. Best has affirmed the financial strengthrating of A- (excellent) for Korean ReinsuranceCompany with a stable outlook. Best said that

the rating was deserved due to the company’scontinuous growth in absolute capitalisation, itsexcellent operating performance and dominantmarket position in the Korean reinsurance industry.

rudential Plc, the life insurer, has won a licenceto operate in Shanghai – its fourth Chineselicence. Asia is Prudential’s fastest growing

market and, with its Chinese joint venture partnerCITIC, already has life insurance operations inBeijing, Guangzhou and the western city of Suzhousince launching there in 2000. The Shanghai branchis expected to open in the first quarter of 2005.

merican International Group (AIG)’ssubsidiaries American Home AssuranceCompany and AIU Insurance Company will

purchase the insurance portfolio of the Royal &SunAlliance (RSA) branch operations in Japan. Thepurchase price is £92 million, and AIG expectsongoing annual gross premiums to be 11 billion Yen.

quitable Life, the troubled insurer, is to spend£260 million to purchase about 80 per cent ofthe bonds it issued in 1997 at less than their

normal value in an attempt to save £23 million ayear and cut its debt.

wo hundred new jobs are being created inNorwich Union’s call centre in Perth, Scotland,which deals with customers who have taken

out insurance through the insurer’s relationship withsupermarket Asda.

he amount of capital to underwrite business atLloyd’s is to be reduced for the first time since1999. Its capacity is expected to be a few

percentage points lower than this year’s record£14.9 billion.

he Association of British Insurers (ABI) is callingfor a reform in pensions that would givepeople the cash to invest in personal and

company pensions. The ABI, unlike others, wants tokeep a reformed second state pension rather thanscrapping it. Abolishing contracting-out “would havemany severe disadvantages,” the ABI said.

s from 2005, Munich Re will comply with allthe recommendations of the German Codeof Corporate Governance with one

exception: it will not be disclosing the compensationof the members of its Board of Managementindividually, because it does not consider suchdisclosure to be appropriate.

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The US Insurance Information Institute (III)’ssurvey of prospects for the industry in the currentand coming year has revealed that the effort torecover from its worst-ever performance in 2001was hampered by the hurricanes of 2004,transforming what would have been theindustry’s best year in decades into a breakevenperformance. In 2005, analysts predict much the same as 2004.The poll also shows that analysts uniformly expectpremium growth to slow in 2004 (to roughly halfof what it was in 2003, on average) and for thatdeceleration to continue in 2005. Net writtenpremiums are thought to come in at around 3.4per cent in 2005, down from an estimated 4.8per cent in 2004.

The combined ratio, which is the ratio of lossesand expenses to premiums, for 2005 is projectedto be 99.0, little changed from the 100.0estimated for 2004 and the 100.1 recorded in2003. The unfortunate side of this is, hadcatastrophe experience in 2004 been ‘normal’,the year’s combined ratio would have been inthe neighbourhood of 95.0 – its lowest levelsince 1972.While the survey results show some expectedimprovement, the bottom line is that the industrywill still be paying out almost exactly the sameamount in claims and associated expenses as itearns in premiums. The failure to get theTerrorism Risk Insurance Act extended in 2004was a major disappointment. In the minds of insurers, 2004 is likely to beremembered as the year in which New YorkState Attorney General Eliot Spitzer initiated aninvestigation of certain insurance industrypractices. The impact of this investigation is stillunknown. However, insurer and broker expensesare certain to rise in 2005 as compliance costsincrease as new regulations come online and finesand penalties are levied and paid.

Property and casualtygrowth slows down


INSURANCEMATTERS 11

As New York Attorney General Eliot Spitzerexpands his investigation into insurance companykickbacks and payoffs, insurers, brokers and stateregulators are predicting a wave of industryreforms, chief among them total transparency anddisclosure of fee payment arrangements betweenall parties. By Milan Korcok

Emphasizing the potentialimpact of Spitzer’s probe,Chairman and CEO of AIG,Maurice Greenberg, told abriefing of insurers in NewYork that large brokers maysurvive but they will have tobe ‘leaner’ and moreresponsive to the businessinterests of their clients. Helikened what was happening inthe industry to the shakeoutamong airlines.“The old model firms are inbankruptcy or constantlyworking on how to cutexpenses,” said Greenberg.“The new model – the JetBlues of the world – areleaner, working less fees andcommissions and doing quitewell.”He said also that the disclosure of brokercommissions and contingencies would become therule rather than the exception in the industry, andhe predicted the end of ‘tying’, the practice bywhich brokers tie placement of business withinsurers to a promise that those insurers will usethe broker for re-insurance.In the meantime, Spitzer’s office continued to rollout subpoenas to scores of insurers andbrokerages, seeking further information in thecontinuing investigation, which began when theAttorney General sued the world’s largest insurancebroker Marsh & McLennan on 14 October for bidrigging, price fixing and accepting contingencycommissions from insurance companies in returnfor placing business with them.Spitzer, who in the wake of publicity generated byhis investigation recently announced his intention torun for Governor of New York on the Democratic

ticket, has also subpoenaed records of Aon Corp.,the world’s second largest insurance broker, but hasnot made any specific allegations against it. AonCEO Patrick Ryan denied any wrongdoingcomparable to that charged against Marsh. He told the Chicago Tribune: “I would defy you to

find one (Aon broker) who would say they everplaced business” by steering clients to insurancecompanies that paid Aon any contingency orincentive commissions. Following his interview withthe Chicago Tribune (of which he is a director), Ryanissued a statement that some of Aon’s employeeshad violated the company’s business code and aninternal review was underway.Though insurers, brokers and even regulators werediligently lining up to condemn the bid rigging andkickback practices charged by Spitzer, many werealso recoiling at the way Spitzer levelled such abroadside against the industry generally.Ernst Csiszar, President and CEO of the Propertyand Casualty Insurers Association of America, andimmediate past president of the NationalAssociation of Insurance Commissioners, criticizedSpitzer’s attack on the insurance industry as awhole. “To besmirch an entire industry because ofthe works of a few bad apples” is a bad approach,

he said.“Filing lawsuits that significantly reduce the marketvalue of individual corporations and entire industries– damaging millions of consumers and tarnishing thereputation of the vast majority of ethical businessprofessionals in the process – is not my idea of

consumer protection,” he told ameeting of the InternationalInsurance Foundation.A fervent critic of the slowness withwhich states have enacted regulatoryreform, Csiszar said the“fragmentation of insurance marketsis neither efficient nor effective.When a company has to file over350 versions of the same form inorder to apply to sell one newproduct in 50 different jurisdictions –and it then takes some states 18months to approve the product –clearly, we have a problem.” He said, however, that the industryshould stay focused on fixing thestate-based regulatory system andnot give way to pressures fromSpitzer and his advocates to imposedfederal charters and a federalregulatory system over insurers –who have historically been regulated

at the state level.Csiszar also urged the industry to push ahead withthe State Modernization and RegulatoryTransparency Act, called the SMART Act, draftfederal legislation which, if enacted, would makesweeping changes to the state regulatory systemwhile still keeping regulation in state and not federalhands. Legislators should now consider additions tothe SMART Act that would add the transparencyand disclosure features being sought as a result ofthe Spitzer investigation, he said.In the meantime, the National Association ofInsurance Commissioners is racing ahead to adoptan amendment to its Producer Licensing Model Actthat would tighten disclosure of commissions andother payments made to insurers by brokers. At present, there are two sections to the proposedamendment:• Any insurance producer or related business entity

Insurance industry regroups in wake of Spitzer allegationsStandard & Poor’s, the rating agency, has decided toretain a stable outlook on the personal lines sectorof the insurance industry and an improved outlookdistribution for personal lines insurers in the US. “Although earnings prospects for the first six monthsof 2005 appear favourable for the personal linessector – with earned premium growth, continueddeclining loss frequency and lower unfavourablereserve development leading to improved profitability– signs of increased competition suggest the operatingenvironment for this sector was approaching a cyclicalpeak in 2004,” noted credit analyst Polina Chernyak.“Personal lines insurers have managed to turnadversity into strength over the past four years,emerging form a period of weak underwriting resultsand investment losses all the stronger for havingsharpened pricing and risk management.”Stronger pricing and higher premiums are set toimprove the personal lines sector, but Standard &Poor’s does not think this is enough to carry thesector to a positive ratings outlook in the year 2005.

Personal lines stable

Private Finance Initiative (PFI) companies in the UKare to be spared from having to obtain authorisationfrom the Financial Services Authority (FSA), savingthe government from higher costs for PFI projects. Under new FSA rules, anyone arranging insurance onbehalf of a third party, advising on its sale or purchaseor assisting in its administration, would need to beauthorised to trade by the FSA. As companies set upto build and operate PFI assets arrange insurancecover not just for themselves but often for public

sector bodies such as local authorities that award thecontracts and subcontractors, it was thought that theytoo would need FSA authorisation.However, the FSA has recently issued newguidelines, which state that such companies areexempt from the regulations – providing the specialcompany is not being paid to arrange insurance forthe public sector or subcontractors. The FSA’s regulations are part of the EuropeanCommission’s Insurance Mediation Directive.

FSA excuses PFI companies Regulators in the Netherlands have said thatan investigation, similar to the one carried outby Eliot Spitzer in New York, into why Dutchfinancial services companies pay brokers feesto promote their insurance polices tocustomers could commence in the new year.“At this stage this is not an investigation, it is aconsultation,” Netherlands CompetitionAuthority spokeswoman Barbara Roest said.“We could still say that we will start aninvestigation if it appears that competitionrules have been violated.”

Dutch threateninvestigation

Spitzer makes pitch for GovernorWhile insurance industry executives werechurning over his investigative tactics, New YorkAttorney General Eliot Spitzer was eating chicken,rice and asparagus along with 1,100 supporterswho paid $1,000 each to hear him announce hiscandidacy for the governor of the state in 2006.Spitzer, a darling of Democrats who drool atthe prospect of regaining the governor’s officefrom Republican George Pataki, already hadabout $7.5 million in his campaign accountbefore the fundraising dinner.Those in the know think Spitzer has a goodchance of getting the Democratic nomination ifhe can only set aside his aloof, prosecutorialmanner. In making his pitch to the converted,Spitzer said that at the core of everything hehas done as Attorney General was the impetusto protect citizens from fraud and dishonesty.

continued on p.24

Jardine Lloyd Thompson (JLT) has said that it willkeep consultant Keith Rutter, despite his fine formisleading the Financial Services Authority (FSA). Mr Rutter was fined £20,000 for breaching twoFSA regulations during 2001-2002, when he wasChief Executive of insurer The Underwriter. Hewas found to have breached premium incomelimits. “Under its former management, TheUnderwriter took steps that enabled the firm tocircumvent a regulatory requirement set by theFSA. Despite regular discussions between the FSAand the firm, these steps were not mentioned bythe firm. This is unacceptable and in breach of ourprinciples,” the FSA said, When questioned regarding Mr Rutter’s currentposition, JLT said: “The FSA penalty relates to amatter that happened in the past and is a matter forKeith Rutter, not for JLT.”

Fine consultant kept


INSURANCEMATTERS12

utch financial services group ING is to cut its88 per cent stake in Polish ING Bank Slaski to75 per cent.

tandard & Poor’s Ratings Services announcedthat it has assigned its AAA financial strengthrating and a stable outlook to AIG Europe

(Netherlands) N.V.

wiss Re has announced that the Australianbranch of Swiss Reinsurance Company willassume its Australian and New Zealand

property and casualty reinsurance and insuranceliabilities. This will become effective 1 January 2005.

rawford & Company has received a subpoenafrom the State of New York, Office of theAttorney General, Eliot Spitzer, requesting

information of the company in connection with aninvestigation Spitzer is conducting. The subpoenaseeks various documents related to the operationsof the company.

irginia Financial Group, Inc. announcedrecently that Bankers Insurance, LLC, aninsurance agency in which Virginia Financial

Group, Inc. (VFG) holds a 5.5 per cent interest,intends to acquire Cabell Insurance Associates.

XIS Capital Holdings Limited’s Board ofDirectors has approved the repurchase of upto $350 million of its common shares. The

repurchases are expected to be effected from timeto time in open market or privately negotiatedtransactions, depending on market conditions.

.M. Best has affirmed the financial strengthrating of B++ of Panama’s CompaniaInternacional de Seguros, rating outlook stable.

The rating acknowledges the company’s improvedreserving practices and expansion initiatives and is aresult of the management’s apparent commitmentto effective control systems and focus on operatingresults.

NG Canada and Allianz Group have finallyannounced the closing of their previouslyannounced definite share purchase agreement

for the acquisition by ING Canada of Allianz’sCanadian property and casualty insuranceoperations. Allianz will retain its Canadian industriallines business. The CAN $370 million needed forthe transaction comes from the proceeds of theplanned initial public offering of ING Canada shares.

E expects to deliver double-digit earningsgrowth in fourth quarter 2004, 2005 and forthe foreseeable future, GE Chairman and

CEO Jeff Immelt told investors at the company’smeeting on its outlook for the coming year.

apfre, the Spanish insurance company, isstudying a possible bid for Real Seguros, aBrazilian unit of ABN AMRO. No decision

had been made about the price of a possibletransaction.

onument UK, part of the Primary Group, hasacquired the personal lines schemes andfacilities broker Median Insurance

Management. The Median business will form a newdivision within Monument.

tandard & Poor’s has withdrawn its A insurerfinancial strength and counterparty credit ratingson Swiss Re Australia Ltd, a subsidiary of Swiss

Re. It comes after the company’s announcement thatfrom 1 January 2005, the Australian and New Zealandproperty and casualty reinsurance and insuranceliabilities of Swiss Re Australia Ltd will be transferred tothe Australian branch of Swiss Reinsurance Co.

s of 1 January 2005, Benfield, the reinsuranceintermediary and risk advisory business, has pledged itwill fully disclose its compensation on all US property

and casualty treaty cover notes. It will also disclose to itsreinsurance customers all material relationships thatBenfield has with the customers’ reinsurers. The companybelieves its disclosure policy, in the wake of Spitzer, will bethe most extensive in the industry.

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Standard & Poor’s Ratings Services has issued anew report indicating that its ratings on European

insurers have continuedto stabilize during 2004.“Only five out of the 20groups covered in thisreport continue with anegative outlook,compared with just fivestable outlooks back inMay 2003,” noted S&Pcredit analyst HansWright.The agency stated thatthe results for the firstnine months of the yearshowed an improvedperformance against

2003, which were achieved against stabilized equitymarkets, rising interest rates, hard pricing andbenign claims experience in Europe.However, Wright cautioned: “Such favourableconditions make it more difficult to identify genuineimprovement in underlying risk management.” Hewent on to say that ratings had stabilized asmanagement teams have taken corrective action byreducing risks and raising several billion euros morecapital via debt and equity issues and asset disposals.S&P concluded that the knock-on effect forEuropean insurers of the Spitzer investigation is notyet entirely clear, but European regulators havealready responded. It is probable, S&P says,however, that brokers will be affected more by thisinvestigation than insurers. The ratings service isclosely monitoring developments for all Europeaninsurers and reinsurers with exposure to UScommercial lines business.

European insurerratings stabilize

On the 11 December 2004, China removedgeographical and product restrictions on existingforeign companies and their joint venture partnersunder its accession to the World TradeOrganisation – meaning that foreigners willbe able to sell group insurance in the countryfor the first time. The new companies will, however, first haveto apply for licences to operate. “I don’t thinkit is going to happen overnight … but overthe next six to 12 months, you are going tosee a lot of activity,” said Stuart Leckie, aHong Kong-based consultant. China is now the third largest insurancemarket in Asia, after South Korea, which issecond, and the leader Japan. However, thepremium growth, which was 45 per cent ayear between 2000 and 2003, has sloweddown recently, and is expected to averageout to 15 to 20 per cent in coming years. The Chinese insurance sector is dominated byChina Life Insurance Co. Ltd, which controls morethan half the country’s life insurance and propertyand casualty insurance. Currently, the majority ofthe 14 per cent share of the market held byforeigners is held by AIG.

China’s insuranceliberalisation

Reports of a ‘compensation culture’ hitting the UKhave been exaggerated according to thegovernment’s top lawyer, Lord Falconer, as heattacked insurers for using the hypothesis as anexcuse to raise premiums.Lord Falconer has pledged to clamp down on‘claims farmers: who encourage people to sue forbig payouts’. “All too often, increases in premiumsor the refusal to provide cover are unjustifiablyblamed solely on a rising number of claims or the‘compensation culture’, which in turn helps fuel theperception,” he said. He has advised claimsmanagement companies to clean up their act orface government regulation. He also advised against using adverts to encouragepeople to bring claims against medical staff.Apparently, one advert in a hospital featured awoman looking adoringly at a sports car, whichread: “I have always wanted one of those and nowI have had an accident, I can have one.”“The level of media coverage that surroundspersonal injuries claims has created a myth aboutthe rise in their numbers and there certainly is adegree of sensationalism about it, but theunderlying trend is that claims numbers are falling,”comments David Stephenson, FinancialServices Analyst at Datamonitor. “Sincethe demise of The Accident Group(TAG) and Claims Direct, there hasbeen a definite contraction in thenumber of spurious claims beingsubmitted to insurers.”The Association of British Insurerswelcomed the government’s plans totackle claims farmers, but said thatliability insurance premiums had risenin recent years because of thepressures of claims costs and fallinginvestment income.

UK compensationculture exaggerated

The US Insurance Information Institute (III)’s surveyof prospects for the industry in the current andcoming year has revealed that the effort to recoverfrom its worst-ever performance in 2001 washampered by the hurricanes of 2004, transformingwhat would have been the industry’s best year indecades into a breakeven performance. In 2005, analysts predict much the same as 2004.The poll also shows that analysts uniformly expectpremium growth to slow in 2004 (to roughly halfof what it was in 2003, on average) and for thatdeceleration to continue in 2005. Net writtenpremiums are thought to come in at around 3.4per cent in 2005, down from an estimated 4.8 percent in 2004.The combined ratio, which is the ratio of lossesand expenses to premiums, for 2005 is projectedto be 99.0, little changed from the 100.0 estimatedfor 2004 and the 100.1 recorded in 2003. Theunfortunate side of this is, had catastropheexperience in 2004 been ‘normal’, the year’scombined ratio would have been in theneighbourhood of 95.0 – its lowest level since1972.While the survey results show some expectedimprovement, the bottom line is that the industrywill still be paying out almost exactly the sameamount in claims and associated expenses as itearns in premiums. The failure to get the TerrorismRisk Insurance Act extended in 2004 was a majordisappointment. In the minds of insurers, 2004 is likely to beremembered as the year in which New York StateAttorney General Eliot Spitzer initiated aninvestigation of certain insurance industry practices.The impact of this investigation is still unknown.However, insurer and broker expenses are certainto rise in 2005 as compliance costs increase as newregulations come online and fines and penalties arelevied and paid.

Property and casualtygrowth slows down

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Food translation Language translation cards for food intoleranttravellers are available from a clever companycalled SelectWisely, who now even have theneeds of lactose intolerant folks covered.Each wallet-size laminated card translates phrasesessential for those with food allergies. Forexample, people who are lactose intolerant wouldcarry a card which translates the phrases: “I amallergic to milk and all milk products,” and “Doesthis food contain any milk or milk products?” intoany of 12 different languages, including severalforms of Chinese, Portuguese, Russian and Greek. According to the National Institute of Diabetes and

Digestive and Kidney Disease, between 30 and 50million US citizens are milk intolerant. “Dairy products arefound in so many foods that they are difficult to avoid,”says Pam Ahlberg, President of SelectWisely. “Milk, butterand cheese are in many sauces, pasta dishes, bakedgoods and entrees. Our new Lactose Intolerance cardsare designed to help travellers communicate to foodvendors, grocery clerks and restaurant staff the specificfoods and food ingredients they need to avoid.”Cards are also available for vegetarians, and gluten-freeand other food allergy cards of differing tones can bepurchased to indicate the severity of any specific allergy.

SARS vaccine shows promiseA new vaccine that could lead to a breakthrough inthe prevention of SARS has ‘passed the first hurdle’in human trials. The Chinese government receivedwide criticism from international health bodies forcovering up the outbreak when it began, so it’s fittingthat China is now at the forefront in the battleagainst SARS.“We have finished our first-phase clinical test in linewith international vaccine-testing requirements,” saidthe director of the research team, Yin Weidong.There are serious concerns that SARS could have an

annual cycle like flu and so efforts to produce avaccine have been rigorous. More than 100scientists joined China’s research programme to takepart in the development. Over 10 different projects to produce an effectiveSARS vaccine are underway globally; four based inthe US and Canada, which will go into clinical trialsany time now.SARS infected over 8,000 people around the worldin 2004, and 800 people have been killed by thevirus since 2002 when it first emerged in China.

Russia faces AIDS crisisRussia faces an AIDS crisis the scale of which dwarfsthat of any other country in Europe or central Asiaand the government is not responding. The federalgovernment spends the same amount on its nationalbook publishing as it does on fighting the AIDSepidemic, which may kill hundreds of thousands inthe next two years. UNAIDS and the World Health Organizationreleased a report at the end of November that saidthere was still a way of combating the grim forecast.“There is considerable scope for further expansion

of the epidemic in this vast country – alongside greatopportunities to prevent such an outcome,” it stated.The report went on to say that 860,000 peoplewere infected with the deadly virus in Russia – anumber that far outweighs the official figure of300,000. However, the Federal AIDS Centre goeson to estimate well over a million sufferers. Popular tourist destination St Petersburg leads thecountry in infection rates with a figure of 26,000HIV-positive people in the city.

Meningococcemiain the Philippines

A possible outbreak ofmeningococcemia in the city ofBaguio in the Philippines hasbeen reported. The disease isan acute infection of thebloodstream and subsequentvasculitis (inflammation of theblood vessels), caused by thebacteria neisseria meningitidis.Respiratory droplets transmit

the infection from person to person. The symptoms include fever, a petechial rash,irritability, anxiety, leading to being acutely ill and achanging level of consciousness, plus large areas ofhaemorrhage and/or thrombosis under the skin,and shock. It can be fatal. The City Mayor, Brauilo Yaranon, was keen tosquash the speculation: “It is inevitable that tourismis affected, especially with these kinds of reports [butI can assure that] there is no outbreak.” He said thatthe meningococcemia cases have remained isolatedand sporadic, adding that all of the cases can betraced to one area in Benguet province.

Airplane waterharmfulIn a recent test by theEnvironmental ProtectionAgency (EPA) in the US, one ineight passenger airlines’ waterfailed agency standards becauseit contained the bacteriacoliform.The EPA are advising peoplewhose immune systems areweak to avoid drinking thewater on airplanes unless it’s out of a bottle. “This issomething that needs further analysis, but alsoimmediate action,” Tom Skinner, EPA EnforcementChief, said. The agency is now to investigatewhether the bacteria came form the original watersupply, the tanker trucks that load water onto planesor the airplanes themselves. More testing is also needed to determine why itsresults differ from similar tests conducted by the AirTransport Association (ATA) and the Food and DrugAdministration, neither of which found any cause forconcern. EPA is now working with airlines todevelop new guidelines on water safety.

The European ReinsuranceQuarterly Report preparedby Benfield’s IndustryAnalysis and Research teamhas shown that Europe’s sixleading reinsurance groupsexperienced nearly $2million in losses due to thehurricanes and typhoons inthe third quarter of 2004. “Despite the losses, earningsfrom non-catastrophe exposed business remainedremarkably resilient,” said Lewis Philips from theIndustry Analysis and Research team. “Mostcompanies still reported a third quarter profit.Consequently, storm losses may not reverse therecent down trend in catastrophe reinsurance pricing.”The report notes that for the nine months, grosspremiums fell as companies were prepared tosacrifice under-priced business. A full copy of the report, Benfield EuropeanQuarterly: 9M 2004 Riders On The Storm, can befound on the company’s website.

Profitable despitestorms

Editorialcomment

For insurers, fraud is one of the mostpressing issues that needs to beaddressed. Unfortunately, there is nofool-proof system that I am aware of thatgets every false claim.For some reason, many people feel thatinsurers are fair game, and want to getsomething back from their investment.Some believe, even, that they are owedsome payback from their travel insurancepolicy regardless of any genuine claim. Ascrimes go, it is probably one of the leastfrightening for the perpetrator, oftenwith minimal punishment if caught. Thisis not always the case, however, as larger,more devastating fraudulent behaviourand some career criminals face very longsentences over insurance fraud.It’s worth looking very closely at ourfraud feature this issue, as there aregood tips to outing suspicious claims.What really is scary is the fact thatorganised crime targets insurers. Whyrob retailers and banks in risky heists?Why risk death in shady underworlddrug deals? As a criminal, all you need dois falsify claims systematically and reap aharvest of money with hardly any fuss.There are clever AI programmes now foronline systems that can spot dodgyclaims, but, at the same time, so manyclaims filter through the system thatthere has to be a great many incidents offraud undetected. If a person isprocessing the claim then there is only somuch time per claim that can bereasonably allocated for checkingpurposes – especially when a relativelysmall amount of money is involved.We really don’t know for sure how bigthis problem is, but for every false claimuncovered, we can guess there is onethat gets through.

Richard ForsythEditor

TRAVELMATTERS14


Qantas Christmasstrike avertedDuring recent years the management and staff ofAustralia’s major airline Qantas have been atloggerheads over a number of issues that havehad the potential to cause disruption to services.Roger Allnutt reports

The latest confrontation centred on a proposed newEnterprise Bargaining Agreement for internationalflight attendants, with plans to relocate about 400 ofthem to London from June 2005 in a movedesigned to save the airline around A$18 million.The current agreement expired on 17 December2004 and the union representing the flightattendants had threatened strike action over thebusy Christmas holiday period.The airline’s 4,000 international flight attendants werealso concerned about proposals to use domestic crewson its fleet of Airbus 300s on flights to Hong Kong.However, during conciliation meetings at theAustralian Industrial Relations Commission in Sydneyin early November, the two parties settled theirdifferences. The agreement gives protection to flightattendants in relation to the numbers based overseasand would also guarantee that international flightattendants be used on a certain number ofinternational flights, thus guarding the jobs of theattendants. The new agreement would operate forthree years and involve a nine per cent pay increase.Both sides welcomed the resolution of thedisagreement ensuring smooth flying over theChristmas/New Year period.

Pacific Blue to flydirect to cook islandsfrom Australia Sir Richard Branson, owner of low cost carrierPacific Blue has announced that weekly flightsfrom Sydney to Rarotonga in the Cook Island willcommence on 19 March 2005. By Roger Allnut

Operating every Saturday the flights would be viaChristchurch in New Zealand. Connecting serviceson Virgin Blue would be available from Melbourneand Brisbane.Rarotonga is the third tropical South Pacificdestination following on the introduction of flights toFiji and Vanuatu earlier in 2004. The new flights willcompliment Pacific Blue’s Gold Coast-Christchurchand Brisbane-Wellington services that commencedin November 2004.The weekly schedule is ideal for visitors wanting aseven-day break – or even longer – on the idyllicisland paradise with its great trekking, family friendlyaccommodation and numerous water sports. It isalso the perfect spot to just chill out and do nothing.Pacific Blue will operate a modern Boeing 737-800jet on the route. Depending on demand furtherflights may be introduced.One interesting point on the flight schedule is thatthe planes will leave Christchurch at 5.45P.M. onSaturday and, due to travelling over the InternationalDate Line, will arrive at Rarotonga at 11.35P.M. onthe Friday before departure.

Moscow monorailopenedThe Moscow monorail opened for passenger ‘testrides’ on 20November toadd a modernfeel to thecapital and toraise somepositive PR inlight of recentterror attacksfromChechenrebels. Unfortunatelythe Russian weather didn’t make the opening themost pleasant of experiences as temperaturesdropped to a chilling minus five Celsius, the windwas up and a snowstorm swirled into the city. Inplaces the snow was reported to be around 15-20cm deep but the monorail did not seem to beaffected. The train will cost 50 rubles for adults and currentlythere are only two trains online departing every 30minutes for the trial period, but a total of six trainsare to start for permanent service in January.Boarding is only available at Eisenshteina Station, theeast terminus near the VVTs exhibition centre.

Life in the fast laneSingapore is trial testing new biometric recognitiontechnology in Changi Airport. The system, aptlynamed Fully Automated Seamless Travel or FAST,speeds frequent flyers through check-in andimmigration formalities. The trial will be over a six-month period. The system enables travellersto skip the usual procedures atthe check-in counter, policecheck area and immigrationservice (for passport checks).This means that the usual 18minutes of undergoing thesechecks is reduced to two orthree minutes, maximum.FAST travellers are issued witha card with a microchip in itthat has the person’s facialfeatures and fingerprintinformation. In the FAST lane,as it were, a one-stop kiosk allows the traveller toselect a seat, collect a boarding pass and clearimmigration all at once.

India’s low-costcarrier to expandAir Deccan, India’s no-frills carrier, is looking to buynew planes and expand services in the face of risingdemand in travel. The airline has raised $40 millionfrom venture funding with India’s ICICI VentureFunds and US-based Capital International to makethe expansion possible. Only a year old, the airline, owned by Bangalore-based helicopter charter firm Deccan Aviation, plansto increase its fleet from 15 to 60 planes in only fiveyears.The hope is that Indian rail travellers will start usingthe planes due to bargain basement prices of 500rupees (the equivalent of $11) for fares. This ismuch lower than domestic carriers Indian Airlines,Jet Airways and Air Sahara.Managing Director of Air Deccan, GorurRamaswamy Gopinath’s immediate plans are toacquire 23 Airbus planes, in addition to theacquisition of seven A320s announced in February.

Security pat-downs at US airports are offendingsome women say recent reports. Security staffhave developed what some see as an over-invasiveprocedure of checking a person for explosives orweapons.A security guard can now touch a woman’sshoulders, under her arms, around her waist,

across her bra strap and between herbreasts, in plain view of other passengers.The new policy was implemented by theTransportation Security Administration on 22September, after 90 people died in twoplane crashes in Russia as a result ofChechen women who carried explosives onboard. The new rules give screeners thepowers to pat down passengers purely onvisual observations rather than as a backmeasure after metal detector alarms sound.TSA had received approximately 250complaints since the new procedures wentinto effect in September.The good news is that pat-downs could be

made a thing of the past due to a new machine(currently in tests) that sucks in the air aroundpassengers and can rapidly detect explosive material.

Some womenobject to pat-downs

©Civil Aviation Authority of Singapore (CAAS)

Australian low-cost airline Virgin Blue hasnotched up another first with theannouncement of live satellite television on alldomestic flights. Roger Allnutt reports

Virgin Blue has teamed up with subscription TVproviders Foxtel and Austar to provide a range ofprogrammes, including breaking news, sports,comedy and lifestyle.The service would be broadcast via satellite andwill be available on over 8,000 screens locatedon the back of seats. Virgin Blue, Foxtel andAustar will begin phasing in the new technologyby mid-2005, subject to regulatory approval fromthe Civil Aviation Safety Authority.In conjunction with US technology provider LiveTVthe service, called Live2Air, would offer the choiceof 24 channels. It would be delivered under anexclusive licence with Virgin Blue.Four years in the planning, the new service has beendescribed by Virgin Blue chief executive Brett Godfreyas an ‘exciting and generational leap forward’.The service comes at a price though, as passengerswill have to pay AUS$5 for unlimited use on a flightand is activated with a credit card.Efforts will also be made to ensure that when thenew technology is implemented it will not impactVirgin Blue’s low-cost base and its ability to remainAustralia’s high-quality, low-fare leader.


TRAVELMATTERS 15

Virgin Atlantic starts flights to AustraliaVirgin Atlantic boss Sir Richard Branson was in hisusual flamboyant form when celebrating the arrivalin Australia on 8 December of the inaugural flightby the airline from London to Australia via HongKong. By Roger Allnutt

The introduction of Virgin Atlantic will add an extra800 seats a day to the already crowded route. It willadd competitive pressure on the route (known asthe Kangaroo route) traditionally dominated by theQantas/British Airways ‘duopoly’.Sir Richard predicted that fares could fall by up to 30per cent with greater price competition among themajor carriers on the route.In particular, Virgin Atlantic is keen to entice morebusiness-class travellers (Qantas and British Airwayscurrently control about 70 per cent of this marketout of Australia) onto his flights with onboardservices including massages, improved beds andeven a private bar.He also hoped that the Australian competitionwatchdog would take a long look at the current

arrangement whereby Qantas and British Airwayshave a joint services agreement to share certainservices on the Australia/UK route.

Virgin Blueintroduce satelliteTV

Security needed onUK trainsUK unions are demanding that rail guards should bedeployed on British trains in order to protectpassengers and staff from increasing violence incarriages. The number of both verbal and physicalattacks on the UK railways increased to over 3,500in 2003, which amounted to an increase of 18 percent compared with the previous year, according tothe figures published by the Association of TrainOperating Companies. Although there are currently warning posters intrains saying that violence to staff will lead to

prosecution it has come to apoint where securitypersonnel may be needed toenforce the warning where itis ignored.“We need a zero tolerancepolicy from all rail employers,and a properly resourced andresponsive transport police,”said Bob Crow, from RMT(Britain’s largest specialisttransport union) “But we alsoneed adequate uniformed staffon every station all the timethey are open, and properlytrained guards on all trains.”

MyTravel againstFSABritish travel agency MyTravel is fighting a fine fromthe Financial Services Authority (FSA) forcontravention of the listing rules. The notice refersto an investigation into MyTravel’s three profitwarnings in 2002 and the withholding of pricesensitive information without delay – leading toshareholders losing a large proportion of theirinvestment. The FSA has not revealed how muchthe fine will be.

Bat planeScientists in the US and the UK are working on a‘batwing’ aircraft that will have seats for 800 passengers,and be quieter and more fuel-efficient than mostcurrent passenger aircraft. Scale models of the blendedwing plane are being constructed and it is hoped thatwithin 15 years it could be a working model.

Passengers would sit in a cinema-style seatingarrangement with rows of 40 or more seats. Videoscreens linked to external cameras that givepassengers the view of the outside world if startingto feel a little claustrophobic would placate peoplehankering after window seats.

Southwest just keepson keeping onThanks partly to an aggressive oil hedging strategythat keeps fuel costs way below that of mostcompetitors, Southwest Airlines has reported its54th consecutive quarter of profitability, earning anet income of $119 million for the third quarter of2004, 12.3 per cent higher than the comparablequarter last year. By Milan Korcok

“Even with average fuel prices up over 10 per cent,third quarter 2004 unit costs increased only 1.3 percent,” said Gary C. Kelly, Southwest CEO. “Ourhedging programme greatly mitigated record-highfuel prices, which resulted in a reduction inoperating expenses of $131 million for third quarter2004.”Hedging is the practice of buying oil on futurecontracts at prices set earlier. It is a practice which,airline analysts say, the so called legacy (establishedold-line) airlines have been unable to do well.Southwest does it extremely well. According to itsthird quarter earnings report, Southwest hedging hasresulted in an offset to fuel and oil expenses of $131million in the third quarter. The company is over 80per cent hedged for fourth quarter 2004 with pricescapped below $24 per barrel (as world market priceshover in the $55 range); over 80 per cent in 2005 at$25 per barrel; 60 per cent in 2006 at $31 per barrel,and over 40 per cent at $30 per barrel in 2007.“Excluding fuel, our unit costs were flat with the yearago quarter and well below first half 2004, which

represents a significant improvementin cost trends. We are on track withour cost reduction targets andexpect fourth quarter 2004 unitcosts, excluding fuel, to decline fromfourth quarter 2003’s performanceto 6.51 cents.”Emphasising what all airlineexecutives want to hear but fewcan attribute to themselves, Kellystates: “In today’s airline industry,low costs are imperative to remainprofitable.Low fares are our mostimportant competitive weapon andwhat customers demand. We aredetermined to maintain our positionas the low-cost producer and theLow-Fee Airline in America.”

atch 22I have heard it said that, as result of the decision inChester v. Afshar, the entire assistance companyindustry will have to make wholesale changes totheir practices, or face certain lawsuits from patients,all of whom will no doubt be packing a copy of theAfshar judgement along with their swimming trunks,just in case they have to wave it around at theassistance company’s doctor, should they requiretreatment. But are wholesale changes to theindustry necessary? Will there be a sudden andsubstantial rise in claims against assistancecompanies? Will this case cost the industry millionsof pounds, as they have to invest funds in gettingtheir procedures right and frontloading theconsultation part of their operations? Let’s see…

Previous lawTo answer these very important questions, we haveto first look at what the law was. We then need tolook at the facts of the case of Chester v. Afshar andthe judgements given. We can then, hopefully, findsome answers.Until October of this year, a doctor was required toobtain informed consent from a patient to anyintended medical procedure. In reality, this meantthat the doctor had to explain the risks involved inany procedure and the patient had to provide theirconsent, having understood and accepted the risks.

If a patient can demonstrate that they would nothave undergone a particular procedure had theyknown of certain risks and one of those risksmaterialises, the doctor was negligent. The doctor,or in fact their liability insurers, would have beenliable for the consequent damages that flowed fromthis particular act of negligence. Animportant aspect of this was thatthe doctor had only to explainthose risks that a reputable bodyof medical opinion would haveexplained to that particular patient.This logical and practical approachhad been understood andaccepted by doctors and lawyers.It provided certainty. It gave us atest to determine negligence andthe possible consequences of it.This has become known as the‘… but for …’ test.The claimant has, until now, hadto establish that, but for thedefendant’s wrongdoing, theywould have acted differently andthereby not suffered the resultant loss or damage.As far as legal principles go, this is prettystraightforward.

A new precident

The case of Chester v. Afshar involved the claimant,Miss Chester (a travel journalist), who had suffereda long history of back pain. Treatment by aconsultant rheumatologist didn’t alleviate the painand, in fact, the pain became more acute. An MRI

scan indicated disc protrusion andshe was referred to Mr Afshar, aneurosurgeon and defendant in theproceedings.Miss Chester underwent anexamination by Mr Afshar, followedby a consultation of around 30minutes, during which time hercondition and surgical options werediscussed. There is disagreementbetween the two as to whatprecisely was discussed. Mr Afsharclaimed to have discussed all thesurgical risks, including thepossibility of nerve damage leadingto paralysis. Miss Chester claimedthat, being concerned aboutsurgery in any event, she pressed

Mr Afshar about the risks. She stated that paralysiswas not mentioned and that Mr Afshar merelymade one throw away remark about not havingcrippled anyone yet.In any event, only three days later, Miss Chesterunderwent surgery at the hands of Mr Afshar. Shesuffered nerve damage and paralysis.It was found that the risk of this type of injuryresulting from such surgery was only about one totwo per cent.Miss Chester was extremely honest at trial andadmitted that she couldn’t say that she would nothave undergone the surgery even if she knew therisk of paralysis. What she did say was that she wouldhave wanted more time to think about it and wouldhave obtained a second, and possibly a third,opinion. She went ahead with the operation onlythree days after the consultation because Mr Afsharhad made it all seem sosimple.The House of Lords, by asplit decision of 3:2, foundfor Miss Chester andallowed her to recoversubstantive damages. The dissenting Lordsapproached the case fromestablished, rigid legalreasoning: Miss Chesterhad failed to prove that,but for the failure to warnher adequately of the risksof surgery, she would nothave had to operation.According to LordHoffman, the situationwas analogous to a gameof roulette: the odds ofthe number seven comingup are the same whetherthe game is played todayor next week, or even ata different casino. The riskMiss Chester wasexposed to was the samerisk irrespective of when,where or by whom shehad the operation. Herinjury was not caused bythe failure to warn of therisks.

The majority view, however, was that the defendanthad failed in his professional duty to warn of therisks of the operation when obtaining MissChester’s consent to the operation, which resultedin the injury she suffered; the patient could not havegiven informed consent to the operation, in the fulllegal sense. It did not matter that Miss Chester wasunable to say that she would not have undergonethe surgery, even after giving it more thought andafter obtaining further opinions. However, thedefendant’s negligence (i.e. the failure to warn of allthe risks of the operation) had not, of itself, lead tothe injury. Indeed, no negligence in the actualoperation itself was proven.

But why?The ‘… but for …’ test had clearly not beenestablished in this case, but why did the majority ofthe Lords reach the decision they did?What comes out about the majorities’ view is adesire for practical justice at the expense of logicalrigor. The legal concept of causation has beenrelaxed; it is not always now necessary for an injuryto be caused by the negligent act. In other words,so long as there is a clear duty and a breach of thatduty, the requirements for there to be a causativelink between the breach and the damage can be setaside to put into effect practical justice. Miss Chestershouldn’t be allowed to fail, simply because shecouldn’t overcome the technical legal concept of the‘… but for …’ test.This is all well and good, but there is a problem withthis type of reasoning: it creates uncertainty. This


NEWSANALYSIS16

Until recently, the law in the UK on the subject of consent in cases of medical negligence has beenrelatively clear and logical. However, the decision of the House of Lords in the case of Chester v. Afsharin October 2004 has muddied the waters. Here, lawyer Costas Andrea looks at the consequences ofthis decision on the travel industry, particularly the work of the assistance companies and their doctorsand the implications on their public liability insurers, and indeed the travel insurers under whose policythe assistance companies have become involved

Catch 22 Costas Andrea

Costas Andrea is a partner in the travel unit ofPenningtons solicitors. He joined Penningtons inNovember 2003, bringing with him the teamfrom his niche practice at Andrea & Co. Costashas over 16 years’ litigation experience. He actsfor a range of clients nationally and internationally,representing both corporates and individuals inthe complex area of travel and tourism law.Costas is a member of the Law Society’sPersonal Injury Panel.

uncertainty is already creeping into the minds oflawyers and doctors involved in such potential cases. The Lords did not set down clear guidelines as towhen, and the circumstances in which, the ‘… butfor …’ test will be set aside in future. The majorityview relied heavily on an earlier case where it wasstated that there must be good reason for departingfrom the normal threshold of the ‘… but for …’test. The reason must be sufficiently significant todeprive the defendant of the protection the testwould normally and rightly afford him. Further, thereason must be plain and obvious.What the majority of the Lords did not do in thisdecision was to clearly set out why they modifiedand chipped away at the ‘… but for …’ test. It is oflittle assistance to lawyers, let alone doctors, to betold that ‘policy’ issues will be implemented indeciding when to relax the test.

What now?Going forward, it appears now that a claimant whopleads lack of informed consent will be able torecover damages even if they cannot say that, hadthey been warned of the risk which ultimatelymaterialised, it wouldn’t have made any difference

to their decision to have the surgery or not, just aslong as the risk they ought to have been warnedabout does materialise. Decisions of this type normally attract a great dealof comment, emphasising that this case demandedthis particular decision, but that no general principlesshould be extracted. Such comments are alreadysurfacing in the legal press. Given that the judgement, in my view, raises morequestions than it answers, I suspect that it will benarrowly interpreted in future. It will be appliedsolely to those cases involving informed consent. Inother words, it may not be as far reaching as it mightat first appear.Applying this to the travel industry and assistancecompanies in particular, is not at all easy. One view,extreme in my opinion, is that every possible riskmust be advised to every single patient beingrepatriated to the UK and their written consentobtained (See also ITIJ 47, UK l iab i l i tyjudgement causes concern). However, Icannot see that this will be at all practical in reality.Even if written consent was obtained in every case,it wouldn’t take much for the patient to argue thathe could not possibly have read and understood the

10-page notification of risk hewas asked to sign.

In this context, I shall attemptto answer the questions I firstposed:

1 . Are wholesale changes tothe industry necessary? I donot believe they are necessary.Clearly, everything should bedone to obtain a patient’sconsent, but on speaking withassistance companies and theirdoctors, I’m not at allconvinced they could do muchmore than they’re doingalready. Some are clearlybetter than others, and theworse ones will always face ahigher chance of being sued. Itmust also be remembered thatthe provision of emergencyservices can often fall outsidethe requirement to obtain fullinformed consent, as thecircumstances may requireurgent, lifesaving treatment ofan unconscious patient.

2 . Will there be a sudden andsubstantial rise in claims againstassistance companies? Again, Ido not think so. The facts of

Chester v. Afshar arequite specific. I am notaware of a similar set offacts arising on a travelrelated claim in 16 yearsof dealing with them. Ifthere were a failure toobtain consent by adoctor and the failurelead to injury to thepatient, the doctor andthe assistance companywould have been in theframe anyway. I am alsoquite confident that,whilst the issues raised bythe Chester v. Afsharjudgement could have farreaching implications, Ido not believe theseimplications willmaterialise. A subsequentcase involving solicitor’snegligence, where theclient’s actions would nothave been affected,failed, as the court heldthat the process ofinformed consent tomedical treatment hadspecial importance in law.

3 . Will this case cost the industry millions ofpounds, as they have to invest funds in getting theirprocedures right and frontloading the consultationpart of their operations? Clearly, assistancecompanies and their doctors must do all they can toprotect themselves. It would be relativelyinexpensive to ensure, as far as is practicable, that allis done to inform patients of risks. It must also beremembered that patients being dealt with byassistance companies and their doctors will be insignificantly different situations than Miss Chester.They will not have the luxury of taking a few days

off to think about their options nor to obtain secondopinions. This is the nature of the work and in thisregard, will work in favour of the assistancecompanies and their doctors. Furthermore, oftenthe only option for the injured patient is whether ornot to travel home. Dependant on the country inwhich the medical emergency occurred, I thinkmany patients would struggle to argue that theywould prefer to remain abroad rather than travel totheir home.In conclusion, whilst this House of Lords decisionhas caused some concern and not a little panic inlegal and medical fields, it must be kept in context.Its application is, I believe, limited and applicable toonly a limited number of cases, namely, thoseinvolving informed consent obtained by a doctor tomedical treatment. Furthermore, the nature of workcarried out by assistance companies and theirdoctors means that the nature and length of anypre-treatment consultations with patients will belimited and nothing like a UK-based consultantwould have. I would also expect them to havesome, albeit limited protection, given the medicaltreatment being provided in the foreign country, butthat’s a whole different can of worms.


NEWSANALYSIS 17

THERE IS LIGHT ON THE HORIZON

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Growing fraud plagues health insurers andconsumers worldwide. Fraud has become the newflavour of the month not only for the criminalunderworld, but also for the average man on thestreet. Milan Korcok asks ‘Is it too easy to commitinsurance fraud?’

Brian Calen, of Dobbs Ferry, New York, is anunlucky traveller. Standing indicted of insurancefraud and facing up to 15 years in prison, Calen hasbeen blinded four times – in the same right eye –while on cruise ship vacations: once from a solarburn while looking through a telescope, another byan exploding champagne bottle while sailing fromMiami to South America, another by a flying Frisbeeon a Mississippi riverboat cruise, yet another froman undisclosed accident almost 20 years ago whichwas the first incident to render him blind.Along the way, Calen has collected more than$1,000,000 in travel insurance payouts, but thatlargesse apparently ended after a former cop andnow insurance investigator sniffed a suspicion thatfour blindings to the same eye was too much forany man. And so now, Calen awaits trial in a NewYork court, charged with insurance fraud.A bizarre story, perhaps. But not unusual in a worldwhere scamming insurance companies is seen asharmless sport, where public opinion polls show thatalmost a quarter to a third of respondents think it’sOK to defraud insurers, and where organised crimefamilies have moved into insurance fraud because it’sfar more lucrative and less dangerous than traffickingnarcotics. “You don’t get killed scamming insurers,”said one such nefarious entrepreneur.In fact, many offenders don’t even get a slap on thewrist, like the Briton who claimed for the cost ofhaving his appendix removed while in Cyprus – a

claim he had made of travel health insurers eightprevious times, for the same appendix.Or the man who claimed ‘recuperation costs’ whilerecovering from a heart attack while holidaying inWest Africa – which was actually a bill for servicesprovided at a local brothel.According to the Association of British Insurers(ABI), almost half – 47 per cent – of thoseresponding to a travel insurance survey admittedthey would be prepared to make a fraudulent claimunder certain conditions. There are even somewho think of it as a sworn duty, such as the mansuspected of making repeated false claims who wasfound to have a leaflet at home called ‘How tomake £2,000 from your holiday’.Estimates of worldwide health insurance fraud rangeall over the map, up as high as $100 billion, butbecause this is largely a clandestine activity, reliablefigures are hard to come by. The bilkers don’tadvertise their prowess. The bilked are often tooembarrassed to admit their gullibility. And because itis so easy, and until recently there have beenrelatively few serious laws against it in mostcountries, insurance fraud has grown into anepidemic costing insurance companies and ultimatelytheir clients billions of dollars, euros or pounds. According to an ABI report issued in November2004, motor, contents and travel insurance fraudhas been estimated to cost UK insurers over $1billion annually, and six per cent of people have, atsome time in the past, exaggerated an insuranceclaim, while two per cent have actually made up aclaim. That suggests that about 3.3 million peoplehave committed insurance fraud in Britain alone,and “these numbers probably underestimate thetrue extent of insurance fraud, as some people maynot admit to their dishonesty, even to themselves.”

In the US, wherehealth insurancefraud is acorporate enterprise,only in the past decadehave most statesenacted specificinsurance fraudlaws andbackedthem upwith anti-fraud

enforcementunits, andonly in 1996did Congressenact the latest in aseries of healthcarestatutes making anyfraud perpetratedagainst a public or privateinsurance payer a federalcriminal offence. Now,instead of simply having tomake restitution and spending afew weeks in a county jail, insurancescammers can end up spending yearsin a federal jail. Coincidentally, state fraudprosecutions have tripled in the past threeyears.

Easier than doing drugsAccording to the US-based Coalition AgainstInsurance Fraud, healthcare fraud in the US talliesup to some $54 billion, far too much to beaccounted for by a few doctors or office managerswith sticky fingers. In the US, healthcare fraud hasbecome a corporate activity, with hospitalcorporations bilking government programmes andprivate insurers, insurance companies bilkinghospitals and government, third party administratorsscamming both suppliers of services as well asconsumers, and creative entrepreneurs doing anumber on everyone.As early as 1999, the US Government AccountabilityOffice reported that organised crime had becomeheavily involved in defrauding Medicare, Medicaidand private health insurance. The healthcareindustry, now spending $1.8 trillion per year, is justso big, so diverse, so poorly controlled, that the sizeof the prize and the ease of access has madeMedicare, which accounts for about $400billion of the total annual tab, too temptingto resist for big fish as well as little. Thegreat opening for crooks is that thoughfederal government funds Medicare, itdoes not provide the services. Rather itpays private, independent contractors to

provide the care, to do the billing,and even to oversee someone

else’s billings – for a fee or ashare of the collections. As

most experts will agree,oversight of these

transactions has becomea joke, yet efforts toreform Medicarecontinue to be stalledin Congress and tobe fought by the

industries who make apretty good living out of

the programme thatcovers the US’s 41 million

elderly and disabled.One small fish, Gabriel

Hernandez, a former ‘logisticsco-ordinator’ for the Medellincocaine cartel in Colombia,

opened a chain of health clinicsin Florida and billed Medicare

and Medicaid programmes forfictitious services to paper

patients. He earnedmore than $1.7 millionin government checksfor his efforts over two

years. And even though he waseventually caught, convicted,

and served jail time for his fraud,he saw a sunny side to his work: “Everything waseasy compared with being in the traffickingbusiness,” he told media. “All I was doing waspicking up cheques every week. And I got caught,but I didn’t get killed.”A much bigger fish was Columbia/HCA HealthcareCorp, once the nation’s largest hospital chain, whichin 2000 agreed to pay the government $745 millionto settle billing fraud charges. According to thegovernment’s case, HCA had been over-billingMedicare for years, charging for unneeded lab tests,making improper diagnoses, and disguising un-reimbursable expenses as reimbursable. Two HCAmiddle managers in Florida were convicted ofconspiracy and fraud. The company sacked its topexecutives and began a downsizing programme ofits national network. The Chief Executive Officer atthe time was Thomas Frist, cardiovascular surgeonand currently the majority leader of the US Senate. To put the mater into perspective, HCA is now butone of several large hospital companies to have

FEATURE18


Insurance fraud

“According to theAssociation ofBritish Insurers(ABI), almost

half…of thoseresponding to atravel insurancesurvey admittedthey would be

prepared to makea fraudulent

claim…”

fought Medicare fraud charges in the courts – thelargest now is Tenet Healthcare Corporation, whichowns and operates some 115 acute care hospitalswith 28,512 beds and numerous related healthcareservices.With the intermingling of big and small scams acrossthe full spectrum of US healthcare, the NationalHealth Care Anti-Fraud Association (NHCAA) hasestimated that of the nation’s annual healthcareexpenditures, at least three per cent is lost tooutright fraud. Other agencies peg the percentagelost to fraud as up to 10 per cent.

European fraudsters proliferateAccording to Tommy Short, immediate pastpresident of the International Association of SpecialInvestigation Units, the minimum total for insurancefraud (all types) in the 25 European countries is atleast €8 billion. This is equal to two per cent ofannual insurance premiums, and in the UK the ABIestimates insurance fraud to have costed theindustry £650 million in 1999, or 3.9 per cent of allclaim payments. In Germany, Munich Re estimates that as much as10 to 30 per cent of premiums could be lost tofraudulent insurance claims. Gernot Kiefer, who hasheaded Germany’s task force on health system

fraud recently, said in 2002 that fraud costs Germanhealth insurance companies about €750 millionannually. He said also that in 2000, about 17,000cases involving 1,600 doctors were investigated forfraud. Kiefer noted that 20 per cent of doctorswere suspected of claiming more money than wasdue them.In Ireland, says Short, fraudulent insurance claimsare costing the industry up to €100 million a year.The Swiss Insurance Association (SVV) says thatthough there are no statistics on the extent ofinsurance fraud in the country, insurance companiesproceed on the assumption that approximately 10per cent of their benefit payments are based onbogus claims, running into several hundred millionSwiss francs every year. Despite this cost, “insurancefraud is still not taken seriously by many people, theassumption being that an anonymous organisation isbeing harmed which can well afford it on account ofits deep pockets.” The SVV notes also that anopinion poll on the subject has shown that everyfourth individual surveyed knows someone who hasengaged in insurance fraud at one time or another.In New Zealand, more than 15 per cent of allclaims have an element of fraud associated with

them, says the Insurance Council of New Zealand,and insurance fraud costs NZ$62 per household,reckoning conservatively.

Africa and Asia: fraud is a way of lifeIn South Africa, between eight and 35 per cent ofthe claims paid out by insurance companies arebelieved to be fraudulent, and insurance fraud coststhe industry between R2 and R3 billion a year.According to the Nedbank ISS Crime Index, oneinsurance company is reported to have lost morethan R350 million in one year on vehicle relatedfraud alone.Insurance investigators agree: there is no country inwhich travel health insurance is not an issue – butit’s particularly prevalent in Africa, Asia and LatinAmerica, where insurance anti fraud laws arevirtually non-existent, and scamming insurers isculturally acceptable.Citing data from cases referred to Pinkerton forinvestigation, one investigator noted that 50 to 70per cent of suspicious claims by Asian nativestravelling to Thailand, Philippines and Malaysia in factproved to be inflated or falsified, 80 per cent ofclaims by Africans travelling back to Africa werefalse, and 90 per cent of African death claimsreferred to Pinkerton for investigation were bogus.

These were not random samplings, but claims inwhich suspicion of wrongdoing was sufficient towarrant investigation.Many of these claims were generated by claimantsreturning to their country of origin after vacationingor otherwise visiting with their dependents orrelatives. And in an especially large proportion ofthese cases, the amounts of the claims coincidedclosely with the total costs of the ‘vacation’ trip.One way of paying for a vacation!In many of these countries, said one investigator, aclaimant caught in the act will simply shrug hisshoulders and say: “It was worth a try, wasn’t it?”and then walk off.

Red flags to heedIn fighting the international flow of medical insurancefraud, investigators and auditors advise travelinsurers to be suspicious about the following:• Photocopies of receipts. It’s very easy to altersuch figures.• Bills that are not itemised or that list lump sumsfor drugs, beds, etc., bills marked ‘paid in full in USor some other currency’, or ones demandingseveral thousands of dollars, euros, pounds or other

currency – in cash.• Misspelledmedical terms,cross-outs orerasures.• Medicaldocumentationwritten in laymen’sterms.• Treatments forthree or fourillnesses at one time.• Incorrect style ofdating documents.• Alterations tomedical notations ordeath certificates with high policyvalues and vague burial details.• Medical notations in inconsistenthandwriting, but with the samepen.• Claims for high tech servicessuch as CT scans or MRIs inremote areas unlikely to have suchtechnology.• Claims with attachments listedin English (not the primarylanguage).

• Charges from a foreign hospital, doctor or cliniclisted in the traveller’s home currency. • Claimants too anxious to conclude their ‘deals’,or those who say they borrowed money to pay thebills and need it quickly, or those who say thehospital is holding their spouse captive until they gettheir money.

What all of the anti-fraud and investigatingauthorities seem to agree on is that individual greed,an inherent part of human nature, is a powerfulmotivator in the insurance scamming process. And,unlike robbing banks or peddling cocaine, nobodygets killed doing it. As has been shown in numeroussurveys in the US, the UK and Europe, mostpeople are not too offended by a little padding of

insurance claims, and a reasonable number don’tseem to lose any sleep over creating some claimsout of whole cloth. The reason is that nobody canreally see who is being hurt by the fraud – exceptthe insurance company, and in most people’s eyesthat’s just a euphemism for somebody else’s ‘deeppockets’.Then there are those who carry it a little further,like dentist Richard Chetnik who was prosecuted inIndiana for bilking Medicaid (the state administeredprogramme for the poor) of $3.4 million for doingan improbable number of tooth procedures over atwo-year period. Since people only have 32 teethat best, investigators found it hard to believe thatwhile in Dr Chetnik’s chair, 33 patients had 3,234teeth removed, for an average of 98 teeth, 44patients had 3,152 teeth yanked – or 72 teeth perperson, 16 patients had more than 1,000 rootremovals, which means each patient had 64removals, and 33 patients averaged 287 dentaltreatments apiece. In restitution for all that practice, prosecutors wantChetnik to cough up a Lamborghini, a Rolls Royce,two Jaguars, his house, 116 round diamonds, otherdiamond jewellery and Bordeaux wine futures – whichthey say Chetnik bought with ill-gotten Medicaidproceeds. Chetnik faces up to 20 years in jail – plentyof time to think about his ‘victimless’ crime.

FEATURE 19


“Estimates of worldwide health insurance fraud rangeall over the map, up as high as $100 billion, but

because this is largely a clandestine activity, reliablefigures are hard to come by.”

“The healthcare industry… isjust so big, so diverse, so

poorly controlled, that the sizeof the prize and the ease of

access has made Medicare…too tempting to resist for big fish

as well as little.”

Retirement and all that new-found freedom totravel can have its hiccups says Roger St Pierre,investigating the insurance offer for olderglobetrotters

Retirement was once an eagerly awaited event,when the shackles of the office desk or factoryworkbench could at last be forever removed and arelaxed, come-as-you-please lifestyle beckoned thelucky gold watch recipient. Given all the time in theworld – and a nice pension – endless possibilitiesopened up, not least being the chance to at last getout and about and learn something more about theplanet we live on.The rapidly growing so-called ‘grey’ marketspawned a whole new business opportunity forcompanies like UK-based Saga Holidays, whoseoffer now spans almost everything the elderly mightneed – and that’s not just specially tailored travelpackages but affordable car insurance, a value-for-money credit card and capital-freeing house re-funding deals, among a myriad of other things.The Folkestone-based company has even seen itsglossy magazine – initially produced merely as apromotional tool – grow to what is now the sixthlargest circulation in the country, as a title avidlyread by all those ‘Saga louts’ out there.Though in many cases it has been compulsoryrather than voluntary, early retirement became thecatchphrase and a decade agoSaga extended their targetaudience to include the over50s as well as the over 55s.With mortgages paid off, or atleast lots of equity in theirhomes, and the kids off theirhands, the grey brigaderepresented an audience withmoney in its pockets and plentyof time to spend it. And therewere lots of them, with the agesector virtually doubling since1995.People who had spent theirlives watching the pennies

suddenly started investing their hard-earned savingsin world cruises, five-star hotel breaks and holidayhomes in the sun.According to Saga’s Peter Bentley: “Our researchreveals that nearly half of 55-65 year olds areplanning a far-flung holiday and that figure does notdrop by much as people get older.”The Spanish costas became a mecca for olderGermans, Dutch and Brits; so too did Mallorca, theCanaries and Madeira – blessed as they are with300 plus days of sunshine each year, but withsummer’s heat tempered by cooling sea breezes.The retirement condominiums and ranch house-style villas of sun drenched Florida also beckoned,not just to the traditional ‘snowbirds’ from Canadaand America’s north eastern seaboard, but tohordes of freshly retired Europeans too.The more switched-on resorts started to install liftsand ramps to assist the disabled, while airline crewsbecame accustomed to handling wheelchairs. Singles holidays, which in the early days of packagetours were targeted at the 18-30 year olds,suddenly became the province of – what did wecall them? – ‘senior citizens’, and the sunset yearssuddenly became exciting rather than daunting.

Age-old problemsNow, though, a spanner has been thrown into theworks by the travel insurance industry. Recognising


FEATURE20

Watching the sundownWatching the sundown

the simple and undeniable fact that fading eyesight,impaired hearing, and, in many cases, memory losstoo, plus slowed down reactions and reducedmobility all combine to make older people moreaccident prone than others, many travel insurancepolicies no longer underwrite the over-65 risk.With some companies, the age cut-off point is aslow as 60 if you want an annual policy and steepprice increases are met with every passing decadeof life. Some insurers charge three times as much toa 70-year-old as they would for the same person at65 and around half the world’s major travelunderwriters will not insure anyone over 79 yearsold at all.A long-term member of the British Guild of TravelWriters, wheelchair-bound but still highly active,Margaret Hides has just reached that 79 break point.She had an unpleasant surprise when her travelinsurance policy recently fell due for renewal.“Perry Gamble, the Guild’s underwriters, hadpreviously placed our business through London andEdinburgh, and I was never aware of any problemover age issues,” she says. Adding, “But they nowwork through a different set of underwriters, who,like so many others, willnot cover the over-70s. Ihave been with thebrokers for 16 yearswithout so much as aclaim for a lost piece ofluggage, but that seemsto count for nothing.”Taking advice to “phonearound”, Margaret gotbusy dialling. Saga, yes,that very same companythat has built its notinconsiderable fortunesfrom the old and grey,quoted a whacking £880!– and that for just thethree weeks of coverMargaret needed whiletaking a P&O cruise.“Seventy-five now seemsto be the cut-off pointwith most underwriters,which begs the question– since the world’s cruiseships are jam packedwith older people – where on earth to they gettheir insurance from?” she comments.“It’s one thing me travelling within the UK, or evenin the wider European Economic Area, where formE111 gives you some protection, but who in theirright mind would go to North America withoutadequate travel insurance being in place?”It seems, then, that the freedom of movementbeing granted by retirement from work on the onehand is being negated by the ‘no old ‘uns’ stancenow being followed by insurance underwriters.“I appreciate the commercial consideration, but Ibelieve one could contend that this state of affairsconstitutes an infringement of human rights byrestricting the freedom of movement of olderpeople. It is certainly ageism, however you look atit,” argues Margaret forcefully.

A little understanding goes a long waySome of those who do manage to get cover face anightmare when it comes time to claim: “Olderpeople can’t always read or fathom the small printand all too often they would find, if they could, thatthey have been sold a policy which, in fact, doesnot cover someone of their age,” says MichaelLiddell, Travel Insurance Manager at Britishsupermarket chain Sainsbury’s, whose underwritersdo cover people up to age 79.“Too many travel insurance providers either don’tundertake comprehensive screening of policyapplications or, because older people are morelikely to make medical insurance claims, simplydecide not to insure any older travellers, leavingthem to struggle to find cover at a time in their liveswhen they have the means to travel and most wishto do so.”Lots of policies are badly sold around the world bytravel agents: “Despite their policies usually being farmore expensive, they sell around half of all the UK’stravel insurance and the pattern is the same in othercountries. In Britain, that means around £326 millionworth of business a year,” says a spokesperson for

the Consumer’s Association.Adding, “Unlike otherfinancial services providers,travel agents are not requiredto register their insuranceproducts with the FinancialServices Authority. This, notsurprisingly, leads to a lot ofmis-selling and to people, likethe older travellers amongus, thinking they are undercover when they are not.”The Research Department,an independent organisation,found that travel insurancecould cost twice as muchwhen booked through a touroperator or travel agentrather than boughtseparately.Around the world, mobilityfor older people is a growingconcern. Recent research inNew Zealand indicates thatthe total annual distancedriven by the 65-plus age

group has increased significantly, especially amongwomen. In the Netherlands, increases have beenfar less, but this is thought to be down to risingprices and relatively low fixed incomes. “Certainlywe are selling more travel packages to olderpeople,” commented a Dutch tour operator.Almost everywhere, people aged 65 and over arethe fastest growing segment of the population. InNew Zealand, for example, the number of peopleaged over 65 increased 14-fold between 1901 and1999, from 31,000 to 446,000. As a share of theoverall population, this represents a growth fromfour per cent to 12 per cent. The 15-64 portion ofthe Kiwi population has remained at around 65 percent, while the number of under-15-year-olds hasdropped from 33 per cent in 1901 to just 23 percent to day.

Over the past decade, the number of registereddrivers of over 70 years of age registered in the UShas grown by a whopping 50 per cent and thisgrowth is bound to accelerate with the accession ofbaby-boomers to pensionable status.

However you look at it, older people are animportant and ever-growing market and, likeanyone else in business, travel insurance providerswould do well to look at and cater for their needswith something better than a closed door policy.


FEATURE 21

With a 9,596,960 sq km land mass, China is theworld’s fourth largest country in area, after Russia,Canada and the US. At just under 1.3 billion, itsrecorded census population is considerably biggerthan those of the US and the European Unioncombined, however. But, according to someindependent assessments, the true populationfigure is more like 1.5 billion. The discrepancy inthose figures is because the country officiallyoperates a ‘one child per family’ policy and it issuspected that many couples give false returns andhide their children in order to avoid prosecutionfor breaking the quota, which is a rule that mighthelp in terms of the nation’s social engineering, butdoes not take into account natural human desires.The bending of the rules is particularly noticeableamong the better connected and more well offmembers of society, who are more likely to beadept at getting away with it.Given economic growth that has followed abreathlessly upward path for 20 years and shows nosign of abating, China is set to eventually becomethe world’s largest market – so no wonder foreigninvestors have been beating a path to the Orient,difficulties notwithstanding.

Huge potentialThe country is, after all, still run by what isnominally a Communist regime, with all the red-tapebureaucracy, philosophical and cultural difficultiesthat implies. But the potential is mind-boggling.Shanghai seems set fair to become the world’s mostimportant city before long, and it is claimed –perhaps a tad apocryphally – that fully two-thirdsof all the world’s construction cranes have beenworking there in recent times. What was once a seaof bicycles ridden by men and women in drab anduniformly coloured Chairman Mao outfits hasbeen transformed into the world’s biggest trafficjam. Today, you rarely see an old car on the road,but that’s because just a couple of decades ago therewere virtually no cars at all!Armani suits, dark shades and the ubiquitousmobile phones are now de rigeur among theupwardly mobile and while, especially in the moreremote rural areas, abject poverty can still be foundall to easily, there is a fast emerging and alreadyenormous and affluent middle-class, with money toburn and travel on its mind.For centuries, China was a leading civilisation,spearheading arts and science alike, while shelteringfrom outside influences behind its Great Wall.Then came the economic invasion of the 19thCentury, when countries like the UK, France,Germany and the US set up entrepot enclaves andcornered markets, while bullying the locals.It was Sun Yat Sen who brought the decrepit andcorrupt Empire tumbling down and dragged Chinainto the 20th Century; but then followed the

turmoil of Japanese invasion, leading to the horrorsof World War Two, and the 1949 Communistrevolution, led by the charismatic but sadlymisguided Mao Zedong. Radicalism led to terror,famine and the loss of millions of lives beforeChairman Mao’s more outward-looking successor,Deng Xiaoping, set course in 1978 for decentralisedeconomic decision-making – a wise decision thatsaw output quadruple within two decades andChina developing what is today the world’s secondlargest Gross Domestic Product (GDP).

Travel boomBurgeoning tourism has become one of the drivingforces of that growth. Earnings from the industryare expected to have topped 600 billion yuan (£37bn) when the 2004 figures come in. The numberof domestic tourists now tops 105 million a year,accounting for 70 per cent of the total and makingChina the largest domestic tourism market in theworld. What’s more, incoming tourists havereached 105 million annually.According to Shen Huirong, Director of the tourismpromotion and international liaison department ofthe China National Tourism Administration: “Chinahas earned US$19.26 billion of revenue frominbound tourism in the past year and that representsan impressive rise of 37.5 per cent over the previous12 months. We expect the number of overseasvisitors to hit 210 million by 2020, with revenuesreaching US$58 billion to make us the world’snumber-one tourism destination.”Says John Koldowski, Managing Director of Pacific& Asia Travel Association’s strategic intelligencecentre: “2003 was one of the worst years ever forthe region, due to four major external shocks –SARS, terrorism, global economic doldrums andthe war in Iraq, but China bucked the trend.“And China has done best from the record-breaking growth seen in the region this year, whichhas been down to a combination of factors,including pent-up demand from last year,competitive fares from low-cost air carriers, robusteconomic performance in Asia Pacific sourcemarkets and further easing of outbound regulationsby the Chinese authorities.”Peru, for example, has just been granted ‘approveddestination status’ by China and expects to welcomemore than 250,000 Chinese tourists this comingyear, against the mere 5,000 it hosted in 2003.“The approval decision accomplished one of thekey goals of our foreign minister’s ongoing Chinatour,” comments a happy Jorge Chian, theEconomic and Commercial Counsellor with thePeruvian embassy in Beijing.Outbound travellers from China have reached atotal of 30 million this year – which is twice as

many as those who venture out of Japan, and anincrease of nearly 50 per cent on the previous year.“Among the first things you do when you have new-found disposable income is to buy a house, buy acar, get into the whole designer label thing and startto travel,” states a recent report from PATA.This tendency has been labelled as ‘braggingrights’, continues the report: “People like to bragabout what they have bought and the places theyhave visited. China is becoming like Japan was atthe time of its ‘bubble economy’, 20 years ago. It’sa place of new-found affluence and aspirations.”With land borders to 16 other countries, includingRussia, India and Vietnam, and a revitalised airindustry – with Air China currently looking likelyto raise HK$8.36 billion from its initial publicoffering on the Hong Kong and London stockexchanges – Chinese travellers have lots available todraw them beyond their own borders.One country not benefiting as much from all thisas it should is the US, however. Because thedifficulty in obtaining an American visa is so greatright now, most Chinese don’t even bother to putthe US on their shopping list for possibledestinations.Continues the PATA report: “With the emergenceof a new middle-class that likes to show off itswealth and success, it is natural that more andmore Chinese will travel to other parts of theworld. And that will have a huge impact on theeconomies of other countries.“To capitalise fully on this, destinations must learnto cater for Chinese language and tastes – like rice,rather than bread, at breakfast.“The Japanese want their bed placed so their feetare facing the sea but the Chinese believe that thisleads to all your fortune being swept out of thewindows!”

Customs and insuranceNaturally, custom also impacts on the travelinsurance industry. It’s a sweeping generalisation, ofcourse, but the perception is that the Chinese are,by nature, a nation of gamblers and it can certainlybe said that, until now, most of the country’stravellers have been content to trust in goodfortune rather than the solid protection of a travelinsurance policy. But as the market becomes moresophisticated and people venture ever further fromhome, insurance considerations are being takenmore seriously and there is every indication thatthis will become a massive growth market withplenty of opportunities for outside investors.The norm is still a requirement for outsidecompanies to operate as partnerships with localventures, rather than as wholly-owned stand-alones, but now China is a third-year member of

Roger St Pierre gives thelow-down on the world’sfastest growing market


WORLDMARKETS22

Chinese whispers

the World Trade Organisation (WTO) that is likelyto change, as the country moves increasinglytowards free market conditions.The country recently announced that to mark theanniversary of its 2001 WTO accession, it will nolonger restrict foreign firms’ access to its insurancemarket to specific zones within the country. Alsobenefiting from this relaxation of trade restrictionsare banking, transportation and, significantly, thetourism industry.This move not only gives new impetus to foreigninvestments in China’s burgeoning economy butalso underlines the authorities’ confidence in thecountry’s ability to now compete in the financialservices and insurance sectors on an increasinglyequal basis.However, the impact could be more symbolic thanreal as most foreign investments in China’sinsurance industry take place in the busilydeveloping coastal areas and in and around the keycities of Shanghai and Beijing, which have, in fact,long been open to foreign investment. Perhaps of more interest is the Decemberannouncement by the China Insurance RegulatoryCommission that foreign brokers are now allowed to

hold up to 51 per cent of the equity in theirChinese affiliates. The rule that limits foreigninsurers to a 50 per cent stake in any joint venturehas not changed, though American InternationalGroup Inc (AIG) was able to negotiate an exception. AIU is the overseas property and casualty insurancedivision of AIG: “When we first obtained ourlicence to set up a branch in the southern city ofGuangzhou, the approval had a lot of stringsattached,” says Branch Manager David Peng. “Evento this day, some insurance sectors are off-limits forus. However, we have a long-term commitment tothis exciting market. We may be a small-time playerright now but we see enormous room for growth”As compared to domestic competitors,international operators like AIU are usually muchsmaller in scale, with fewer branches and limitedproduct lines, but believe such disadvantages canbe turned around by those who have expertise inemerging markets.AIU boasts its own unique strengths. Not onlydoes its parent company have a coveted AAA

Standard & Poor’s rating, but AIU itself is alsohighly rated, which is rare for an insurancecompany in the post-9/11 world.“China’s insurance industry is still at an earlystage of development and management tends tobe in broad brush strokes,” says Peng. Incomparison, his company’s approach is morenuanced, focusing on niche markets in which itfeels confident it can excel.According to China Insurance RegulatoryCommission statistics released in November, some40 foreign insurers now have a total of 73 officesin China.Their 2003 net premiums topped US$800 whilethey held assets in excess of US$3 billion.

Going for goldOne concern that does need redressing is the fast-widening trade gap between China and its tradingpartners. With exports surging at an annual rate ofnearly 46 per cent, while exports grew by a lower, butstill impressive, 38.5 per cent, the surplus widened inNovember for the fourth consecutive month. The US, the EU and other trading partners claimthat the yuan’s government-decreed exchange rate

undervalues the currency by asmuch as 40 per cent, makingChinese exports unfairly cheap.However, as foreign exchangepolicy moves inexorably towards amarket-based floating system, thecountry has still set no timetablefor revaluation of its currency:“The continued goal of the centralbank’s monetary policy remainssustainable growth, stable price andsound employment,” says People’sBank of China Deputy GovernorGuo Shuqing.Along with a more realisticexchange rate, invisibles, such asinsurance, are seen as a major wayin which the outside world canclose the trade gap.According to WTO DirectorGeneral, Supachai Panitchpakdi,

China has performed admirably in living up to thecommitments of its accession to the organisation,though there remain some tough nuts to crack.One interesting aside is the run-up for the 2008Beijing Olympics, which is sure to produce a surgeof demand for travel insurance and will provideadded impetus for long-term growth in China’sinbound tourism industry.It was the Olympics that really put Barcelona onthe international tourism map, in 1992, and thatcity has never looked back; while Seoul, in 1988,leveraged the marketing opportunity presented bythe games to open up its inbound market andkick-start double-digit growth in demand.Sydney, in 2000, was already well established asone of the world’s great destinations and enjoyedits best year ever thanks to the games, but has notreally sustained the momentum, while Athens in2004, though a great success in sporting terms, isunlikely to leave a very rich tourism legacy. ButBeijing? Well, that could be something else…


WORLDMARKETS 23

There has been a substantial increase in thenumber of people living and working abroad whoare not on holiday. Most prominent among thesepopulous non-holiday groups are expatriates(expats). Expats include the millions of corporateemployees living and working in countries otherthan their own, and their accompanying spousesand children. Virtually all expats and their familieshave special insurance created to cover theirmedical and other needs while living abroad.Expats tend to encounter fewer legal problems, percapita, than the other non-holiday categories. Mostexpats receive pre-trip briefings on the medical,cultural and legal problems they are expected toencounter in the countries where they are sent towork and live. These briefings vary considerablyfrom company to company; but even the mostcomprehensive pre-travel instructions do notdisclose all of the cultural/legal differences andspecial problems which may arise in the specificcountry of assignment. For instance, who would have expected that using aradar detector in an auto (a most common practicefor drivers in the US) would be illegal in France?Certainly the expat arrested near Paris for drivingwhile using his radar detector was surprised toreceive a traffic citation. His call to our office,conferenced by his company’s assistance provider,centred on what would happen if he ignored hiscourt summons. Would there be an Interpolwarrant? (Most likelyno.) Would he bearrested if he left andthen re-enteredFrance? (Probably not,but still possible.) Didhe need a local legalreferral? (Yes, if hewanted to fight theunderlying charge.)The typical member ofthe expat group isgenerally mature, busyworking, with little idletime to engage inactivities which result inlegal trouble. It is morecommonly an expat’sfamily member whobecomes involved witha legal problem. Forinstance, an expat’swife in Paris whoconstantly argued withthe apartment building’ssuperintendent overingress/egress issues,received a police summons for ‘assault’ after theirconfrontations escalated when she continued tomove the super’s potted palm to clear a path forher baby’s carriage and for packages. Our Parisianlawyer cleared up this emotional situation. Otherproblems arise when the teenage children of expatsmistakenly presume that the benign treatment ofmarijuana in Northern European countries is thesame in other European regions.Expats and other international longer-termresidents, including students, cultural exchangeworkers such as au pairs and camp counsellors andresort staff, typically take holidays while abroad,ranging from long weekend trips to longer end ofwork/school term holidays in-country and in nearbycountries. During such trips, these travellers tend to

encounter legal problems to a similar extent asholiday travellers. We have observed that while at their assigned workdestination, the cultural worker and temporaryworker groups tend to get into legal problemsmore frequently than the expats. Au pairs in theStates encounter driver’s license problems becauseof 50 separate bodies of licensing laws, as well asconfusing and changing regulations, especially thoseenacted post-September 11. Often, vehicle/drivingcitations are erroneous and caused by confused, or‘hard-headed’ officers, many of whom have notheard of an International Drivers Permit (IDP).One police officer took drastic action inWashington, D.C. when he stopped an au pairwho was driving her host family’s car with thefamily’s five year old daughter as a passenger. Theau pair showed the officer both her foreign driver’slicense and her IDP. The officer incorrectlydetermined that the 22-year-old woman had beenliving in D.C. for more than 30 days, and that she,therefore, was illegally driving without a D.C.license. Instead of giving her a citation, he arrestedher, and placed her in a jail cell at the local policeheadquarters, separating her from her charge. Thefive-year-old girl screamed and cried hystericallyuntil her father appeared more than one hour later.It took us a month to get the arrest quashed andannulled and to obtain a semblance of an apologyfrom a local police official.

Similarly, every state has itsown laws for each criminaloffence. The drug lawsrange from no prosecutionto imprisonment for thesame amount of marijuana.Drunk driving laws for a firstoffender range from pre-trial probation and norecord, with a 30-daylicense suspension in onejurisdiction, to a permanentrecord of conviction and amonth or more in prisonwith a year or more licensesuspension in a neighboringjurisdiction. These significantdifferences also exist withineach state and vary fromcity to city and county tocounty. Qualified localcounsel is essential toachieve acceptable results.Keeping non-residentforeign clients in the US freefrom a permanent policerecord is increasingly

essential in this post September 11 environment,where even a minor conviction may involvedeportation from the US or may prohibit a foreignnational from ever again legally entering the US.Underage drinking and alcohol-related offences,shoplifting and auto accidents form the bulk of thecases for this non-holiday travelling population. Theindividual group members have something incommon with the holiday tourists: they aregenerally law abiding. But with so many millionsliving and travelling abroad at any given moment,accidental, reckless or unintentional actions arebound to occur with resultant legal consequences.Such problems abroad can be a monumentalhassle, and certainly require competent legalassistance.

Dick Atkins looks into the legal problemsthat arise when someone decides to live inanother country. Although often betterinformed than tourists, when ex-pats breakor misunderstand the law, trouble can stillbe serious and lasting.

Living abroad safely


DICK’SHOTLINE24

Dear ITIJ,

I wanted to ask you – do you think travelinsurance is worth it – I mean,statistically? How many people buy travelinsurance and how many people have torely on it? Something tells me the truthabout travel insurance is that companiesrely on instilling a fear into us all aboutwhat might happen, whilst, in reality,incidents of claiming are rare. Anotherthing: the idea of loading policies offendsme. If someone is, percentage wise, morelikely to need travel insurance as a back-up, these companies are allowed topunish them with extra costs. When didthat ever become fair trade? The peoplethat are most vulnerable and mayactually benefit from the service are theones that are penalised? Imagine thiswas a taxi service and the customer withinjured legs is made to pay a higher priceas he is more likely to rely on the service.One charge for one service – surely? Let’s face it, insurers aren’t the mostscrupulous of service providers – they’lltry and get out of paying where theycan anyway.

David Morris, UK(e-mail)

Dear David,Maybe you have had a bad experience orresent paying for the idea of security, but ifyou do go abroad and are caught short when

you break a bone or lose luggage then youwill be the first to kick yourself when youwant compensation or a medical bill paid.Statistics, if anything, show that accidents dohappen. At ITIJ, we hear about a lot of casesand just look at the newspapers to see all theaccidents and incidents that can occur inpopular tourist destinations. Loading policies can be a contentiousissue, I agree, and we must examinethese price fluctuations case by case, butif you are looking at a possible payout of,say, £100,000 in medical expenses dueto a known condition, do you think it’sfair that the insurer shouldn’t ask for alittle more for coverage? Loadings aren’talways that significant when compared tothe price of air ambulances and extensivesurgery. As for avoiding payouts, mostinsurers try and stick to the letter of thepolicy, as this is the only measure bywhich they can make judgements. Whenthere are annoyed, customers who thinkthey deserved a payout often go to thetabloid papers – sometimes when theyare not in the right, and, because of this,some insurers may pay out where theyneed not to, to ensure their reputationisn’t tarnished. And remember, if youdon’t want to buy travel insurance thenyou have that choice – but don’t blameanyone if you can’t afford theconsequences of something going wrong.

Regards,Richard Forsyth

Send your letters to: The Editor, ITIJ,Voyageur Buildings, 43 Colston Street, Bristol, BS1 5AX, UK (fax +44 (0)117 929 2023 or e-mail [email protected])

We reserve the right to edit your letters and to cut them if neccessary.

Letters

that is allowed to receive compensation from theinsured must get that insured’s written permissionbefore also receiving payment from the insurer.The producer must also disclose the actual amount– if possible – or an estimate of the compensationfrom the insurer, including any contingentcompensation, and the method of calculation.• An insurance producer must disclose in advanceto an insured or prospective insured that theproducer will receive compensation from theinsurer; that the amount of compensation may varyby product and insurer; and that the insurer maypay the producer additional compensation basedon factors such as the volume of loss experience ofbusiness placed. There seems little chance the amendments willmove ahead unaltered, however. How much orhow little to disclose, how to do it, and to whom,remain contentious issues among varying groups.Holly Bakke, Banking and Insurance Commissionerfor New Jersey reacted to some industryrepresentatives who argued that detailed disclosurerequirements would inundate consumers withpaper. She said: “I am troubled by the fact that youseem to think that consumers can’t handle moreinformation…You may be at a point where youneed to rethink the compensation system and howit works…all industries evolve.”

continued from p.11

Insurance industry regroupsin wake of Spitzer allegations

A salesman had been on the roadfor several days when heencountered difficulties with hisairline booking. The possibility ofnot getting on to the requiredflight made his blood boil. Thepoor counter clerk endured it allstoically. After sorting him out andfinding him a seat she pinned abright badge on to his lapel andtold him to show it to the cabinstaff once on board. Anticipating VIP treatment, heimmediately sought out a flightattendant and pointed to thebadge. She looked puzzled andasked who had given it to him.“Does it matter!” he exclaimed.“Not really sir,” the flightattendant replied. “But that is thebadge we normally put on childrenwho require special attention!”

Thanks to ABTN forthis amusing incident:

Smile corner

Beginning next month, Bangladesh will face acritical economic challenge when all textile andclothing quotas in the industrialized world arephased out. IJET Travel Risk Management looksat the possible consequences of this move

In the 1995 Uruguay Round of World TradeOrganization agreements, industrialized membersagreed to abolish all clothing and textile quotasbeginning 1 January 2005. Though there have beenincremental quota reductions, the most substantialreductions – which will affect the remaining 49 percent of the industrialized world’s textile imports –kick in next month. The textile industry is crucialto Bangladesh’s struggling economy.Domestic and international business organisationsdisagree on the economic impact that the newquota system will have on the country’s pivotaltextile industry. But most acknowledge thatBangladesh will face substantial economicchallenges under the new system. Because thereduction in quotas will also increase access tomajor markets for more developed garmentexporters such as China and India, Bangladeshmust overcome significant challenges in order toremain competitive.The US market is key to Bangladesh’s garmentindustry. The removal of quotas will allow China’scheaper and more abundant garment exports greateraccess to the US market than before. Because USgarment producers have begun lobbying against anincrease in Chinese imports under the new system,the US government will probably impose somerestrictions on Chinese textile imports.The policies the Bangladesh government is puttingin place to adapt to the new quota system have ledto some improvements to the country’s overall

business environment. But failure to quicklyimprove the competitiveness of Bangladesh’sgarment industry could cause drastic economic andpolitical consequences.

Efficiency at Chittagong Port For Bangladesh’s textile industry to become morecompetitive, it must reduce delays in acquiringmaterials and improve infrastructure and customsconstraints. The country’s main port inChittagong, which handles 75 per cent ofBangladesh’s exports and imports, is inefficient. ATransparency International Bangladesh studyindicated that exporters and importers mustcommonly bribe customs and port workers, whichmakes Bangladesh a more expensive – and lessattractive – place to do business.The port is also hindered by severe containercongestion. The government approved a contract inlate 2003 for a new container terminal to alleviatecontainer congestion. But the project is notexpected to be finished until December 2005 andhas already encountered some setbacks.

Unrest likely The demands of greater competition will probablyput 500,000 to one million garment employees outof work. International and governmentaldevelopment organisations such as the US Agencyfor International Development and the AsiaDevelopment Bank have established programmesto prepare for the elimination of quotas. Theseplans, unfortunately, may be too late.Given the large number of workers who are likelyto loose their jobs and the lack of a social safetynet, widespread civil unrest could develop.Garment workers in the country launch protests

with some frequency, some of which have beenviolent. Companies should expect intensified laborunrest, as the textile industry is the only job formany Bangladeshi women.Labor unrest could also lead to intensified politicalunrest. The opposition, Awami League, continues itsefforts to oust the current ruling BangladeshNationalist Party (BNP) four-party alliance bylaunching many crippling general strikes (hartals).These strikes not only disrupt the distribution ofgoods and supplies, but also reflect negatively on thecountry’s image as a location for foreign investment.Furthermore, a rise in social instability couldincrease the appeal of Islamic extremism. Terrorattacks by fundamentalist groups are on the rise;there are allegations that JI has connections withsome of these groups. A bomb threat sent toChristine Wallich, the World Bank’s CountryDirector for Bangladesh, prompted her to leave the

country for a week in September. Bangladeshi-bornBritish High Commissioner Anwar Choudhurysuffered minor injuries in a 21 May bombing at aMuslim shrine in the northern town of Sylhet.Attacks could increase if political unrest intensifies.Bangladesh faces a substantial economic challengeand, potentially, a deteriorating securityenvironment in 2005. Although the government wassidetracked by major economic challenges earlier thisyear due to severe flooding throughout the country,its earlier delays on efforts to improve the country’sbusiness environment will likely exacerbate thenegative effects of the new quota system. Thegovernment must speed up political reforms andinfrastructural investment over the next year in orderto minimize any negative effects. Otherwise,Bangladesh could miss out on the renewed interestin foreign investment – and the country’s businessenvironment will go from bad to worse.

Bangladesh: a business environmentin need of transformation


HOTSPOTS26

plans.Ross cited an earlier Kaiser report which noted that16 per cent of employers in the small and mid sizecategory are actually considering dropping theirhealth benefits totally in 2004, and ‘all these factorsare dragging people to the individual marketplace.’To date, the individual health insurance market hasserved primarily the self- employed, individuals andfamilies whose employers are too small orparsimonious to offer health coverage (it is notmandatory), the temporarily unemployed, and earlyretirees with no coverage. For them, the individualinsurance market is the only option – that or going bare.For many years there has been little choice in theindividual health insurance market.Even many people who could afford them couldn’t findinsurers offering individual plans or, if they were offered,the medical requirements were so daunting mostpeople with even modest afflictions couldn’t meetthem. In addition, groups plans – though far moregenerous than individual ones and infinitely more costly– were mostly paid for by employers, while individualplans were paid by the insured – no subsidy.According to data reported by the Kaiser survey,premiums for single coverage in one surveyaveraged $1,786 annually for single individual planscompared to $3,383 for singles in a group plan,and $3,331 for an individual in a family plancompared to $9,068 for family employer-basedcoverage. Other surveys have shown individual andgroup premiums far higher than that.In general, says the Kaiser report, older purchaserspay higher premiums than younger, and premiumsin the New England/Mid Atlantic region are higher,sometimes almost double the premiums in otherregions – generally reflecting higher health costs anddifferences in state insurance laws.Because they pay all the premiums out of their ownpockets, individual purchasers are selective aboutwhat they buy, usually opting for more deductiblesand co-payments, buying only what they think theyare going to need. While group plans, negotiatedby hardened union bargainers are more interestingin getting whatever they can get – whether theyneed it or not. Gary Lauer, CEO of eHealthInsurance – a nationalmarketer of individual health insurance products –reported that individual plan purchasers are alsomuch more amenable to accepting high deductibleswith their purchases: 68 per cent in one survey ofeHealthInsurance clients accepting deductibles of$1,000 or more. ‘Whether that is influenced simply by affordability,

by budgetaryconstraints thatthese differentconsumers have,I don’t know theanswer to that,but this has beenfairly constant forus for someperiod of time,’said Lauer.Lauer’s firm, eHealthInsurance, provided much ofthe data for the Kaiser report. He noted thatamong the approximately 140 carriers his firmworks with, there are over 4,000 differentinsurance plans available to individuals.eHealthInsurance is not a health insurance carrierper se, but brokers the products of other carriersacross 50 states. Who is buying these products? 53.9 per cent ofsingle purchasers of individual products fromeHealthinsurance are in the 25 to 44 year agegroup, while 67.1 per cent of family planpurchasers are in that age group. Twenty eight percent of single plan purchasers are under age 25.Moreover, said Lauer, 40 per cent of individuals andfamilies who buy health insurance through hiscompany were previously uninsured for a minimumof six months.He noted also that a particularly buoyant part of theindividual market was short-term insuranceproducts designed for the unemployed or peoplebetween jobs who anticipate being hired relativelysoon by an employer who does offer healthinsurance. ‘Short-term’ health insurance policiestypically cover gaps of between three to sixmonths. Almost 80 per cent of individual plan purchasers,however, are more interested in the long haul, suchas the self-employed or early retirees who justwant to make it through to age 65 when Medicarekicks in. Even with that, however, they are not outof the swamp as Medicare covers only about 50per cent of the average senior’s health bills. Thegreat majority of Medicare participants buyadditional, supplemental coverage on the retailmarket or join federally-approved HealthMaintenance Organizations that cover or assumeresponsibility for all their healthcare in return forstipends from the government. The Kaiser Family Foundation is a private, non-profit organization dedicated to studying andreporting on health policy issues.


Market for individual healthinsurance grows in the US

Richard Forsyth interviews Rafael Senen Garcia,General Manager of Mapfre Asistencia, in Spain

When you meet Rafael for the first time, you canfeel his presence taking stock and taking lead.Although English is not his first language, he hascomplete command over subtleties often lost insecond languages, like inflection, and he has ameasured, gentle voice. His strong, dark eyes seemto assess situations quickly as they absorb the placesand people around him. He’s quietly in control andhe knows it. There is something he exudes thatmeans you have to take him seriously, a business x-factor which no-doubt has aided him to get to

where he is, the General Manager of MapfreAsistencia – a company that since his arrival 15years ago has gone from an income of €30 millionto €400 million.Born and educated in Madrid, Rafael’s first job wasas a teacher of fiscal law on a postgraduate coursefor management of SMEs (Small and MediumEnterprises), a good grounding for the commercialknow-how he would later rely on in practice. But ithasn’t always been a bed of roses. He recalls hisworst job ever as cleaning out the filth from horsestables in Germany. “They didn’t even let me ridethem,” he grumbles at the memory. But when itcame to his career, a little time, hard work anddetermination earned him a play in the biggergame.The crossroads in his life was when he had a choiceof two high-level entry positions – one from afrozen pre-cooked food company and the otherfrom Mapfre. If he had taken the other route hewould be responsible for the sales progress ofmillions of bags of chips! “Any regrets?” I asked.“No,” he laughed, “They were offering more, butno regrets.”

Despite high incentives to join the other company,his heart took him to Mapfre, where he saw abetter career track on offer, one that has sincecome to fruition. FromOctober 1989 he has beenworking on Mapfre Asistenciawith the objective of setting upa Commercial Department. Itis obvious he has a lot of pridein his work and his companywhen he says he ‘could talkabout Mapfre for years’.Priorities he sees as importantinclude transparency, ethical

behaviour and fairness in hisrelationships with employees,collaborators, clients andproviders.When it comes to theindustry, he has a fair assessment of the biggerpicture and he thinks there are some excellentopportunities opening up in the world.“Travel insurance, on a worldwide basis, as well asthe tourism that sustains our market, despiteappearances, is going through an important growth,although the main European markets (UK &Germany) are showing an obvious sign of growth.The Asian markets, for example, are growing atspeed. The arrival of the Schengen visa has had animportant effect: it has substantially increased theissuing of travel insurance in Latin America andAfrica. “To conclude,” he says, “the joining of newEU members from Eastern Europe and thedevelopment experienced during the last decade incountries like Spain, Ireland and Portugal are factorsthat have also helped boost this sector. Obviously,to be able to reach these targets, it is necessary tobe a global company.” Unsurprisingly, Rafael is a busy man, and someone

who is always on the move from country tocountry for his business. On greeting him, I aminformed that he has to catch a plane in the next

hour, whichsounds likesomething heprobably saysa lot. “Fifty per centof the time Iam travelling,”he calculates.This may wellbe the reason

he spends allhis spare timewith hisfamily. Rafaellives in the

centre of Madrid with his wife Yolanda and hischildren Lorena (nine) and Alberto (six). “My wife is my heroine,” he declares, and youknow he means it. “My family is the most importantthing. I treasure my time at home. I always go backhome when I can.”His personal passion is reading. He reads‘everything, all subjects’, but, in particular, likes to

research history with every opportunity, and ifforced to choose another path, he says he wouldhave liked to have become an historian. There is anenthusiasm and intelligence in his voice when heexplains this, like he takes pride in learning about hisworld.When pressed about how he sees himself, hedescribes his prime quality as being ‘intuitive’ andthen, with a shrug of the shoulders and narrowingof the eyes, he says his worse quality is thatsometimes he gets ‘grumpy’. This, he puts down tohim being very demanding and exacting.“I am a perfectionist,” he tells me as if it were aburden for those around him, “I ask a lot from

people. Mainly, I am motivated by things well done.I look forward to things done properly.”In his personal life, he believes the three mostimportant guidelines to get right are ‘trying to be agood person (‘it is not an easy task’ – he adds),solidarity and having a good sense of humour.’Under the boss-like armour, there is most definitelya sharp wit and wicked sense of humour lurking justbeneath the surface. When asked the question: “Ifyou could write your own epitaph, what would youlike it to say?” he replies: “… At last he died… Thatwould mean that I had lived for a very long time!”

Tel: +254-20-600090/ 600552/ 315454/ 315455/ 602492Fax: +254-20-344170 Mobile: +254-733-639-088, +254-722-314-239

Sat Phone: +873-762-315-580 Sat Fax: +873-762-315-581Radio Frequencies: HF 9116 kHz LSB, 5796 kHz LSB

email: [email protected]


PROFILE 27

Thankfully, he said ‘no’ to frozen chips…

“Travel insurance, on a worldwide basis, aswell as the tourism that sustains our

market, despite appearances, is goingthrough an important growth…”

“I ask a lot from people. Mainly,I am motivated by things welldone. I look forward to things

done properly.”


Another active hurricane season predicted for 2005industry, by television weather people as well as byscientists hired to chart the course of the storms asthey head landward.In assessing if and where the storms will makelandfall, the Colorado team estimates a 69 per centchance that at least one major category three tofive hurricane will hit the US, a 49 per cent chanceit will hit the east coast including Florida, a 39 percent chance one will get into the Gulf of Mexicoand make landfall somewhere between BrownsvilleTexas (the southernmost tip of that state up againstthe border of Mexico) and the Florida panhandle. Italso rates an above average major hurricane landfallrisk for the islands of the Caribbean.The forecasts are derived from a variety of climate-related global and regional data, sea surfacetemperatures and sea level pressures, and stormactivity over 52 years. Certain years in the historicalrecord also provide global oceanic and atmospherictrends similar to 2004/2005, and these can provide‘useful clues’ about what to expect, says the Grayreport. In this respect, the best analogue yearswere 1952, 1958, 1970 and 2003.The Gray team does not anticipate any significant ‘ElNino’ events to affect the Atlantic basin. El Ninosare warm water current changes in the Pacific thatalter weather patterns in sub tropical latitudes

around the globe.In their report, the Colorado researchers also takea direct swipe at those who attribute the recentupswing in Atlantic tropical storms to globalwarming. “There is no evidence that is the case,”they conclude. “If global warming were the cause ofthe increase in US hurricane activity of the past nineyears…one would expect to see an increase intropical cyclone activity in the other storm basins aswell (i.e. West Pacific, East Pacific, Indian Ocean,etc.) This has not occurred. When tropical cyclonesworldwide are summed, there has actually been aslight decrease since 1995. In addition, it has beenwell-documented that the measured globalwarming of about 0.5 degrees centigrade during the25-year period of 1970 to 1994 was accompaniedby a downturn in Atlantic basic hurricane activity.”They note also: “Even though the 2004 hurricaneseason has been quite active, it is only somewhatmore active than seven of the past nine hurricaneseasons. It was only the environmental steeringcurrents that drove four of the six major hurricanesof 2004 on such long, low latitude westerly tracksthat made the season so special.”Co-author of the forecast 2005 report wasresearch associate Philip Klotzbach.

AIR AMBULANCE

Aerojet 4631 NW 31st Ave #220 Tel: +1 954 730 9300 [email protected] Stuart HaymanFt Lauderdale Fax: +1 954 485 6564 www.aero-jet.com PresidentFL 33309 Jacobo BercoviciUSA Vice-President

Air Ambulance Professionals, Inc. Ft. Lauderdale Executive Airport Tel: +1 954 491 0555 [email protected] Brian L. Weisz1535 South Perimeter Rd Fax: +1 954 491 6114 www.airambulanceprof.com PresidentHangar 36B Ft. LauderdaleFlorida 33309 USA

Air Ambulance Specialists, Inc. 8001 S.Interport Blvd. Toll Free: +1 800 424 7060 [email protected] Donald JonesSuite 250 Tel: +1 720 875 9182 www.airaasi.com PresidentEnglewood Fax: +1 720 875 9183CO 80111USA

Air Partner Plc Platinum House Tel: +44 1283 844 888 [email protected] Amanda Johnson24/7 Medevac Services Gatwick Road Tel: +44 1283 844 859 www.airpartner.com Team Leader

CrawleyWest Sussex RH10 9RPUK

AMREF Flying Doctor Service Wilson Airport Tel: +254 20 600 090 [email protected] Dr Bettina VaderaLangataRoad Tel: +254 20 315 454 [email protected] Doctor/Medical DirectorPO Box 18617 Fax: +254 20 344 170 www.amref.org Sean CulliganNairobi Mob: +254 733 639088 OperationsKENYA

Atlantic Assist Rua da Alfândega no10-2.oD Tel: +351 291 214 200 [email protected] Adriano GouveiaMedical & Assistance Services PO Box 750 Fax: +351 291 214 202 www.atlanticassist.com Operations Manager

9000-056 Funchal Medical(24hr): +351 965 013 938 Dr E AçafrãoMadeira Ops.(24hr): +351 963 443 339 Medical DirectorPORTUGAL

Canadian Global Air Ambulance TORONTO Tel: +1 204 888 5555 [email protected] Deryk WilliamsWINNIPEG Fax: +1 204 888 9111 www.canadianglobalair.ca Director of Sales & Marketing VANCOUVER Toll Free: +1 800 563 3822

DRF German Air Rescue Raiffeisenstr 32 Tel (24hr): +49 711701070 [email protected] Frank Spirgatis70794 Filderstadt Fax: +49 711701071 [email protected] Director, Fixed WingGERMANY www.german-air-rescue.de Rainer Horcher

Head of Alert Center

Egres Aeromedical Postnet Suite 82 Tel: +27 11 701 2172 [email protected] S.D. Avice Du BuissonEvacuation Services Private Bag X4 Fax: +27 11 701 2173 www.egres.co.za Managing Director

Lanseria 1748SOUTH AFRICA

Euro-flite Air Ambulance Helsinki International Airport Tel: +358 20510 1900 [email protected] Juani MissonenPO Box 187 Fax: +358 20510 1901 Coordinator/Programme DirectorFIN-01531 VantaaFINLAND

FAI Flight - Ambulance International Flughafenstrasse 100 (GAT) Tel: +49 911 36009 0 [email protected] Sven MuellerD-90411 Nuremberg Fax: +49 911 36009 59 [email protected] Operations ManagerGERMANY Mob: +49 174 344 5358 www.flightambulance.net Volker Lemke

Director of Sales & Marketing

Global Air Response 7355 S Peoria Street Tel: +1 800 631 6565 [email protected] Tom CoxA3/ Suite 209 Intl. Tel: +1 303 858 9967 www.airresponse.net Director of Business DevelopmentEnglewood Fax: +1 888 631 6565CO 80112 Intl. Fax: +1 303 858 9968USA

Global Medical Support Ullevaal University Hospital Tel: +47 22 96 50 50 [email protected] Otto Karud0407 Oslo Telefax: +47 22 96 50 51 www.globalmedicalsupport.com Marketing DirectorNORWAY Tel(24 hr): +47 22 96 50 00 May Furuli

Telefax(24 hr): +47 22 96 50 31 Operations Manager

JetWest 16644 Roscoe Blvd Tel: +1 818 787 9100 [email protected] Shawn CrockerVan Nuys Fax: +1 818 787 4473 www.jetwest.comCalifornia91406USA

Luxembourg Air Ambulance 175A, rue de Cessange Tel(24hr): +352 420 440 1 [email protected] Andy BreedenL-1321 Tel: +352 420 440 361 www.air-ambulance.lu OperationsLUXEMBOURG Fax: +352 420 440 366 Louis Wright

Sales & Marketing Manager


SERVICEDIRECTORY 28 To have your company listed in the Service Directory email: [email protected]



Medic’Air International 35 Rue Jules Ferry Tel: +33 1 41 72 14 14 [email protected] Dr Herve Raffin(Air ambulance and rescue, 93170 Bagnolet (Paris) Fax: +33 1 48 57 10 10 www.medic-air.com General Managermedical escort worldwide) FRANCE Dr. Francois Bouchereau

Medical Director

Medical Jet Services & Partner Radetzkystr 19 Tel: +43 1 713 2799 [email protected] W DichtlVienna Fax: +43 1 713 2799-19 www.medicaljetservice.com1030 24hr Tel: +43 699 1570 1570AUSTRIA 24hr Fax: +43 699 4570 1570

Medical Wings 222 Room 3602 Tel: +662 247 3392 [email protected] Jarin KiatfuengfooBangkok International Airport Tel: +662 535 4735 www.medicalwings.com General Manager & DirectorViphavadeo-Rangsit Road Fax: +662 535 4355Sikan, DonmuangBangkok 10210, THAILAND

National Air Ambulance 3495 S.W. 9th Ave Tel: +1 954 359 9900 [email protected] George MartinezFt. Lauderdale Toll Free: +1 800 327 3710 www.nationalairambulance.com Manager Flight CoordinationFL 33315 Fax: +1 954 359 9500USA

Netcare 911 Aeromedical Netcare 911 House Tel: +27 11 254 1392 [email protected] Shane Marais49 New Road Fax: +27 11 254 1405 www.netcare911.co.zaHalfway HouseMidrand 1685SOUTH AFRICA

North Flying A/S Aalborg Airport Tel: +45 96 32 29 00 [email protected] Jef SorensonNorresundby Fax: +45 96 32 29 09 www.northflying.com Sales DirectorDK-9400DENMARK

Pacific Flight Services Pte. Ltd ST Aerospace Engineering Bldg. Tel: +65 6481 3756 [email protected] Katherine YeoA subsidiary of Singapore Seletar West Camp Fax: +65 6482 1727 www.fly-pfs.comTechnologies Aerospace Ltd Seletar Airport

SINGAPORE 797796

Skyservice Lifeguard 9785 Avenue Ryan Tel: +1 514 497 7000 [email protected] David EwingAir Ambulance Montreal Fax: +1 514 636 0096 www.skyservice.com Vice President

Quebec International Business DevelopmentH9P 1A2CANADA

South Pacific Air Ambulance NEW ZEALAND Tel: +649 256 9000 [email protected] Simon BartonAUSTRALIA Fax: +649 256 9111 General Manager OperationsSINGAPORE

Swiss Air Ambulance/REGA PO Box 1414 Tel: +41 333 333 333 [email protected] Walter StunziZurich - Airport Fax: +41 44 654 3590 www.rega.ch PR/Marketing ManagerCH-8058SWITZERLAND

AIR AMBULANCE INTERIOR

Air Ambulance Technology A-5282 Tel: +43 7722 85051 [email protected] Egon KuntnerRanshofen Fax: +43 7722 85051-22 www.airambulancetechnology.com PresidentAUSTRIA

ASSISTANCE COMPANIES

AMREF Flying Doctor Service Wilson Airport Tel: +254 20 600 090 [email protected] Dr Bettina VaderaLangata Road Tel: +254 20 315 454 [email protected] Doctor/Medical DirectorPO Box 18617 Fax: +254 20 344 170 www.amref.org Sean CulliganNairobi Mob: +254 733 639088 OperationsKENYA

Antalya Assistance Muratpasa Mah. Tel: +90 242 243 6219 [email protected] Murat ArslanogluAdnan Menderes Bulvari No 19 Fax: +90 242 248 7724 www.fempatr.com Network ManagerGazihan K:4 D:21AntalyaTURKEY

ARC Transistance 11 Avenue Pleiades Tel: +32 2 776 04 70 [email protected] Hans BiekmannB-1200 Brussels Fax: +32 2 776 04 99 [email protected] Network DirectorBELGIUM www.arctransistance.com Gabriel Goldberg

Travel Assistance Sales Manager

Asistur Paseo del Prado Tel: +53 7 866 4499 [email protected] Emilio Guevara Fernández208 e/ Colón y Trocadero Fax: +53 7 866 8087 www.asistur.cu Managing DirectorHabana Vieja Nestor Silva PérezCiudad Habana Assistance ManagerCUBA


SERVICEDIRECTORY 31call +44 (0) 117 925 5151 To make an alteration to a listing email: [email protected]

Assured Assistance Inc. 6880 Financial Drive UK Toll Free: +080013872487 [email protected] Martha TurnbullMississauga Toll Free: +18003872487 Director of OperationsOntario Tel: +1 905 816 2495L5N 7Y5 Fax: +1 905 813 4719CANADA


9000-056 Funchal Medical(24hr): +351 965 013 938 Dr E AçafrãoMadeira Ops.(24hr): +351 963 443 339 Medical DirectorPORTUGAL

Connex Assistance Egypt Ofiice 11 Tel(24hr): +2 02 336 0005 [email protected] Lara Helmi1st Floor Fax(24hr): +2 02 762 0003 www.connexassistance.com International Network Director6 Sad El Aali StreetDokki, CairoEGYPT

Customer Care Pty Ltd Level 3 Tel: +612 9202 8222 [email protected] Janine Benson60 Miller Street Fax: +612 9202 8220 www.customercare.com.au Operations ManagerNorth Sydney 2060 Dr Howard RobyNSW Medical DirectorAUSTRALIA

Europ Assistance Worldwide 24 Napier Road Tel: +27 11 359 5000 [email protected] Bryan KruuseServices (South Africa) Richmond Flt desk: +27 11 242 1772 www.europassistance.co.za Manager: Aero-medical evacuations,

Johannesberg Fax: +27 11 388 3544 emergency services, events managementSOUTH AFRICA Fax: +27 11 254 1111

First Assistance PO Box 17-310 Tel: +64 9 356 1650 [email protected] Mary-Jo McDonaldGreenlane Fax: +64 9 356 1798 www.firstassistance.co.nz Sales & Marketing ManagerAucklandNEW ZEALAND

Global Excel Management 73 Queen Street, Euro tel: +1 819 566 1130 [email protected] Brian AllattLennoxville, Quebec, NA tel: +1 866 566 1130 www.globalexcel.ca Executive Vice PresidentJ1M 1J3, CANADA Fax: +1 819 566 8335 Christine Francis-Herrin4242 Cranmore Court Director of Business DevelopmentBelle Isle, FL 32812, USA

Global Voyager Assistance PO Box 11 Tel: +7 095 775 0999 [email protected] Costas Danilenko125124 Fax: +7 095 775 0998 [email protected] CEOMoscow Cyprus tel: +357 24 62 5099 [email protected] Maria BerkovaRUSSIA Cyprus Fax: +357 24 62 5065 www.gva.ru Business Development Manager

Goral Assistance Corex House Tel: +97 299 579 930 [email protected] Natalie GankinPO Box 12815 Fax: +97 299 579 931 www.goralassist.com Network ManagerHertzlya Industrial Park46733ISRAEL

LuzDoc International Rua 25 de Abril, 12 Tel: +351 282 780 700 [email protected] Dr Maria Alice SilvaMedical Service Ltd Villa da Luz Fax: +351 282 780 709 www.luzdoc.com Medical Director

8600-174 LUZ LGSPORTUGAL

Medex Assistance Corporation 8501 LaSalle Road Tel: +1 410 453 6300 [email protected] John HmelnickySuite 200 Fax: +1 410 453 6301 [email protected] SVP Sales & MarketingBaltimore [email protected] Rob MooreMD 21286 www.medexassist.com Director of Business Development - UKUSA

Medical Wings 222 Room 3602 Tel: +662 247 3392 [email protected] Jarin KiatfuengfooBangkok International Airport Tel: +662 535 4735 www.medicalwings.com General Manager & DirectorViphavadeo-Rangsit Road Fax: +662 535 4355Sikan, DonmuangBangkok 10210 THAILAND

MK International 95, Ioanninon Street Tel: +30 210 5154600 [email protected] Minas KaloumenosEmergency Services 10444 Athens Fax: +30 210 5131660 General Manager

GREECE

SER Assistance Ltd 50/2206 Dizengoff Street Tel: +972 544 370 002 [email protected] Dr S ZareceanskyDizengoff Tower Fax: +972 3629 1991 General Manager & Director64332 Tel-Aviv ISRAEL

SOS-Hungary Assistance Company Csalogany Street 4/D Tel: +36 1240 0475 [email protected] Dr Peter FelkaiBudapest Fax: +36 1439 1440 www.soshungary.hu Medical DirectorH-1015 HUNGARY

South Pacific Air Ambulance NEW ZEALAND Tel: +649 256 9000 [email protected] Simon BartonAUSTRALIA Fax: +649 256 9111 General Manager OperationsSINGAPORE

TBS Team 24 d.o.o. Ljubljanska Ulica 42, Tel: +386 2618 2301 [email protected] Tomaz Bezensek2000 Maribor Fax: +386 2618 5800 www.tbs-team24.com Marketing ManagerSLOVENIJA Edvard Hojnik(covering Croatia, Bosnia and Herzegovina & Serbia) Director

TMCA 217 Broadway Tel: +1 212 964 8580 [email protected] Margaret WhartomSuite 600 Fax: +1 212 406 1520 www.tmcatravel.com Operational Manager / VP Travel DivisionNYCNY 10007USA

VeriSafe International Ltd Unit B, 6/F Tel: +825 3110 1488 [email protected] Francis ChanLippo Leighton Tower Fax: +852 3005 4760 www.verisafehk.com Chairman103-109 Leighton Road www.verisafegroup.comCauseway Bay, Hong KongCHINA

World Travel Protection 400 University Avenue Tel: +1 416 977 3565 [email protected] Dr Ron MayerCanada Inc. 15th Floor Fax: +1 416 205 4676 [email protected] President & Chief Medical Officer

Toronto www.wtp.ca Lambert BoendersOntario M5G 1S7 VP Operations & Customer RelationsCANADA

CLAIMS MANAGEMENT

Global Excel Management 73 Queen Street, Euro tel: +1 819 566 1130 [email protected] Brian AllattLennoxville, Quebec, NA tel: +1 866 566 1130 www.globalexcel.ca Executive Vice PresidentJ1M 1J3, CANADA Fax: +1 819 566 8335 Christine Francis-Herrin4242 Cranmore Court Director of Business DevelopmentBelle Isle, FL 32812, USA

CRITIAL CARE PATIENT TRANSPORTATION

Lufthansa German Airlines FRA SQ/B Tel: +49 172 367 7929 [email protected] Doris Ehring(Patient transport compartment) Frankfurt Airport Fax: +49 69 690 58147 Key Account, Product &

D-60546 Process ManagementGERMANY

FUNERAL DIRECTORS

Defin Funeral Services Muratpasa Mah. Tel: +90 242 248 8389 [email protected] Murat ArslanogluAdnan Menderes Bulvari No 19 Fax: +90 242 248 7724 www.fempatr.com Network ManagerGazihan K:4 D:21AntalyaTURKEY

Funeraria Officia Roberto Zega Via Clelia 26-28 Tel: +39 067 840 300 [email protected] Cristina ZegaRoma Fax: +39 067 802 488 www.zega.it General ManagerITALY

Funeralcare International 221 Upper Richmond Road Tel: +44 20 8788 5303 [email protected] Mike JohansonPutney Fax: +44 20 8788 2525London SW15 6SQUK

Global Networks Funeral Assistance 22 Falcon Crescent Tel: +44 208 350 0645 [email protected] Cristina Almudi Enfield Fax: +44 208 482 0742 www.globalnetworksfa.com Managing DirectorEN3 4LTUK

Kenyon Christopher Henley 83 Westbourne Grove Tel: +44 20 7313 6920 [email protected] Christopher HenleyBayswater Fax: +44 20 7313 6999 www.kchrepatriation.com Managing DirectorLondon W2 4ULUK

MK Funeral & Transportation Services 95, Ioanninon Street Tel: +30 210 5154600 [email protected] Minas Kaloumenos10444 Athens Fax: +30 210 5131660 General ManagerGREECE

Rowland Brothers International 299 - 305 Whitehorse Road Tel: +44 20 8684 2324 [email protected] Steve RowlandWest Croydon Fax: +44 20 8684 8000 www.rowlandbrothersinternational.co.uk Tony RowlandSurrey CR0 2HRUK

HEALTHCARE CLINICS

Number One Health Group 1 Harley Street Tel: +44 207 307 8756 [email protected] Dr Charlie Easmon(Incorporating Travel Screening London W1G 9QD Fax: +44 7092 196 169 www.executivescreen.com DirectorServices and Exectutive Search) UK



HOSPITALS

Hospital Clinica Benidorm Avenida Alfonso Purchades 8 Tel: +34 96 585 3850 [email protected] Ana DaPaz Brown03500 Benidorm Fax: +34 96 586 4345 www.clinicabenidorm.com Medical DirectorAlicanteSPAIN

INTERNATIONAL GROUND TRANSPORT CO-ORDINATOR

Parkview EMS Ltd 5770 Timberlea Blvd. Tel: +1 905 629 7557 [email protected] France PaquinSuite 201 Fax: +1 905 629 1927 www.parkviewems.comMississauga Toll Free: +1 888 795 9570Ontario L4W 4W7CANADA

MEDICAL COST CONTAINMENT

ChargeCare International PO Box 18 Tel: +44 1409 261 368 [email protected] Philip MarshallHolsworthy Fax: +44 1409 261 633 www.chargecare.co.uk Director of OperationsEX22 7WBUK

Global Excel Management 73 Queen Street, Lennoxville Euro tel: +1 819 566 1130 [email protected] Brian AllattQuebec, J1M 1J3, CANADA NA tel: +1 866 566 1130 www.globalexcel.ca Executive Vice President4242 Cranmore Court Fax: +1 819 566 8335 Christine Francis-HerrinBelle Isle, FL 32812 Director of Business DevelopmentUSA

Global Medical Management 7901 SW 36th Street Tel: +1 954 370 6404 [email protected] Raija ItzchakiSuite 100 www.gmmusa.com Assistant VP MarketingDavieFL 33328USA

Hygeia Corporation 15500 New Barn Road Tel: +1 305 594 9291 [email protected] Joe RadiganSuite 200 Fax: +1 305 594 9201 www.hygeia.net Chief Operating OfficerMiami LakesFL 33014USA

Intercontinental Corporation 5975 Castle Creek Parkway Tel: +1 317 806 2000 [email protected] Karla KregerSuite 100 Fax: +1 317 806 2033 www.us-icc.com Manager, New Business IntegrationIndianapolisIN 46250USA

Medsave USA 1400 Old Country Road Tel: +1 516 622 1700 [email protected] Donald MoyleSuite 109 Fax: +1 516 622 1733 www.medsaveusa.com Chief Marketing OfficerWestburyNY 11590USA

OneWorld Assist Inc 10th Floor Tel: +1 604 278 4108 [email protected] Calvin Ball6081 No. 3 Road Toll free (NA): +1 800 663 0399 www.oneworldassist.com Business Development ManagerRichmond, B.C Fax: +1 604 303 2142V6Y 2B2CANADA

TMCA 217 Broadway Tel: +1 212 964 8580 [email protected] Margaret WhartomSuite 600 Fax: +1 212 406 1520 www.tmcatravel.com Operational Manager / VP Travel DivisionNYCNY 10007USA

MEDICAL ESCORT ON COMMERCIAL AIRLINES


Medic’Air International 35 Rue Jules Ferry Tel: +33 1 41 72 14 14 [email protected] Dr Herve Raffin(Air ambulance and rescue, 93170 Bagnolet (Paris) Fax: +33 1 48 57 10 10 www.medic-air.com General Managermedical escort worldwide) FRANCE Dr. Francois Bouchereau

Medical Director

Medical Wings 222 Room 3602 Tel: +662 247 3392 [email protected] Jarin KiatfuengfooBangkok International Airport Tel: +662 535 4735 www.medicalwings.com General Manager & DirectorViphavadeo-Rangsit Road Fax: +662 535 4355Sikan, DonmuangBangkok 10210 THAILAND



SERVICEDIRECTORY 33call +44 (0) 117 925 5151 To make an alteration to a listing email: [email protected]

18 January2nd Annual Workers' Comp

ExecuSummitEducational event specifically designed for

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19 JanuarySpeed-to-market seminar

Free seminar for property and casualty insurersto build awareness of the regulators' initiatives,current property and casualty industry practices

and technology solutions addressing productdevelopment and state filing processes.

Westin O'Hare, Chicago, USwww.insystems.com

19-20 JanuaryIndependent Insurance Agents of

North Carolina Eastern AgentsConference

What you don't know can hurt you (and yourclients)!

Sheraton Imperial Hotel and ConventionCentre

North Carolina, USwww.iianc.com

26-29 JanuaryPeak Performance Insurance Ski

Conference: Adjusting for anothermarket shift

This year, Peak Performance examines theevolving marketplace of 2005, addressing the

state of the marketplace as well as the use of thespecialty market including surplus lines,

standard and alternative forms of coverage.Vail Marriott Mt Resort and Spa

Colorado, USwww.skiprogrambusiness.com

1-4 February2005 Windstorm Insurance

ConferenceThe conference, which is co-sponsored by the

Tort Trial and Insurance Practice Section(TIPS) of the American Bar Association and

PIPSO (Property Insurance Plans ServiceOffice, Inc.), is designed to provide a variety of

workshops created on specific tracks forinsurance agents, catastrophe adjusters, publicadjusters, risk managers, engineers and other

experts and counsel.Waterside Marriott, Tampa

Florida, USwww.windnetwork.com

6-9 FebruaryPARMA 2005 Conference and

ExpositionRisk management event

Disneyland Hotel, AnaheimCalifornia, US

www.parma.com

9-10 FebruaryInsuring Export Credit and Political

RiskThe 15th Annual Global Convention on

Insuring Export Credit and Political Risk. Thisconference attracts 100-150 industry

professionals including senior figures fromECAs, private insurers and reinsurers, banks

and exporters from over 40 countries.Jury's Great Russell Street

London, UKwww.ibc-financial.com

Diary dates

MEDICAL PROVIDERS



9000-056 Funchal Medical (24hr): +351 965 013 938 Dr E AçafrãoMadeira Ops. (24hr): +351 963 443 339 Medical DirectorPORTUGAL

LuzDoc International Rua 25 de Abril, 12 Tel: +351 282 780 700 [email protected] Dr Maria Alice SilvaMedical Service Ltd Villa da Luz Fax: +351 282 780 709 www.luzdoc.com Medical Director

8600-174 LUZ LGSPORTUGAL


TRAVEL AGENTS


Voyageur Aeromedical Travel Voyageur Buildings Tel: +44 (0)117 927 3554 [email protected] Marc Lucas43 Colston Street Fax: +44 (0)117 925 5940 www.voyageur.co.uk General ManagerBristol BS1 5AXUK



CONTRIBUTORS

Published on behalf of Voyageur UK (Travel Services) Ltd,Voyageur Buildings, 43 Colston Street, Bristol BS15AX, UK

The information contained in this publication has beenpublished in good faith and every effort has been made toensure its accuracy. Neither the publisher nor Voyageur Ltdcan accept any responsibility for any error ormisinterpretation. All liability for loss, disappointment,negligence or other damage caused by reliance on theinformation contained in this publication, or in the event ofbankruptcy or liquidation or cessation of the trade of anycompany, individual or firm mentioned, is hereby excluded.

Printed by St. Ives (Roche) Ltd

Copyright © Voyageur Publishing 2004. Materials in this publicationmay not be reproduced in any form without permission.

INTERNATIONAL TRAVEL INSURANCE JOURNAL ISSN 1743-1522

Greco joins AllianzThe supervisory board of Allianz AG has acceptedDetlev Bremkamp’s wish to retire by the end of2005 after 40 years service with the Group.Bremkamp, currently responsible for the Europe IIcountries as well as international reinsurance andindustrial insurance business, has served as a boardmember of Allianz AG for more than 25 years,carrying out a variety of responsibilities. Furthermore, the board has appointed Mario Grecoto the Allianz management board as of 1 May 2005.He will assume responsibility for Europe II in future.Greco has served for more than 10 years in the topmanagement of the Italian Allianz Group subsidiary,Riunione Adriatica di Sicurtà (RAS). He has beenChief Executive Officer of RAS since 2000. Enrico Tomaso Cucchiani, Chief Executive Officer ofthe 100 per cent subsidiary Lloyd Adriatico in Italy,has been appointed to the International ExecutiveCommittee. Cucchiani will continue to co-ordinateAllianz Group’s efforts to increase its competitivenessand reap more synergies from its property andcasualty insurance business worldwide.

RISCK find solutionfor general managerSimon Smart takes over as General Manager ofRISCK Solutions Ltd, a new medical screeningcompany born as a result of a separation within theWings Medical Group.Wings has been involvedin screening since 2001,but in 2004 it was decidedthat the screening divisionwould operate separatelyas a new company withnew shareholders and runby Simon. Simon hasbeen involved in the travelinsurance industry on andoff since 2000. Prior tothis, he was working in theleisure and travel industries in various locationsworldwide. Simon says that the new venture isexciting and challenging. He plans that in 2005 RISCKSolutions will become a major player in the pre-travelmedical screening and travel advice market, providingother travel related services out of their 21-operatorcall-centre in Bristol in the UK.

Take-off with DRFGerman Air Rescue (DRF) has appointed FrankSpirgatis as Director for the Fixed Wing sector. Hewill be responsible for key accounting and thefurther development of DRF’s global partnershipnetwork. “Following our ISO 9001 and EURAMIcertifications in 2004, permanent qualityimprovement is essential,”says Mr Spirgatis.After receiving an engineeringdegree, he started his careerin 1986 as a Weapon SystemsAdvisor at the German AirForce. Also holding a businessand administration degree, hehas taken over differentmanagement positions withgrowing responsibilities in theIT industry since 1995. Beforejoining DRF in 2004, Mr Spirgatis held the position ofBusiness Unit Manager with a staff of 60.Having this mixture of marketing, technical andoperational experience, Mr Spirgatis appears to bethe ideal candidate for this newly created position. Hesaid: “In the past 30 years, DRF has earned anoutstanding reputation in the air ambulance market. Iam very pleased to have the opportunity to join thesenior management team and thus support theircontinuing success in the market.”

Zurich appointmentsZurich has taken on AlanFairhead as ChiefUnderwriting OfficerGlobal Corporate andAndreas Grünbichler tohead its newly createdGroup Risk ManagementPolicy and Research Unit. Alan Fairhead joinedZurich in 1999 after 21years in the insurancebusiness in a variety ofroles covering casualty and property lines of business.Since April 2004, he has been Managing Director ofGlobal Corporate UK. His new role will encompassresponsibility for the continuous improvement ofGlobal Corporate’s underwriting performance. Hewill also be involved in Global Corporate transactions,which means he will continue to work withcustomers and brokers. In Grünbichler’s new role, he will lead RiskManagement Research, a new function within GroupRisk Management. Before joining Zurich, he servedas Co-chief Executive of the Financial MarketAuthority of Vienna in Austria.

Morrissette getspersonal with ChubbChubb Insurance Company of Canada has announcedthe appointment of Paul Morrissette as Manager ofChubb Personal insurance. Mr Morrissette brings 15years of industry experience into his assignment, havingserved in a variety of underwriting and marketingpositions at Chubb. Most recently he was VicePresident and Underwriting Centre Manager for ChubbPersonal Insurance in Whitehouse Station, New Jersey.As Vice President of Chubb Insurance Company ofCanada, Morrissette replaces Susan Vella, who hasaccepted a move to the US within the Chubb Groupof Insurance Companies.

Lundberg joinsCooper GayThe broker Cooper Gay has appointed PhilipLundberg as a Director within its non-marine division.Mr Lundberg has over 20 years experience in thebroking sector and has been appointed to maintainand further expand Cooper Gay’s global presenceand expertise in the non-marine sector.Prior to joining Cooper Gay, Mr Lundberg held theposition of Senior Vice President and head of brokingfor Latin American accounts in London and Europefor Bowing/ Marsh Energy onshore division. Inaddition, he was joint Head of Broking for LatinAmerican region.Toby Esser, Chief Executive Officer of Cooper Gay,said: “I am delighted that Philip has joined us. With hisexperience and knowledge of the broking sector, hisappointment will add great value to the group’songoing expansion in the onshore Energy field.”

Willis recruits fromAon and MarshGary Beck, with 28 years in the insurance brokingindustry under his belt, has moved over from Aon toWillis as the ProfessionalServices Industry PracticeLeader. He had served atAon as an independentconsultant specialising in aLegal Industry Practicegroup.In addition, Mr Beck is aninvited member of theinsurance section of theState Bar of Texas andacted as Exxon’s principalexpert in Exxon v CertainUnderwriters at Lloyd’s, London.In his new role, Beck will co-ordinate the globalresources of Willis Group. “We can offerprofessionals such as lawyers, engineers andaccountants one contact that can serve all theirinsurance and risk management needs,” Mr Becksaid. “With Willis’ globalreach we can offer aseamless suite ofcoverages in portfoliopackage form.” Willis has also announcedthat former Marsh ExecutiveArlene Corsetti has joinedas Executive Vice President& Regional Executive Officer(REO) to lead the USWestern Region, coveringAlaska, Arizona, California,Hawaii, Nevada, Oregon and Washington. Ms Corsetti joins from Marsh where she has workedfor 21 years, most recently as a Managing Director andRegional Manager overseeing the Mid-West operations.“Arlene Corsetti is a proven winner; she has greatdrive, tremendous focus on helping clients attain theirbusiness objectives and is a strong leader with acommitment to building successful teams,” said JoePlumeri, Chairman and Chief Executive of Willis.“Her joining Willis is testament to our cutting adifferent path in the insurance broking business thatattracts the best in the industry.”

ABI appoints starDirectorThe Association of BritishInsurers (ABI) hasappointed Nick Starling asits new Director ofGeneral Insurance. Hejoins the industry tradebody from the Health andSafety Executive, wherehe is currently Director ofPolicy Programmes. He will be starting in his new roleon 4 January 2005.Dennis Holt, Chairman of the ABI’s GeneralInsurance Management Committee and Group ChiefExecutive of AXA UK, said: “Nick Starling is anextremely good appointment for the ABI and we aredelighted to welcome him to the role. It has neverbeen more important to help businesses andindividuals to manage and understand the risks theyface. Nick’s experience in one of the most seniorroles at the Health and Safety Executive will beinvaluable to the ABI, its members and ourcustomers.”Nick Starling said: “My understanding of riskmanagement and work with widely differing sectorsacross the economy have given me a keenappreciation of the importance of the generalinsurance industry. I’m really looking forward toworking with new colleagues at the ABI. I know thatthe Association provides a first class service formember companies and that I will have a greatrecord of achievement to build on.”

Zurich Financial ServicesGroup has announcedchanges in the compositionof the Group ManagementBoard (GMB). Effective 1January 2005, the GMBwill include the 10members of the GroupExecutive Committee(GEC) and eight businesssegment and functional leaders. New members includePaul Hopkins, John Lynch and Martin South.Zurich also announced that Martin Feinstein will retireeffective 31 March 2005, as Chief Executive Officer ofFarmers Group Inc and from Zurich’s GEC after 34years of dedicated service to the Farmers Organisationand the Zurich Group. Paul Hopkins succeeds him.James Schiro, Chief Executive Officer of Zurich said:“The changes in the GMB’s composition reflect ourtransition to managing our businesses by globalsegments and global functions. “There are also four leaders who will no longer bepart of the GMB: Gastón Aguirre, Hans-Jürg Bernet,José Cela and Hanneke Frese. Mr Schiro added: “Iwant to thank them for their service to the GMBover the last few years. They will remain part of ourlarger Group leadership team and I look forward tocontinuing our close working relationship.”

Roger Allnutt is a freelance travel writerbased in Canberra, Australia, and hasmaterial published widely in magazines andnewspapers in Australia and New Zealand. Hetravels widely both in Australia and overseas.

Dick Atkins is chief counsel forInternational Recoveries, Philadelphia,which provides global legal assistance tothe travel insurance industry. He is in chargeof International Recoveries’ legal hotlineand has been involved in handlinginternational legal incidents for the past 20years. He can be reached via email [email protected]

Barbara Casassus is a Paris-basedfreelance journalist. She contributes to theAmerican weekly magazine ‘Science’, thedaily newspapers Chicago Tribune and‘Baltimore Sun’, and to specialist magazinesand newsletters on economics, law, tourismand publishing in France. She wrote for theFinancial Times, the Times EducationalSupplement and a number of periodicalswhile living in the Middle East and Japan.

Miles Clarke is a Sydney-based freelancejournalist with more than two decades’experience in newspapers, radio and tradepress. As a business and travel writer, hiswork takes him throughout the Pacific,Southeast and East Asia, Australia and NewZealand.

iJET Travel Intelligence (www.ijet.com),the travel risk management company,provides real-time travel intelligenceinformation through its award-winningWorldcue (copyright) technology platformfor tracking and communicating withtravellers. iJET services are backed byregional and category specialists from thefields of intelligence, security, travel, andhealth who staff an around-the-clockoperations centre in Annapolis, MD.

Milan Korcok is an award-winningfreelance health policy and economicswriter who covers travel insurance, publichealth, and medical education issues inCanada and the United States. He has beenwriting about health financing and policyissues in these countries since the 1960sand is a frequent contributor to leadingNorth American professional journals andconsumer media. He lives in FortLauderdale, Florida.

Roger St Pierre is one of the UK’s mostexperienced travel, music and motoringwriters and has visited 111 countries on fivecontinents. His insights appear in a widerange of consumer and trade publications.Roger’s 33 published books include a historyof McDonald’s, guides to such destinationsas Orlando, Moscow, Edinburgh and theCosta del Sol, biographies of MarilynMonroe, James Dean, Bob Marley and JimiHendrix and a range of cycling books, thelatest of which is A Bike Is For Life.

Paul Hopkins

Zurich restructuresGMB


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