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The State of
Health Insurance
Hong Kong Shanghai Beijing Singapore Dubai
Bangkok London Los Angeles Mexico City Cebu
2019-2020
Neil RaymondCEO and Founder
Pacific Prime
I’m proud to introduce the third edition of Pacific
Prime’s State of Health Insurance Report. Covering
2019-2020, this report was created to help our
readers understand what has been happening in
the international private medical insurance world.
Now that we’re in the first half of 2020, it is the
ideal time to reflect on the developments of the
previous year - and make informed predictions
on what is likely to occur in the future.
In this year’s edition, the State of Health Insurance
Report features sections on changes and trends
that are being witnessed in the global insurance
market, along with analysis from some of the
world’s leading insurance companies as well as
our own insurance experts at Pacific Prime.
You can expect to find answers to questions such as:
What are the main factors shaping the global insurance industry sector today?
What are the regional trends and challenges, and how do they affect individuals,
businesses, and employee benefits?
How does healthcare innovation impact health insurance products?
What are the implications of technology on the insurance sector?
How has Pacific Prime developed in 2019?
And more
About the report
The State of Health Insurance 1
Report contributors
To answer these questions as clearly as possible, this
report has been broken down into four main sections
and multiple subsections. The following table of contents
makes it easy to navigate through the entire report and
find exactly what you’re looking for.
In order to provide the most accurate overview of the
health insurance landscape, the data used throughout
this report comes from numerous reputable sources,
including our public reports, insurer commentary, internal
data collection, and collective insight from our in-house
salespeople and insurance experts.
I hope this report gives you more insight into the significant
trends and factors impacting the state of health insurance
as a whole, and is enjoyable to digest in the process.
Happy reading!
Andrew Merri lees
General Manager
Bupa Hong Kong
Insurance
Kevin Jones
Chief Executive Off icer
Aetna Insurance
Hong Kong Ltd
Patrick Graham
Chief Executive
Off icer - Asia Pacific
Cigna
The State of Health Insurance 2
Table of Contents
The State of Health Insurance 2019-2020
I. About the report
Table of Contents
II. Changes and trends shaping
the global health insurance industry
Considerations for employers
III. Regional changes and trends
IV. Pacific Prime’s latest developments
Appendix
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The State of Health Insurance 3
When looking at trends and changes in the health
insurance sector as a whole, it can be easy to
miss the forest for the trees. As such, this section
of the report highlights the most prominent macro
factors shaping the global insurance sector today.
For ease of reading, our analysis has been split
into the following four sections:
The shifting risk landscape
Major healthcare challenges and trends
Health insurance inflation
Technology increasingly takes center stage
CHANGES AND
TRENDS SHAPING
THE GLOBAL
HEALTH
INSURANCE
INDUSTRY
The State of Health Insurance 4
The shifting risk landscape
Evolving health, technological, economic, and social factors are continuously shaping the risk
landscape for the health insurance sector, as well as its customers and policyholders. For 2020,
we predict that the following risks will be the most prominent and impactful on the global health
insurance industry at large.
The global pandemic
The COVID-19 outbreak has sent shockwaves across a myriad of industries the world over,
and it is increasingly likely that a global recession will eventuate. Now that a pandemic has
been declared, share market losses have accelerated further, and it is becoming more likely
that consumer confidence may not bounce back to pre-outbreak levels until as late as the
third quarter or beyond.
The implications of COVID-19 on the global health insurance sector and its clients
An increasing number of insurers are reviewing their health insurance
offerings to make exceptions for COVID-19. Traditionally, health insurance
policies would exclude the treatment of all diseases that are considered an
'epidemic' or 'pandemic', but many plans have started to feature special
allowances that cover this particular coronavirus.
From what we have observed so far, it is still too early to tell if
COVID-19 has had any significant upward impact on health insurance
sales. In the countries most affected by the outbreak, city lockdowns and
travel restrictions have led to a slowdown of economic activities and hence
dampened overall new sales during the first quarter. In the medium to long
term, however, we anticipate that the outbreak will likely trigger increased
awareness on general health risks, which could, in turn, have a positive
impact on health insurance sales in the future.
The most affected locations have seen a notable exodus of expatriates
(the key target market for IPMI plans), many of whom have decided to
return to their home countries. In the short term, this could potentially have
an adverse impact on the IPMI market. That said, the past few years have seen
a steady rise in the demand for international health insurance from local High
Net Worth (HNW) individuals; this key customer segment could help cushion
the blow caused by the expat exodus.
The State of Health Insurance 5
With global growth in 2020 recording its weakest pace since the 2008 financial crisis, two key
economic risks stand out to help explain why this is happening :
Global recession
Japanification in the US and Europe
Economic risk: the global economic downturn
According to the Swiss Re Institute’s latest sigma research report, a global recession is in the
books and is expected to be mild in a historical recession context, though risks remain tilted
to the downside. However, in the event that COVID-19 does not peak by the end of 2020, the
global recession would be deeper and more prolonged. This would mean a V-shaped recovery
(a brief period of economic decline with a clearly defined trough, followed by a strong recovery)
is very unlikely given the devastating outbreak and tightening financial conditions that continue
to batter the global economy.
Prior to the COVID-19 pandemic, economic tension between China and the US was already
a top economic risk for 2020. The ratcheting up of tariffs since 2018 between the two giants
has been slowing down the global economy at an alarming rate. To date, the US continues to
promote protectionist trade measures against China, while China has been responding with
tariffs and policies of its own. The endless tug-of-war seemed to pause briefly with the recent
signing of the Phase 1 trade deal in mid-January of 2020, which offered some much needed
respite. However, the negative impact COVID-19 is having on supply chains in both China and
the US is likely going to affect the agreement and present questions on how both will be able
to achieve their designated targets.
At the time of writing, China has already lifted some restrictions and begun ordering factories
and logistics to resume normal operations. However, the US seems less content on opening
up its borders and resuming trade as it continues to battle and contain against the ruthless
pandemic.
Global recession
A global recession is looking inevitable in 2020 as the new coronavirus
outbreak has triggered extreme fear across financial markets and other
key industries, including manufacturing.
The State of Health Insurance 6
What is economic risk?
Economic risk is the probability that changes in the greater macro economy will result in a loss
to an investment or business activity. It is a term used to describe the potential impact of global,
national, or regional economic fluctuations on the ability to achieve current and future goals.
Another worrying economic risk to mention in 2020 is the current low interest rates seen
across many major economies. Since the 2008 financial crisis, the global interest rate has
been very low, with interest rates already lower in 2020 due to the COVID-19 pandemic.
Low interest rates are meant to encourage consumer spending, which will, in turn, stimulate
the world economy. However, it may also lead to more debt creation and decrease the level
of financial stability worldwide.
Today, economists are anticipating a similar trend in Europe and the US. There are concerns
that Europe’s economy could be heading for a similar fate. Growth predictions are repeatedly
revised down across Europe and a toxic culture of risk aversion continues to stifle innovation.
In addition, an aging population in Europe, increased life expectancy, and migration is sounding
alarm bells for the next round of Japanification.
The US itself seems to be facing the same conundrum, though to a lesser extent than Europe.
Economists have been warning for years that the US economy could start to resemble
Japanification and the reality is coming true.
How long Europe and the US will remain in this situation is difficult to say, as Japan has
suffered low growth since the 1990s. However, it will certainly present challenges for the ECB
and the Federal Reserve System. The outlook looks grim with worse expected on the horizon,
unless aggressive fiscal policies are adopted by both Europe and the US.
How are insurers coping with economic risk?
For the foreseeable future, health insurance is going to be a hot topic for all, including
individuals, families, travelers, and businesses of all sizes. Health insurers are already
adopting new measures to cope with major changes such as increased claim volumes and
cover for COVID-19. In addition, with the global insurance landscape changing due to the
aforementioned macroeconomic risk factors, many insurers will be embracing digital health
solutions to increase efficiency and deliver personalized support to their clients.
Japanification in the US and Europe
Japanification refers to Japan’s renowned multi-decade malaise after its
asset bubble burst in 1990. In the decade that followed - dubbed “The
Lost Decade” or “The Lost 10 Years” - the country experienced broad
economic stagnation, accompanied by deflation and low interest rates.
This left in its wake a record amount of negative-yielding debt.
The State of Health Insurance 7
Shifting demographics
Shifting demographics create a set of unique new trends, which include the rapidly aging
population in developed countries, the rise of Gen Y and Gen Z in the workforce, and an
increase in the middle-class cohort in developing countries. Each of these factors will shape
global health insurance differently.
Lower fertility rates and aging populations have become worldwide concerns, especially in
developed countries such as Singapore, Japan, the UK, Italy, and the US, which have stood
out for their lower birth rates and graying of their citizens since the mid-20th century. In 2018,
for the first time in history, older persons have outnumbered children under five years of age.
This continuous trend creates a burden on local healthcare providers due to the increased
spending on welfare and healthcare.
Providing healthcare to the growing geriatric
demographic is likely to be a key concern for
health systems around the world. Overall life
expectancy is increasing and the number of
people aged 65 or over will reach more than
686 million, or 11.8% of the total population,
by 2023.
Aging population and low birth rate (in high-income countries)
Growing middle class in developing countries
According to a study from the Brookings Institution,
the size of the “global middle class” will increase
from 1.8 billion in 2009 to 3.2 billion by 2020 and
4.9 billion by 2030.
The rapid growth of the middle class offers many
opportunities to the healthcare and health
insurance industries, as we have seen from the
example of Indonesia last year, where the growth of
the middle class led to a higher demand of
premium health insurance products that can give
access to both local Indonesian private clinics
and facilities abroad, such as in Singapore or
Hong Kong.
The State of Health Insurance 8
People on the move
In 2019, international migrants – people living
outside of their country of origin – numbered
around 272 million, or almost 3.5% of the global
population. Asia hosts the largest number of
international migrants, as many of the migrants
moved over for work, family, or education. This
trend continues to drive demand for international
health insurance plans.
Multi-generational workforce
A multi-generational workforce is a workforce
made up of employees from different generations,
like the baby boomers, millennials, and
Generation Z. As each generation has different
work and benefits expectations, companies
worldwide are facing a tough task of designing
and maintaining employee benefits packages
to attract and keep talent from all of these
generations.
Companies nowadays must offer a diverse
set of employee benefits packages to become
more appealing to today’s jobseekers, and to
make sure all of the generation’s needs are met;
from meeting Gen X’s expectations of robust
healthcare, daycare, and solid pension plans,
to flexible work arrangements and gym
reimbursements for the younger Gen Y
(millennials) and Gen Z demographics.
The State of Health Insurance 9
The State of Health Insurance 4
The cost of healthcare has long been a major driver of health insurance costs, with the medical
insurance inflation rate being closely linked to the global medical trend rate. According to Aon's
2020 Global Medical Trend Rates report, it is anticipated that the global medical trend rate in 2020
will be 8.0%, which is slightly higher than the 2019 rate of 7.8%. This is mainly due to an expected
increase in general inflation.
What is the meaning of 'medical trend rate'?
Medical trend rate, or medical cost trend, refers to the change in the cost of healthcare.
Insurance providers closely monitor treatment costs to determine how they are trending.
Other key factors, such as price inflation, medical care utilization, the leveraging effect of fixed
deductibles and copays, government-mandated benefits, and technological advancements, all
influence the medical trend rate.
Rising medical trend rates
Major healthcare challenges and trends
Evolving health, technological, economic, and social factors are continuously shaping the risk
landscape for the health insurance sector, as well as its customers and policyholders. For 2020,
we predict that the following risks will be the most prominent and impactful on the global health
insurance industry at large.
Rising medical trend rates
Rise in chronic conditions and NCDs
Rise in awareness of mental health conditions
Deloitte's 2020 Global Health Care Outlook report predicts that global
healthcare spending will remain at about 10.2% through 2023, which is
equal to 2018's ratio. This steady rate is great news for the healthcare and
insurance industries, as it reflects stakeholders' efforts to improve cost
efficiencies in many of the world's healthcare systems.
We have seen a growing number of employers take the driver's seat to
manage the cost of healthcare. More specifically, we are seeing employers
pursue innovative solutions, such as telehealth and wellness programs, to
improve healthcare access and enhance quality - while containing costs in
the long run.
As the cost of healthcare continues its upward trend, governments are
increasingly investing in digital tools and medical technologies to not only
contain rising costs, but also transform traditional healthcare models in
order to improve health outcomes.
More specifically, new and evolving healthcare models are putting more
emphasis on prevention and wellbeing, and less on treatment. For example,
Forbes predicts that the use of AI in the healthcare field to identify and
diagnose conditions, as well as suggest precision therapies for complex
illnesses, will take the spotlight in 2020. As this technology becomes
increasingly sophisticated, it is anticipated that AI will improve health
outcomes by 30-40% and reduce the cost of treatment by up to 50%.
While technology is set to play a significant role in maintaining the financial
sustainability of many of the world's healthcare systems in the long run,
medical technology investments can be immensely costly at the outset.
As such, increased spending on medical technology has both an upward
and downward impact on the cost of healthcare - a core driver of health
insurance premiums.
Increased spending in medical technology
The State of Health Insurance 11
What does 'health outcome' mean?
A health outcome can be described as the efficacy of interventions (e.g. the
introduction of medical technology and health insurance coverage) in improving
the health status of patients, employees, or the society at large.
Currently, one in 10 people suffer from a mental health disorder, according to estimations
from the University of Oxford. The most common mental illnesses are depression and anxiety
disorders, which affect more than 540 million people combined.
Given how widespread these illnesses are, mental health disorders remain a severely under
discussed issue in public discourse. In some parts of the world, there is still a heavy stigma
over the most common types of mental health problems like depression and anxiety.
Although awareness of mental health conditions is rising, mental illnesses still lead to over
800,000 suicides each year, averaging a rate of one suicide every 40 seconds.
HERE ARE SOME KEY
MENTAL HEALTH
ISSUES FACED BY
DIFFERENT COUNTRIES
AROUND THE WORLD :
Rise in awareness of mental health conditions
Suicide rates have been
on the rise in Thailand,
w i t h
suicide attempts in 2019.
THAILAND
2019
53,000up to
One-third of Hong Kong employees
reportedly suffer from MENTAL HEALTH
PROBLEMS.
HONG
KONG
THE UK
of employees have
experienced a mental
health issue while
almost half of UK
university students
suffer from mental
health problems.
IntheUK77%
students
employees
CHINA
30million
students
In China,
it is estimated
that around
aged between
18have experienced
mental health
problems.
17 and
The State of Health Insurance 12
Mental health and the COVID-19 outbreak
Global pandemics take a toll on the
psychological health of every single
person. Even though the novel virus is
not life-threatening for the vast majority
of people, it has caused panic in many.
For this reason, the coronavirus calls for
mental health issues to be recognized
more widely than ever before. This is so
that the correct coping methods for the
mental health ramifications of this global
pandemic can be put in place.
Andrew Merrilees
General Manager
at Bupa Hong Kong Insurance
Apart from wellness
support, with the busy
working schedules
in Hong Kong, our
clients also requested
our further support
around mental health.
They see mental health
as equally important as
physical health, but
usually they are not sure
about how to start and
where to invest for
better mental health in
the workplace and as
individual customers.”
“
The State of Health Insurance 13
Health insurance inflation
The rise in medical trend rates ties in closely with health insurance inflation. Since medical
inflation is projected to increase in 2020, employers must be more proactive in developing
strategies to contain rising costs and ensure their capital goes further. What are the main
reasons for growing health insurance inflation this year? This section answers that very
question by offering greater insight into the following:
Why insurance premiums continue to rise
What the main factors driving plan costs are
Pacific Prime’s Cost of International Health
Insurance Report 2019 found that 97% of all
100 locations studied saw their international
health insurance premiums increase for both
individual and family plans.
The average IPMI premiums for individuals
ranged from USD $8,887 in the US and USD
$2,728 in Thailand. For families, these figures
stood at USD $26,883 in the US and USD
$10,842 in Thailand.
Unsurprisingly, the US remained the most
expensive location as it pertains to health
insurance premiums, resulting from their
expensive healthcare system. The expensive
healthcare system in the US has also caused
spillover effects on the North America and
Latin America regions.
Canada became the second-most expensive
country in the ranking, overtaking Hong Kong
from the previous year. The average cost of
IPMI plans in Canada stood at USD $7,045
and USD $18,264 for individuals and families
respectively. A contributing factor to Canada’s
IPMI cost rise was that many insurers
grouped the US and Canada together and
applied the same rates.
Meanwhile, the Americas rose to prominence
in the rankings. A key explanation for this is
that many international health insurance plans
in the region also include US coverage. This
pushed up premiums, leading to significant
health insurance inflation in the region.
In Asia, Singapore witnessed the highest
premiums inflation rate at 9%, coming in
fourth for the location with the most expensive
premiums. This is reflective of Singapore’s
healthcare system, which has seen prices
skyrocket in recent years, with the country’s
healthcare inflation rate hitting 10%, 10 times
the economic inflation rate in 2018.
On the other hand, China was the outlier,
experiencing a 7% decrease in average IPMI
cost for individuals and a 3% decrease for
families. This is mainly because insurers are
starting to segment hospital networks by
treatment cost, allowing them to offer
cheaper plans for lower-cost networks.
Finally, the African continent is also
experiencing high premium inflation rates,
with up to 21 African countries seeing inflation
rates hit 15% or above. The region’s fast-
developing economies and growing middle
class, along with recent technological
advances, are all factors fueling premium
increases in the region.
Insurance premiums continue to rise
The State of Health Insurance 14
The main factors driving plan costs
Increased challenges
with fraud regulation
Increased cost of
healthcare
The State of Health Insurance 15
Increased demand for
international quality
private care
Increased regulation
The rise of insurtech
Operational changes
Insurance providers around the world are
starting to develop their own in-house privacy
management systems, which will allow them
to limit their liabilities when it comes to client
data usage. As a result, annual investments
in IT are being directed more to developing
consent management platforms to ensure
that the usage of customer data in product
development does not pose any legal threats
to the company.
Another challenge that the healthcare and
health insurance industries face concerns
the level of interoperability between their
online platforms. Health insurers and
healthcare providers will need to collaborate
closely on developing their online platforms
so that data sharing is safe and secure.
Compliance issues
The rise in concern for data privacy has led
to various regulatory changes that limit the
usage of client data, such as the CCPA and
the EU's GDPR. While data protection laws
can pose a challenge to insurance firms,
they also provide an opportunity to develop
long-term client relationships. By fulfilling
compliance requirements, insurers will be
better equipped to develop long-term,
trusting relationships with clients.
Regional issues
Attitudes towards data privacy vary across
different regions of the world, thus resulting
in varying degrees of private data protection
laws. For instance, while the EU and Japan
have implemented strict laws to prevent the
violation of data privacy, insurance firms in
vast markets like China can still freely use
big data analytics to create new product
innovations. As regions become more
interested in data privacy, insurers will need
to continue adapting their client account
management tactics to become more
transparent and ensure the protection of
their clients' private information.
Technology increasingly takes center stage
This section explores the key challenges and opportunities posed by the incorporation of
technology in the health insurance sphere.
The challenges and opportunities of data privacy and
management
To cope with current and future breaching issues, the healthcare and health insurance industry
have been developing data privacy and consent management platforms and legislations to
reduce the risks of data breaches.
The State o f Health Insurance 16
Personalization and efficiency in
customer care
Some of the digital transformations we can
already see are in the form of personalized
applications for policyholders, where they
can securely and quickly access relevant
information such as clinics and doctors in
their network, make or view their latest
claims, pay their premiums, or chat instantly
with a consultant or chatbot via live chat.
IoT
Many health insurance companies offer their
customers wearable devices that can be
used to motivate and reward customers. For
example, a wearable device can be used to
count the policyholder’s steps, and if a certain
number is reached, they are rewarded for
maintaining good physical activity, weight,
etc. This move is not only intended to motivate
customers to get free movie tickets or a slight
reduction in premiums, but poses huge
financial savings for the insurer as well. If the
policyholder is healthy, he or she is less likely
to make medical claims for the treatment of
NCDs.
Enhanced underwriting
For medical underwriting of individuals, big
data is likely to be the leading driver as
underwriters are increasingly utilizing customer
behavior analytics from wearable devices and
past claims history to set premiums. Possible
collaborations with third-party data vendors
can also influence the medical underwriting
processes in the future, and using AI can make
the whole process more accurate and speedy.
Better fraud detection
With insurance fraud causing billions of
dollars in losses annually, investment in fraud
detection continues to be one of the main
priorities for insurance companies the world
over. In particular, insurers are investing
heavily in new technologies that have the
ability to detect fraudulent claims and
behaviors faster and more effectively than
ever before.
How digitalization will
transform the insurance
service model
The digitalization of insurance, which is driven
by AI, machine learning, predictive analytics,
mobile service, live chats, IoT, etc., has already
started, and while some areas of the digital
transformation process are now accessible by
customers, other digitalization projects are still
in their early stages.
The State of Health Insurance 17
What is big data?
Big data is made up of volume (size of the data), variety (a mix of different types of data, e.g.
image, video, text, etc.), and velocity (the rate at which data is generated and the speed at
which it needs to be analyzed and processed).
Transforming big data into actionable
insights to reduce losses
The recent wave of new technologies is significantly enhancing efficiencies across many
operations, increasing revenue opportunities, and vastly improving customer experience.
Big data in 2020
In the last 10 years, big data has grown exponentially
and represents an opportunity for businesses to be
more thorough in the way information is analyzed to
understand the world.
The year 2020 has much to offer in the big data
department, including:
The exponential growth in smartphones and
tablets, coupled with cloud technology
The explosion of advanced computers that
offer power and substantial storage, enabling
the collection and streamlined analysis of
vast amounts of data
The addition of more accurate and effective
sensors and devices connected to the IoT
The State of Health Insurance 18
With the growing amount of data produced daily on a real-time basis, insurers can utilize
these technologies to harness unstructured and huge multimedia data and translate them
into actionable insights.
How and where health insurance may be affected by big data
Big data affects health insurance in a number of ways, such as:
1. Predicting the behavior of potential customers - Health insurers can learn more
about their customers’ preferences and trends, after analyzing big data and making
conclusions from the information gathered.
2. Underwriting and pricing - Patterns can be established by correlating behavior with
mortality and healthcare needs, especially with the help of wearable devices.
3. Distribution and sales - Big data can enable better targeting and understanding of
consumer behavior. New insurance products may arise due to a better understanding of
consumers’ needs.
USD $6.37 billion flowed into the insurtech industry in 2019, reflecting
the weight of importance which insurance firms place on developing new
technologies. The driving factor behind the rise in insurtech investment is
the myriad of new medical innovations in the healthcare sector.
Overall, healthcare innovation impacts health insurance products in the
three following ways:
1. New wellness initiatives
2. More personalized products
3. The rise of mental health coverage
Healthcare innovation and
health insurance products
1. New wellness initiatives
A significant portion of technological
innovations in the medical field have focused
on two things: the early detection of diseases
and preventive healthcare. Preventative
healthcare, which refers to healthcare methods
that are designed to prevent illnesses, has had
a sizable impact on health insurance products
in particular.
In light of this medical trend, health insurance
providers are beginning to provide more
products that cover preventative treatments,
as opposed to only covering recovery treatment
costs. These include coverage for screenings,
preventive medications, immunizations, and
counseling.
The State of Health Insurance 19
2. More personalized products
Medical innovation has led to more treatment
options for any given disease, allowing
patients to choose and customize the type
of medical treatment they will receive.
Beyond treatments, patients are also getting
a wider variety of other services in hospitals,
such as the type of inpatient rooms available
as well as catering options.
The increased personalization of medical
services has led insurers to also offer more
personalized products. As a result, there will
be a wider variety of premiums and coverage
options in the market, with each plan
targeting a specific type of customer and
their unique set of medical needs.
3. The rise of mental health coverage
As a result of increased public awareness on
mental health issues, many countries have
started to pass legislation aimed at making
mental health services more accessible. In
Singapore, for example, the first insurance
policy to cover mental health illnesses was
launched at the beginning of 2019.
Despite an upward trend in the availability of
mental health insurance solutions around the
world, accessibility to mental health products
is still low. This is largely due to the high cost
of mental healthcare treatments, which is
then reflected in insurance premiums.
image
The State of Health Insurance 20
The increased popularity of telemedicine services
Telemedicine - the practice of administering medical care remotely - is becoming hugely
popular due to its practicality. While most healthcare businesses, organizations, institutions,
and healthcare providers have been implementing telemedicine for decades, it has only
recently become widespread due to advancements in the healthcare industry. These
advancements include a plethora of new technological devices, better communication
systems, robust networks within hospitals, and an overall improvement in service quality.
Trends emerging in telemedicine in 2020
Telemedicine is growing at an astounding rate and revolutionizing healthcare. Here are some
of the trends to look out for in 2020 and beyond:
More insurers are covering telemedicine
As telemedicine becomes more widely used and accepted, health insurance companies and
government-administered healthcare programs are increasingly stepping up to cover such
care.
Health insurers utilize telemedicine
Health insurers are expanding telemedicine use and giving providers and patients incentives
to use this delivery model. Aetna, a health insurance company, currently waives copays for
coronavirus testing, and all telemedicine visits would have zero copay for those seeking
coronavirus treatment. Private health insurers would pay for virtual visits for people who
may have the coronavirus to improve access to care for their customers.
Remote appointments via telemedicine
Remote appointments are popular with health providers because they can increase practice
revenue, introduce more flexibility, and meet growing patient demand. More so, as patients
may experience difficulties getting to the clinic due to their ill health, this method of allowing
medical professionals to get in contact with them anywhere is empowering and practical.
Patients can use their phones or computers to get guidance about whether they need to be
seen or tested, instead of showing up unannounced at the emergency room or doctor’s
office.
The State of Health Insurance 21
Global health insurance
trends and challengesConsiderations for employers
Considerations for employers
The trends and challenges discussed above have far-reaching implications for employers and
the employee benefits space. In this section, we provide a cursory overview of the key points
addressed above, as well as detail the main considerations for employers.
The shifting risk landscape
The risk landscape for the health insurance
sector is constantly being shaped by numerous
factors. The risks that are predicted to be
most important and impactful for 2020
include:
The global pandemic - The COVID-19
outbreak has affected industries globally,
and a global recession is likely to eventuate
later in the year.
The global economic downturn -
The last time that global economic growth
was as weak as it currently is was during
the global 2008 financial crisis. The key
economic risks that are likely to contribute
to this include the global recession and
Japanification in the US and Europe.
Shifting demographics - New trends
that have been created by shifting
demographics include an aging population
and low birth rate, the growing middle class
in developing countries, international
migration, and a multi-generational
workforce.
As countries are either on lockdown due to
COVID-19 or taking preventative measures,
employers across the globe have had to
make adjustments accordingly. Employees
are working from home if their job allows for
it. Meanwhile, health and safety policies at
work are also being reviewed, with more
emphasis on encouraging sick employees
to stay home and educating employees on
hygiene.
Businesses of all sizes may look for ways to
scale down on employee benefits to survive
this period of uncertainty. To scale down
effectively, businesses will need to find a
balance between what benefits they are able
to offer and what employees actually need,
such as health insurance and financial security.
Cutting out non-essential benefits could help
reduce costs and help businesses stay afloat.
New start-ups can focus on the essential
benefits, such as group health insurance and
paid family leave, to create a solid foundation
of support for new employees.
With a workforce made up of different
generations, including baby boomers (Gen X),
millennials, and Generation Z, companies are
now faced with different work and benefit
expectations. Businesses will have to provide
a wider range of employee benefits to attract
and retain talent from these generations, such
as flexible work arrangements for the younger
generation and solid pension plans for Gen X.
The State of Health Insurance 22
Global health insurance
trends and challengesConsiderations for employers
Major healthcare challenges and
trends
Key trends and challenges that will affect
the state of health insurance in 2020
include the rise in medical costs, the
increase in NCDs, and awareness of
mental health conditions. The rise in the
global medical trend rate for 2020, from
2019’s 7.8% to this year’s 8.0%, will
mostly be caused by an anticipated
increase in general inflation. Additionally,
while medical technology will help contain
rising costs and improve health outcomes
down the line, initial investments can be
extremely expensive.
An aging population and social behavior
changes are some factors that contribute
to a continuous growth in long-term health
issues. The increasing demand and pres-
sure on healthcare systems because of
chronic conditions and NCDs has become
a huge concern. Oftentimes, early detection
can help prevent many chronic conditions
or result in less costly treatment.
Even though mental illnesses like anxiety
and depression are widespread, there is
still stigma attached to these issues. The
COVID-19 outbreak has also put a strain
on the psychological health of people all
over the world.
Employers have begun managing their
healthcare costs. They are pursuing innovative
solutions to enhance quality and access to
healthcare, and contain costs further down
the line. Some of these solutions include
wellness programs and telehealth benefits.
Since early detection can often help prevent
chronic conditions, or at least reduce their
severity and associated costs, employers
should offer health check-ups as part of their
employee benefits package, if such benefits
are not included already.
Businesses are realizing that they can help
reduce mental health problems among
employees. An increasing number of private
firms are creating HR teams that can offer
support for employees who are dealing with
mental health issues. What’s more, companies
are starting to provide mental health programs
in their employee benefits packages to help
staff stay mentally healthy.
The State of Health Insurance 23
As premiums continue to increase,
employers are increasingly recognizing the
importance of analyzing claim patterns and
identifying where employees are seeking
medical treatment. Doing so will make it
possible to identify which benefits are actually
being used and which types of care are most
sought-after.
By consulting with an employee benefits
specialist, businesses can reduce future
claim costs through benefits such as holistic
wellness programs. What’s more, they must
stay compliant to avoid severe financial risks
and consequences. Ways to do this include
being transparent with personal employee
data collection and processing, as well as
securing insurance plans from compliant
insurers and brokers.
Employers can also play a vital role in tackling
insurance fraud and abuse. This can be done
by educating staff on ways fraud affects them
and their benefits, as well as showing them
how to detect fraud and abuse.
Lastly, the rise of insurtech calls for companies
to embrace disruptive digital technologies to
prevent losses.
Health insurance inflation
Increasing medical costs and health
insurance inflation are closely related.
The main reason for health insurance
inflation in 2020 lies in growing insurance
premiums. Even though there are many
factors behind rising plan costs, the five
key factors affecting IPMI pricing, and
insurance in general, include:
Increased demand for international
quality private care - Demographic
changes continues to drive the growing
demand for international quality private care,
which in turn has led to a growing demand
for private medical insurance and increases in
premiums.
Increased cost of healthcare - Global
healthcare costs continue to rise and
surpass general inflation. Some key drivers
behind increased healthcare costs include
an aging population, poor lifestyle choices,
and declining health.
Increased regulation - Due to
constantly changing regulations (such as
the EU’s GDPR), the logistics of providing
IPMI is becoming more and more complex.
As a result, insurers are having to spend
more to ensure compliance.
Increased challenges with fraud
regulation - The detrimental impact of
insurance fraud results in huge losses for
insurers and higher premiums for clients.
The rise of insurtech - Insurtech offers
new opportunities for containing costs and
preventing loss, with the most notable
trends being telemedicine, big data, and AI.
Global health insurance
trends and challengesConsiderations for employers
The State of Health Insurance 24
Technology increasingly takes center
stage
Issues with data breaching have led to the
development of consent management and
data privacy, along with legislations to
lessen data breach risks from now on. By
developing in-house privacy management
systems, insurers are able to limit their
liabilities in regards to client data usage.
Insurers and healthcare providers also
need to work closer together to improve
the level of interoperability between both
parties’ online platforms.
Growing concern surrounding data privacy
has resulted in regulatory changes that
limit client data usage, such as the EU’s
GDPR. Despite posing a challenge to
insurers, data protection laws offer an
opportunity to build long-term and trusting
client relationships if compliance is met.
The practicality of telemedicine, which
makes it possible to administer medical
care remotely, has helped it become
incredibly popular. Even though
telemedicine has been around for some
time, advancements in the healthcare
industry, such as new technological
devices and robust hospital networks,
have helped it become more widespread.
Telemedicine benefits will only become
more attractive in 2020, especially amid
the COVID-19 pandemic.
Global health insurance
trends and challenges
Any business that holds personal data, including
employee-related data (e.g. health benefit data),
needs to comply with data protection regulations
like the GDPR. HR departments must consider
a broad range of digital employee data held on
mobile devices, work IT systems, CCTV, and
more.
Companies need to modernize the way they
handle personal information, such as by using
digital healthcare tools like wearable tech and
health apps. With so many opportunities for
breaching privacy, both internally and through
third parties, employers have to exercise
extreme caution and only work with vendors
that are compliant.
Now that the GDPR is in full operation,
businesses that are not based within the
EU/EEA, but provide employee benefits
solutions that contain EU/EEA citizens/
touchpoints will have to make sure their
plans are GDPR compliant as well. It’s crucial
for employers to be proactive in pinpointing
any exposure to EU/EEA citizens and to
redesign their plans accordingly.
Furthermore, employers need to be transparent
about the way they collect and process
employee data, such as by providing a privacy
notice that details the data they are collecting.
Employers can also offer telemedicine as a
benefit to their employees to help reduce
healthcare costs, improve access to healthcare,
and increase employee satisfaction and
productivity.
Considerations for employers
The State of Health Insurance 25
Now that we have an understanding of the changes and trends shaping the global health
insurance industry, we can take a closer look at the changes and trends by region to develop
a deeper understanding. In this section, we provide summaries of key trends as they apply to
each of the following regions:
Asia-Pacific
The Middle East
The Americas
Europe
Africa
In a manner of speaking, the Asia-Pacific
region holds the key to the future of the
health insurance industry. Nearly one-third
of the world's population resides in the region,
and it is also home to some of the world's
fastest growing economies, as well as a
number of countries with fast-expanding
middle class populations.
Furthermore, China is on the fast track to
becoming the largest economy in the world.
Insurance premiums and penetration rates
in the region as a whole will continue to
witness strong growth throughout 2020
and beyond, but emerging challenges have
also arisen as populations age, consumer
expectations evolve, and authorities race
to contain the COVID-19 pandemic.
Asia-Pacific
Regional Changes and Trends
The State of Health Insurance 26
Insurtech takes center stage
Global mental health-related losses between
2011 and 2030 are estimated to total USD
$16.3 trillion, but coverage for mental health
conditions remains relatively low in Asia-Pacific.
According to a Willis Towers Watson survey,
only 39% of small group policies (covering less
than 50 employees) include mental health
benefits.
For group policies that cover up to 500
employees, only half of insurers in Asia-Pacific
cover mental health conditions and there is little
indication that this will change significantly in
the next few years. Anecdotal evidence
suggests that other markets (e.g.. Europe and
Latin America) may have a more sophisticated
understanding of mental health issues and their
wider effects vis-a-vis the Asia-Pacific market.
Lack of mental health
coverage in group policies
A number of sociodemographic factors point
to a positive future for insurtech in the region,
including a greater affinity for technology
(particularly among millennials), a relatively
friendly regulatory environment, and societies
with large populations. Consumer preferences
around insurance, therefore, skew strongly
towards digital in Asia-Pacific.
The receptive response among consumers
shows that digital innovations in the health
insurance sector are headed towards the
right direction, as insurers continue to raise
the bar by developing new solutions and
improving the customer experience in new
ways. For example, the authorization of
Bowtie, the inaugural virtual insurance
company in Hong Kong, signifies the
beginning of a bright future in terms of
insurtech development in the region.
Blockchain technology is also anticipated
to become the "next big thing" in the health
insurance industry, due to its potential to
minimize operational costs and mitigate risks.
While most countries in the region (excluding
China) have been relatively slow in adopting
blockchain technologies, large Asian insurers
like Blue Cross Insurance are starting to
make strides to incorporate blockchain in
their efforts to eliminate fraud and speed up
medical claims.
The State of Health Insurance 27
Patrick Graham
CEO of Asia Pacific at Cigna
“People today are more digitally connected than
ever before and continually seek simplicity,
flexibility, and affordability. Individual health
customers are no different; they choose plans that
are tailored to suit their individual needs and plans
that are accessible and easy to understand.”
Population - related trends
and challenges vary across
the region
It is to be expected that the various
Asia-Pacific countries face a wide range
of disparate population-related trends
and challenges. On the one hand, insurers
in Japan and South Korea face threats on
existing portfolios as the countries'
populations age and birth rates decline.
In contrast, the growth of digitally savvy
millennials and middle class populations
in the region's emerging markets (e.g.
Indonesia and Vietnam) pose numerous
opportunities for insurers. Insurers must
therefore choose the demographics in
which they want to focus, and keep
abreast of ever-changing market
dynamics.
The State of Health Insurance 28
CHINA
The COVID-19 pandemic has been one of the largest challenges facing all industries in China,
and the health insurance industry is no exception. The outbreak, city lockdowns, mandatory
quarantine measures, and travel restrictions have led to a significant exodus of expatriates in
the first quarter of 2020, thus causing a slowdown in IPMI sales and renewals in particular. It is
anticipated, however, that the pandemic will trigger greater insurance awareness in China, and
hence lead to a greater uptick of health insurance products in the long run.
China's insurance market is opening up
The insurance market in China has also opened up, allowing foreign companies to own 100%
of insurance licenses. There were a number of foreign insurers and reinsurers that took advantage
of this in 2019, and it is expected that more foreign players will enter China in 2020 and drive
penetration in markets where local insurers have traditionally dominated, thus intensifying
competition. The insurance companies that win in the future will be those that can meet rising
customer expectations and stay at the forefront of the digitalization of the industry.
Maintaining premium stability will be key
China's overall individual health insurance premium inflation rate will likely continue to stabilize
in 2020, after years of dramatic increases. Corporate insurance clients, on the other hand, will
need to keep a closer eye on ensuring premium stability, as a growing number of insurers are
adopting the "experience rating" pricing methodology for group plans. What this essentially
means is that groups with a history of high claims will be charged much higher premiums, in
light of the higher risk they pose to the insurers.
Rising healthcare costs
Rising healthcare costs will remain a key issue. High-cost facilities in major cities like Beijing
and Shanghai will likely continue to raise their prices, especially for costly inpatient procedures.
Beijing hospital costs are particularly high, mainly due to the relatively low number of facilities
in the city, as well as monopolization of major hospitals and clinics. The insurance market has
been adapting well, with insurers working hard to offer plans that strike the best balance
between price and benefits. For example, solutions that exclude cover at high-cost facilities
are increasingly commonplace, as they can help clients save around 30% on their premiums.
COVID-19
“The COVID-19 pandemic has affected all industries in China, and the insurance
industry has certainly not been spared from its impact.”
Jason Armer
Country Manager at Pacific Prime China
The State of Health Insurance 29
Patrick Graham
CEO of Asia Pacific at Cigna
“The demand for streamlined
individual healthcare solutions
is growing and customers are
increasingly interested in
deductibles, co-pay options,
and areas of cover in order to
help contain costs whilst still
having cover that offers
peace of mind.”
The State of Health Insurance 30
HONG KONG
“In light of the coronavirus outbreak and monthslong protests in Hong Kong,
more expats are returning to their home countries.
This may have an impact on insurance sales and renewals.”
Luke Hickey
General Manager at Pacific Prime
Political instability and a contracting economy
Asia's key financial hub will continue to face challenges related to rising uncertainty and a
contracting economy amid the COVID-19 outbreak and unprecedented political turmoil.
Once considered one of the top cities for expats, Hong Kong has in recent times lost its
luster for foreign executives. More and more expatriates are leaving the city to return home,
or relocating to other financial hubs like Singapore.
“ In terms of the recent situation of
COVID-19, we’re incredibly thankful
that we have plans that offer cover to
all members during epidemics and
pandemics. We have always seen
ourselves as a healthcare company,
not just an insurance provider, and
our response to COVID-19 is evidence
of that. We have waived fees and cost
sharing for COVID-19 tests.”
Kevin Jones
Chief Executive Officer
at Aetna Insurance Hong Kong Ltd
The State of Health Insurance 31
Telemedicine and EAPs gain traction
Budget-conscious individual insurance buyers are looking for cheaper options, such as Hong
Kong-only or inpatient-only plans. For corporate clients, telemedicine benefits and EAPs will
regain traction in 2020, especially amid the coronavirus outbreak. In a bid to contain costs, a
growing number of corporate buyers in Hong Kong have been searching for solutions that offer
network services for inpatient and outpatient treatment, as well as e-services (e.g. online claims
submission). Insurers, however, are finding it challenging to implement network services, as
Hong Kong's choice of facilities is relatively narrow compared to larger regions in Asia (e.g.
Thailand).
Health insurance inflation
The overall atmosphere of uncertainty in Hong Kong, as well as the region's relatively high
medical and health insurance inflation rates, have also meant that individual and corporate
buyers are becoming more hesitant - and sometimes more cost-conscious - than usual in
terms of choosing or changing plans. 2020 may see more insurers offerings discounts and
incentives to retain and attract clients.
“ We have seen a rise of healthcare inflation in the global healthcare markets,
especially in Hong Kong. Customers are looking for more comprehensive
coverage, both physically and mentally, while affordability is still a key decision
driver when they compare different health insurance products.”
Andrew Merrilees
General Manager
at Bupa Hong Kong Insurance
We have always seen ourselves as a healthcare company, not just an insurance
provider, and our response to COVID-19 is evidence of that. We have waived fees
and cost sharing for COVID-19 tests, and we have been able to rapidly roll out
our vHealth app to all members in order to provide them with access to telehealth
consultants and keep them out of hospitals and clinics for as long as possible.
We have been able to do this because of the groundwork we have laid in 2019
to develop digital and telehealth offerings to our customers.”
Kevin Jones
Chief Executive Officer
at Aetna Insurance Hong Kong Ltd
The State of Health Insurance 32
Telemedicine rises in popularity amid
the COVID-19 outbreak
Telemedicine usage in the Lion City has
soared significantly during the first few
months of 2020, as more people favor
online consultations versus the riskier
option of visiting healthcare facilities amid
the coronavirus outbreak. Most insurers in
the region have noted an increase of
roughly 40% in telemedicine usage, and
have subsequently released a broader
range of telemedicine solutions that are
either managed internally, or through an
external vendor.
Local legislations have also changed to
allow for the delivery of prescription
medications to patients' homes, thus
eliminating the need for people to physically
leave their homes for consultations and
medications. This further makes the future
prospects of telemedicine particularly
favorable in the city-state. To ease the
burden on public facilities struggling to
meet the demands of an aging population,
it is likely that Singapore will continue to
implement measures to support digital
innovations in the years to come.
Wellness benefits take the spotlight
Wellness and big data will continue to take
center stage for corporate clients in 2020,
as companies are striving to look for more
sophisticated ways to improve the overall
health and wellbeing of employees. The
expansion of traditional health insurance
benefits to include wellness features (e.g.
gym memberships and healthtech) in the
corporate space will become increasingly
popular, largely as a result of the expanding
millennial and Gen Z workforce.
SINGAPORE
“Demand for and
utilization of
telemedicine in
Singapore will
continue to grow,
especially amid
the coronavirus
outbreak.”
Olivier Zeller
Chief Executive Officer
at Pacific Prime Singapore
The State of Health Insurance 33
Individual buyers grapple with health
insurance inflation
Individual insurance customers in Singapore
are, by and large, becoming more digital savvy
and sophisticated in their insurance purchasing
decisions. As customer expectations evolve and
information becomes increasingly transparent,
insurance advisors may need to work harder
to demonstrate the value of their guidance.
Rising medical insurance premiums will also
remain a key issue for individual buyers, as
NCDs that are caused by poor lifestyle
choices remain the top driver of claim costs.
“At Cigna, our work is rooted in
our mission to improve the health,
well-being, and peace of mind of
those we serve. Using cutting-edge
technology and through our work
partnering with doctors,
technologists, and artists, we
have come up with a powerful
new way to make the invisible
visible. Introducing our stress
care initiative - ‘See Stress
Differently’.”
Patrick Graham
CEO of Asia Pacific
at Cigna
The State of Health Insurance 34
Increased utilization of technology in health insurance offerings
The integration of technology in insurance offerings, such as telehealth benefits and claim
apps, is another key focus area in the Land of Smiles. Corporate buyers in particular are
looking for technological solutions to bolster their employees' physical and mental wellbeing.
Financial wellness is also receiving increasing attention, as more employees (especially Thai
employees) are seeing the value of life insurance products in protecting their family members.
New mandatory health insurance
regulations
One of the most notable changes in Thailand's
health insurance sector is that compliant health
insurance has been made mandatory for
foreigners aged 50 and above applying for
non-immigrant O-A and O-X visas. Long-stay
plans must meet a number of minimum coverage
requirements. More specifically, plans must
offer outpatient treatment benefits of no less
than THB ฿40,000, and inpatient treatment
benefits of no less than THB ฿400,000.
While there are many options in the market,
individuals face the challenge of finding plans
that are lifetime renewable.
Cigna enters the onshore market
With Cigna being the newest major player to have entered the onshore market, and demand
for quality advice growing, the outlook of the Thailand health insurance market in 2020 looks
promising. This is especially true in the corporate sphere; with another major player onboard,
there is now another attractive option available to corporate insurance buyers.
“Keeping up to date and investing in technologies to maintain a strong
position on data privacy and protection are important elements to ensure that both
our individual customers and corporate clients continue to enjoy a strong sense of
security when insured with Cigna. We are also having more active conversations on
solutions around mental wellness with our customers and corporate clients alike.”
Patrick Graham
CEO of Asia Pacific at Cigna
THAILAND
“Due to recent legislation
regarding non-immigrant
O-A and O-X visas, Thailand's insurance market has witnessed an upsurge in long-stay visa plans.”
Walter Van Der Wal
Country Manager
at Pacific Prime Thailand
The State of Health Insurance 35
Employee benefits outlook in Asia-Pacific
Healthcare inflation woes will also continue to afflict the Asia-Pacific region, and thus employers
will need to pay close attention to the medical cost trend. In particular, employers will need to
find sustainable ways of containing costs, such as by implementing cost sharing and preventative
care features, while still allowing access to physicians that will offer the best health outcomes
for employees and their dependents.
While Asia-Pacific lags behind in terms of mental health coverage, the onus will be increasingly
on employers to offer benefits that address employees' emotional and mental wellbeing.
Employers should be cognizant of the drivers of stress, making sure to align benefits offerings
with multi-generational employee expectations.
“On the corporate side, employees are more open to clinical intervention where our
Case Managers are able to help with appropriate actions to ensure best treatment
outcome. Also, there is higher demand for voluntary top-ups on medical benefits,
digital health services like telemedicine, and workplace mental health services.”
Patrick Graham
CEO of Asia Pacific at Cigna
To meet the needs of the expanding millennial
workforce, employers will need to look
beyond traditional insurance coverage and
offer a broader range of wellness benefits.
EAPs that focus on emotional resilience and
stress management will be key. Furthermore,
as telehealth takes center stage, virtual and
telebehavioral health services will also likely
receive growing interest in the employee
benefits sphere.
In order to attract and retain an increasingly
multi-generational workforce with varying
needs and expectations, organizations in
Asia-Pacific will need to work on enhancing
work policies and aligning benefits provisions
with market norms and needs. To ensure
maximum value in their benefits offerings, the
top priorities for organizations in 2020 will be
to place emphasis on wellbeing (i.e. physical,
emotional, and financial wellbeing), enhance
work policies (e.g. flexible working), as well
as incorporate inclusion and diversity into
benefits design.
“Corporations remain price driven in this competitive market, but are still aiming
to offer their members very comprehensive cover, particularly with generous
add-on benefits such as maternity, dental, psychological counselling, etc.”
Kevin Jones
Chief Executive Officer at Aetna Insurance Hong Kong Ltd
The State of Health Insurance 36
The Middle East
As the new decade starts, the Middle East insurance landscape is morphing rapidly, with
stricter government regulations and novel trends in the medical sector.
Mandatory health insurance legislation getting more
prevalent in the region
Since Dubai implemented mandatory health insurance requirements for all residents in 2016,
including expats and their dependents, we have witnessed more countries in the Middle East
region following this trend, including four out of the seven emirates in the UAE, namely Abu
Dhabi, Dubai, Ajman, and Sharjah.
Saudi Arabia
Saudi Arabia, the largest economy in the Middle East, is the latest country that will introduce
compulsory health insurance for its citizens. The country began implementing the mandatory
unified health insurance scheme in July 2016. However, the system was not fully put in place
until 2019, when the Saudi Council of Cooperative Health Insurance (CCHI) ruled that all
Saudi and non-Saudi employees, their dependents, and tourists must acquire health
insurance before they can obtain or renew their visa. Companies that fail to do so will be
subject to a “suspension of services”, as well as a fine equal to the value of insurance for
each individual.
Oman
Oman aims to launch mandatory universal health insurance for its private sector employees,
domestic workers, and visitors by mid-2020. This kind of insurance plan, known as the
Unified Health Insurance Policy (UHIP), must cover compulsory minimum benefits mandated
by local laws.
Oman
Oman aims to launch mandatory universal health insurance for its private sector employees,
domestic workers, and visitors by mid-2020. This kind of insurance plan, known as the
Unified Health Insurance Policy (UHIP), must cover compulsory minimum benefits mandated
by local laws.
Bahrain
The Bahraini government is also planning to introduce mandatory health insurance for its
expat population and temporary visitors in mid-2020 as a means to ease
the financial burden on both the government and employers by keeping
foreign professionals healthy.
The State of Health Insurance 37
DUBAI (THE UAE)
New renewal rule by the DHA
The mandatory health insurance scheme is in its third year in Dubai, during which the health
insurance premiums have been growing rapidly. From 2015 to 2017, the country has recorded
double-digit growth in its CAGR. Thus, it is believed that the DHA will address the renewal
increase by mandating that insurers cannot increase a policy’s premium by more than 100% of
the existing premium.
Over-prescribing trend
“ In Dubai, there is a prevailing trend of overutilization, as well as
over-prescribing by medical facilities. These factors are key
drivers of health insurance costs in the region.”
David Hayes
Chief Executive Officer at Pacific Prime Dubai
We are currently witnessing a trend of
overutilization of medical services across
various specialties in Dubai, which lowers
efficiency and potentially increases
premiums.
It is because some insurers set their
premiums based on the number of claims
the client made in the previous year.
These premium hikes often make it very
difficult for the client to renew their policy
(which causes the DHA to introduce the
new renewal rule as mentioned above),
and thus the client will choose to turn to
another insurer. Some clients may choose
not to declare the conditions to the new
insurer, which will result in claim denials
or even policy cancellations if the client
needs to lodge claims in the future.
To cope with the prevailing trend of over-pre-
scribing and overutilization by the medical
facilities, the DHA has introduced a new
insurance billing system called Diagnosis
Related Group (DRG) classification that may
bring down insurance premiums.
The DRG provides a calculated fixed price
per inpatient service, thereby streamlining
the approval process for insured members
and insurance providers to reduce disputes
between insurers and hospitals around the
necessity of conducted procedures. It is
hoped that with the implementation of the
DRG, patients will no longer get over-pre-
scription or overtreatment, and the length
of stay would also be considered in the fixed
payment to the hospital.
The State of Health Insurance 39
More restrictions on maternity benefits in Dubai
More insurers are reviewing their maternity benefits as a cost-containment measure.
For instance, maternity insurance policies will only provide the minimum maternity
benefits as required by the law, and additional maternity benefits will only be available
when you renew the plan at a higher cost. This is the latest means of the insurer to
obtain at least two years of premium to offset the incoming maternity claims. Further-
more, most international insurers are now adopting telemedicine to reduce outpatient
treatment costs.
Employee benefits outlook in the Middle East
To sum everything up, with the roll-out of mandatory health insurance in multiple
countries and the increasing demand for quality health insurance, it is expected that
group health insurance providers will be able to benefit from the business opportunities
in the years to come. This is because enterprises will have to set aside extra funds to
secure health insurance for their employees, as well as their dependents, to avoid
heavy penalties including suspension of services.
Having said that, insurers will also have to embrace new challenges when governments
introduce different measures, such as the DRG classification and the new renewal
rule, to alleviate the mounting pressure on premium inflation. The actual effectiveness
of these measures, however, remains to be seen.
The State of Health Insurance 40
The employee benefits market in the
Americas is extremely diverse. However,
the fact remains that key developments
in the US can often profoundly impact
the health insurance and employee benefits
market in the rest of the continent.
This is due to the fact that health plans with
international coverage in the continent will
receive the spillover effects of the US’s
expensive healthcare system. The following
are key developments in the US and Latin
America that could impact employee
benefits and health insurance premiums.
The Americas
THE US
The two main developments in the US that may have direct impacts on employee benefits
providers include the California Consumer Privacy Act (CCPA) and the upcoming US presidential
election.
The CCPA
The CCPA came into effect on January 1, 2020, and will shape employee benefits practices
in the state of California. In particular, it will tighten the data collection process of employees
made by both businesses and employee benefits providers.
Businesses in California will need to take extra precautions when collecting personal health
information from clients and employees by maintaining transparency about their collection
process, as well as ensuring that their database is secure.
The CCPA has many exemption conditions which may apply differently to different companies
offering varying types of group health plans. Consulting an employee benefits expert or making
sure that legal and HR teams are up to date on these exemptions will be key to maintaining
compliance in California.
The 2020 presidential election
Whether President Donald Trump gets reelected in the upcoming US presidential election in
November 2020 can shed light to future trends in the US’s health insurance industry. If President
Trump gets reelected, we could see a similar trend of premium increases on the individual
health insurance market set up by the Affordable Care Act.
This is because the introduction of Trump’s Health Reimbursement Arrangement (HRA) in 2019
would allow employers to provide money for their employees’ health reimbursement accounts,
which could then be used to buy individual health insurance coverage instead of receiving
employer-sponsored group plans.
In short, the HRA will give employers the option to not provide traditional group health insurance
plans and implement the HRA instead. This will generate more demand in the individual health
insurance market, leading premiums to increase, while the opposite may occur in the group
health insurance and employee benefits market.
Therefore, if Trump is reelected, we could see more healthcare policies that are designed in
this way, which may push up premiums in the US’s individual health insurance market.
The State of Health Insurance 42
Latin America
Countries in Latin America are fast developing in general. As a result, the region’s healthcare
and economic systems have significantly advanced in recent years, leading to two key factors
that are pushing up the region’s group health and individual health insurance premiums.
Aging population
Firstly, countries in the region are facing aging populations. The population of old-aged
dependents is projected to more than double by 2050, increasing from 13% to nearly 30%.
This means that healthcare expenditure in the region will continue to increase sharply,
putting upward pressure on health insurance premiums.
Growing middle class population
Secondly, when it comes to employee benefits, the growth of the middle class in Latin
America will change employee expectations when looking for jobs in the region. In the past
decade, Latin America’s middle class has grown by around 13 million households. This has
strongly contributed to the growth of private health insurance plans, including employee
benefits solutions.
In the upcoming years, the older population and the growth of the region’s middle class will
continue to fuel the health insurance market in Latin America.
Employee benefits outlook in the Americas
All in all, the group health insurance premiums in the region will face strong upward pressures
in the next decade. The US’s expensive healthcare system has led average private health
insurance premiums in the region to be among the most expensive in the world.
Furthermore, the upcoming presidential election will determine whether we will continue to
see healthcare policies that add to this pressure on premium inflations in the US. Meanwhile,
data privacy could become a more common theme in the US following the CCPA’s
implementation at the beginning of 2020.
In Latin America, the rapid growth of the middle class, coupled with the region's aging
population, will continue to drive up health insurance premiums in the upcoming years.
Insurers in the region will need to stay vigilant amidst changing market conditions in the
Americas. The diversification of products will be key in mitigating future risks that may occur
from demographic, political, and socioeconomic disruptions in the market.
The State of Health Insurance 43
Europe
In Europe, the COVID-19 outbreak will continue to have far-reaching implications on the
employee benefits and corporate insurance market. Other factors, such as Brexit, the region’s
aging population, and subsequent medical inflation, also pose equally challenging obstacles to
the industry in the meantime.
COVID-19’s impact on Europe
COVID-19 has been adversely impacting public health and economic systems all over the world.
In Europe, which the WHO has declared as the new epicenter of the pandemic, insurers and
corporations will need to prepare for an economic downturn in the wake of this new decade,
known as the coronavirus recession.
The forth-coming recession in Europe may have serious impacts on the employee benefits
market, as businesses may be less willing to invest in costly employee benefits plans. This could
put downward pressure on premiums in the upcoming year, and insurers will need to adjust
their employee benefits solutions to address new health concerns that are arising in the region.
The coronavirus outbreak has also led many businesses to implement remote working policies
in an attempt to minimize the spread of the virus. Employee benefits may become more
catered to remote workers, such as home delivery services of office materials, reimbursement
of coworking space costs, flexible working hours, and more extensive wellness and health
insurance packages.
The State of Health Insurance 44
Impact of the GDPR law
Since May 2018, the General Data Protection Regulation (GDPR) law continues to shape
the way HRs and employee benefits providers operate in the region. Businesses will need to
continue refining their HR operations to minimize the risk of breaching this regionwide law.
The GDPR is essentially a framework for data protection laws that applies to all organizations
that process the personal data of citizens of the EU and the EEA, including both employees
and clients. For this reason, employee benefits providers and HRs need to take extra care
when handling personal client and employee data.
Particularly, the GDPR affects HR and employee benefits providers in three distinct ways:
Breaching the GDPR can lead to fines of between EUR €10 million and EUR €20 million, or
2% to 4% of an organization’s worldwide annual revenue.
To minimize the risks of violating the GDPR law, businesses must be more transparent about
their employee data collection process and make sure that they partner with an employee
benefits provider with a good track record of GDPR compliance.
Processing employees’
personal data
All parties will need to be
aware of any risks when
transferring employee data
via unsecured channels.
Responsibility of employee data
Both businesses and
employee benefits providers
may be held jointly responsible
for any mishandling of
employees’ personal data.
1 2 3Structuring
global employee benefits plans
Global employee benefits
providers will need to ensure
that all of their products for
businesses in the EU are
GDPR compliant.
The State of Health Insurance 45
THE UK
“Brexit is set to have a significant impact on the UK insurance landscape.
To retain talented EU employees, employers will need to ensure that their
benefits are implemented and managed optimally.”
Liz Russell,
Manager at Pacific Prime UK
Brexit's impact on UK firms
Brexit’s impact on the UK has significantly
affected the job market long before the UK
officially left the EU. The uncertainty
surrounding the outcome of this historic
breakup has discouraged many EU
employees from searching for employment
in the UK.
However, the demand for skilled and
semi-skilled EU workers remains high in the
country, creating a demand-supply gap in
the job market ever since 2016. For instance,
between 2017 and 2019, the level of
hard-to-fill vacancies increased from 56%
to 61%, according to CIPD’s Labour Market
Outlook 2019.
To compete for EU employees, UK firms will
need to offer competitive employee benefits
to prospective EU employees. Improving
employee benefits has proven to be an
effective strategy to improve employee
retention rates, if implemented correctly and
appropriately. Hence, employee benefits like
group health insurance will become a deciding
factor for employees choosing one employer
over another.
Navigating through changing client expectations
from the COVID-19 outbreak and the uncertainty
of Brexit, while also maintaining compliance levels
in an ever tighter legislative environment, will be
challenging for EU employee benefits providers.
However, the dynamism of the EU’s job market
could still provide health insurers with an opportunity
for growth. The EU’s aging population will likely
result in higher demand for comprehensive group
health insurance by EU employees.
Currently, the median age across all EU member
states stands at 43.1 years and is projected to
increase to 46.9 years by 2050, according to
Eurostat. This suggests that a significant fraction
of the EU’s population are veteran employees
who value a high-quality employee benefits plan.
Therefore, businesses can gain a competitive
edge in recruiting talent by providing a more
comprehensive employee benefits package.
All in all, the outlook of the EU’s economy and
employee benefits market can be challenging in
the upcoming years. Employee benefits providers
will be forced to adapt to these adverse market
conditions, whether this is by offering solutions
that target the EU’s older employee base or by
capitalizing on other innovative opportunities.
Employee benefits outlook in Europe
The State of Health Insurance 47
Africa
With increasing economic maturity and advantageous demographics, Africa’s potential
for lasting growth has not gone unnoticed by the health insurance industry. However,
recent developments have introduced challenges. A progressively worsening
macroeconomic climate, aggravated by a sharp drop in commodity prices, along with
serious governance issues in many of Africa’s key economies, has calmed optimism
for the time being.
Yet, the use of mobile applications in some markets, which promote microinsurance
plans, could increase the prospects for private health insurers.
The State of Health Insurance 48
NIGERIA
Rise in demand for private health insurance
Demands for private health insurance have increased due to growing levels of disposable
income in a few segments of Nigerian society. However, macroeconomic instability and
fluctuating government policies pose more challenges for those looking to develop more
insurance options or robust private treatment centers.
Additionally, wealthy Nigerians may choose to receive medical care in another country,
with an estimated USD $783 million spent abroad on medical tourism annually. As a result,
microinsurance programs for middle-class residents are becoming increasingly popular.
The penetration of private health coverage, subsequently, continues to be very low. As a
percentage of private health expenditure, 95% is out of pocket. Increasing unemployment,
increasingly gradual growth, and a sharp incline in inflation have impacted household disposable
incomes, making affordability a major burden to growing the health insurance market.
With homes far away from hospitals, insurance is something many Nigerians would not consider.
Despite this, Oxford Economics forecasts that spending on private health coverage will
increase to USD $530 million in 2021, which is a 6% increase from USD $400 million in 2016.
SOUTH AFRICA
Unequal access to medical care
Unequal access to healthcare continues to be a major challenge for the nation with a history
of apartheid. Only around 18% of South Africans regularly use private healthcare providers,
despite dedicating 42% of total health expenditures to voluntary health insurance.
Plans focus on rewarding behavioral changes
The rise of healthcare plans directed at rewarding behavioral changes among policyholders is
one particular highlight in the nation’s insurance market. Vitality, a program that provides
discounts, rewards, and personalized technology, such as wearables, as well as data analytics
to promote healthy changes, continues to gain momentum.
It has already captured 40% of the private market for health plans in South Africa, and has even
extended its behavioral incentives to life and car insurance customers. The wellness-promoting
program not only lowers morbidity and mortality rates, but the overall cost of claims as well.
The State of Health Insurance 49
KENYA
NHI to be implemented within the next 14 years
South Africans that cannot afford health insurance can receive free healthcare through the NHI
system within the next 14 years. Private health insurers and providers are concerned that the
private health options will be more limited and doctors could turn into government workers
once NHI is fully implemented.
The growth of East Africa's mobile economy
Health insurance is provided by the National Health Insurance Fund (NHIF) and private
insurers, along with microfinance insurance and community-based organizations. Established
in 1966, the state-owned NHIF is a social health insurance fund that was chosen to offer
affordable, accessible, quality, and sustainable health coverage to the Kenyan population.
The growth of East Africa’s mobile economy is making Kenya a proving ground for new
distribution plans, which also includes health insurance. According to EY, “Private health
insurance should account for an increasing share of health spending over the forecast period,
topping 9% by 2021 (up from 8% in 2016). This will amount to a CAGR of over 10%.”
The State of Health Insurance 50
Employee benefits outlook in Africa
While the health insurance industry
recognizes the potential for sustainable
growth in Africa, the challenges presented
by recent developments might affect the rate
of progress. However, the prospects for
private health insurance companies could
grow with the increasing use of mobile
applications in various markets, which
encourage microinsurance plans.
As levels of disposable income continue
to increase, so do the growing demands for
private health insurance in the region. While
wealthier citizens, such as those in Nigeria,
may be able to access medical care in more
favorable countries, the need for microinsurance
programs for those in the middle-class range
is likely to increase in popularity.
Since the majority of the private health
expenditure percentage remains out of
pocket in places like Nigeria, corporations
could benefit from offering private health
insurance as an employee benefit to attract
and retain employees.
The State of Health Insurance 51
IV. Pacific Prime’s Latest
Developments
Getting health insurance is becoming more important than ever before as new health threats
like the COVID-19 outbreak continue to emerge. To further improve our health insurance
consultation and plan administration services, Pacific Prime is continuing to expand our office
locations to other major cities across the globe.
We have recently established our physical presence in Mexico, the UK, and the Philippines.
This adds to our extensive list of offices, allowing us to deliver truly comprehensive services to
all of our clients who regularly travel across the globe. Currently, we have ten offices worldwide
in the following locations:
Furthermore, since October 2019, Pacific Prime’s CEO Neil Raymond officially joined the
WBN’s board of directors. The WBN is a global network of insurance brokers, comprising
brokers with knowledge and experience in more than 100 countries. This will allow Pacific
Prime’s clients to benefit from the WBN’s global footprint in the private health insurance
and employee benefits sphere.
Another prominent development is our state-of-the-art Prime Care Portal, which was
developed by our in-house IT teams to streamline the employee benefits administration
process for global HR teams. Now available to all corporate clients at no extra cost, our
portal simplifies the entire benefits administration process by enabling the management
and reporting of multiple policies all via one central web-based hub.
Hong Kong Shanghai Beijing Dubai Singapore
Bangkok London Los Angeles Mexico City Cebu
The State of Health Insurance 52
Finally, experts at Pacific Prime are continuing to simplify insurance for all our clients
throughout the globe by providing comprehensive guides and offering free consultation
sessions. In the last quarter of 2019, Pacific Prime released multiple guides to help our clients
around the world navigate the complex world of health insurance, including our Guide to
Medical Evacuation and the Complete Guide to Moving Abroad as an Expat.
To learn more about health insurance and Pacific Prime, visit our website or contact our team
of experts from anywhere in the world today.
SHANGHAI
+86 21 2426 6400
19th Floor, Yunhai Building,
1329 Middle Huaihai Road,
Xuhui District, Shanghai,
China
www.pacificprime.cn
BEIJING
+86 010 5829 1763
Oriental Building - Room 402,
No.9, Dongfang East Road,
Beijing, 100027, China
www.pacificprime.cn
SINGAPORE
+65 6536 6173
Cross Street Exchange
#14-05, 18 Cross Street
Singapore 048423
www.pacificprime.sg
HONG KONG
+852 3589 0531
35th Floor, 1 Hung To Road,
Kwun Tong, Hong Kong
www.pacificprime.hk
MEXICO CITY
+52 55 4124 0118
Calle Lago Zurich 219
Piso 12, Miguel Hidalgo,
Ampliación Granada,
11529 Ciudad de México,
CDMX
www.pacificprime.lat
CEBU
+63 32 2535066
Mabuhay Tower, AsiaTown,
IT Park, Lahug, Cebu City,
Philippines 6000
DUBAI
+971 (0)4 279 3800
10th Floor, Platinum Tower,
Cluster I, Jumeirah Lakes
Towers, Dubai, UAE
www.pacificprime.ae
BANGKOK
+66 2 026 3232
973 President Tower Build-
ing, 9th floor (9D 9E)
Ploenchit Road, Lumpini,
Pathumwan, Bangkok,
Thailand 10330
www.pacificprime.co.th
LONDON
+44 203 968 7750
3/F, 70 Gracechurch St,
London, EC3V 0HR,
United Kingdom
www.pacificprime.co.uk
LOS ANGELES
+1 (626) 600 7089
938 Huntington Drive, Unit D,
San Marino, CA 91108 Los
Angeles County, U.S.A.
The State of Health Insurance 53
Appendix
Application Programming Interface
Artificial Intelligence
Brazilian General Data Protection Law
California Consumer Privacy Act
Centers for Disease Control and Prevention
Chartered Institute of Personnel and Development
Chief Information Security Officers
Chronic Obstructive Pulmonary Disease
Compound Annual Growth Rate
Coronavirus Disease 2019
Council of Cooperative Health Insurance
Diagnosis Related Group
Dubai Health Authority
Electronic Health Record
Employee Assistance Programs
European Central Bank
European Economic Area
European Union
General Data Protection Regulation
Gross Domestic Product
Health Reimbursement Arrangement
High Net Worth
International Private Medical Insurance
Internet of Things
Mental Health Parity and Addiction Equity Act
National Health Insurance
National Health Insurance Fund
National Health Service
Non-communicable Diseases
Organisation for Economic Co-operation and Development
Ultra High Net Worth
Unified Health Insurance Policy
United Kingdom
United States
World Health Organization
Worldwide Broker Network
API
AI
LGPD
CCPA
CDC
CIPD
CISOs
COPD
CAGR
COVID-19
CCHI
DRG
DHA
EHR
EAPs
ECB
EEA
EU
GDPR
GDP
HRA
HNW
IPMI
IoT
MHPAEA
NHI
NHIF
NHS
NCDs
OECD
UHNW
UHIP
UK
US
WHO
WBN
Appendix A - List of acronyms and abbreviations
The State of Health Insurance 54
All information contained within this document is accurate at the time of its publishing.
Ref 2020-05-PP-SOHI
https://www.pacificprime.com/