Joanne Frearson looks at the US expatriate market and how it presents new opportunities for PMI
The US expatriate market had been a new area of focus for European international healthcare companies to target. It is estimated that 1.5 million American expatriates are living abroad which represents a big opportunity for private medical insurance (PMI).
BUPA International recently formed an alliance with American healthcare provider, United Healthcare (UHC), to target US expatriates.
Bill Ward, managing director of BUPA International, says: 'The US has the biggest expatriate market. It has always been attractive, but we had no infrastructure or distribution partners in the country to be able to build a core business. Without an established brand name, it is difficult to become a major player.'
BUPA International is set to sell international healthcare under the UHC brand name to US expatriates. Its first product, Global Choice, is aimed at employees of US companies who are living and working outside the US. It will also be distributed by UHC.
Interglobal Insurance Service also sells to the US expatriate market. Peter Rousseau, business development director at Interglobal Insurance Service, says it is a vast and very good market because of the quality of healthcare in the US.
As such, when US citizens go to work abroad they expect the same high level of healthcare, which is generally provided by private healthcare groups. Katherine Stagetorn, general manager of International Health Insurance Danmark, believes: 'Americans are demanding about PMI because a public health system does not exist in the US.'
'PMI is extremely important for Americans and customers like specialist treatments, for example, choice of doctors and hospitals,' she says.
But Simon Redgrove, group marketing manager at GoodHealth Worldwide, has a different view on the US expatriate market. The company has no immediate plans to distribute in America. He says: 'There are too many players on the market and premiums are too low. There is little potential to make money.'
Neither are the other players completely focusing on the US. Rousseau says there are a lot of opportunities in the market worldwide only 50%-60% of expatriates are covered. Globalisation has seen more and more people working abroad.
In addition, the expatriate market is changing. The average age of the expatriate is getting younger, it is no longer just men but also women, expatriates are taking their families with them and are going to more exotic places.
Kenton Sheldon, director of international sales and client management at CIGNA Healthcare, says: 'There have been a lot of new players in the market who are now prepared to go up a scale on what they are prepared to cover. PMI is growing fairly quickly.'
David Heppard, head of IHC, adds: 'New entrants on the market such as Winterflood have given more choice to consumers ' there is better advice and better products.'
Rousseau believes mergers have been a positive move for the international healthcare industry. He explains a rise in bigger players on the market will create more opportunities for smaller companies.
The bigger companies are more prepared to spend money on advertising to make people more aware of PMI. Smaller players benefit by these advertising campaigns as they increase consumer awareness of PMI. Consumers ring around for quotes from smaller players to see what they are offering and buy from them if it is the service they want.
'People are not looking for old, staid, larger companies, but are buying a service and will go with the company that will give them a good service,' says Rousseau.
Competition in the internal healthcare arena is also prevalent between local and foreign product providers. But, Redgrove says the trend is towards global foreign companies in certain countries.
For example, in Saudi Arabia if an expatriate has local PMI cover and has to leave the country to work elsewhere, local cover cannot be used in the new country whereas foreign PMI can be taken to another country to be used. In Saudi Arabia, it is more beneficial for an expatriate to arrange cover from a foreign provider in case they are transferred to another country.
In the Middle East, laws are changing to make expatriates prove they have external insurance so they will not need to rely on the state services.
Redgrove says: 'In countries in the Middle East, a large number of expatriates has placed a lot of pressure on the healthcare system. They are changing the laws to make it compulsory to buy private PMI cover to take the pressure off the local providers.'
Redgrove expects this trend to be repeated in other countries such as South East Asia and Africa. However, Sheldon says: 'A lot of countries are aimed at protecting their own domestic insurance market.'
Regulations in each country vary depending on the domestic environment. For example, Australia dictates what PMI cover an expatriate must have so domestic players are not disadvantaged. If an expatriate buys PMI from an external player a levy is attached. In addition, expatriates living in Australia have to pay 1% of their salary towards the government healthcare system Medicare.
In relation to regulation, Heppard says you have to be aware of due diligence in certain countries.
Interglobal Insurance Services distributes through intermediaries because they know the local market. They know the regulations, local restrictions and tax implications of the countries in which they work.
PMI is also affected by economics. Ward explains if the US starts to slow down it has a knock-on effect for companies. Companies lay off staff and do not send as many employees on overseas assignments, sales in PMI decreased. For example, after the collapse of the Russian Ruble a large number of expatriates working in the area left. The sale of PMI for expatriates in this area consequently decreased.
Other major impacts on the market includes technology.
The internet has had a very positive influence on the international healthcare market. CIGNA Healthcare has a pilot internet service in the US, but Sheldon says customers still resort to the phone and need face-to-face contact. If a client wishes to talk about a medical issue they want to speak to someone directly who knows and understands the problem. The big influence the internet has had is that it has made administration smoother.
Heppard says most of the focus on the website is on online quotations. IHC has about 13 insurance specialists in its quotation system. These include BUPA International and CIGNA Healthcare. GoodHealth Worldwide has also launched a quotation system available to intermediaries.
PMI is affected by economics.
Competition in the internal health care arena is prevalent between local and foreign product providers.
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