Global Factors Contributing to Rising International Private Medical Insurance Premiums

In this iPMI Global Insights article, iPMI analyst Christopher Knight reads Pacific Prime’s new iPMI report, which explores the global factors that are contributing to the rising cost of international private medical insurance.

The report analyses trends in individual and family International Private Medical Insurance (IPMI) premiums across 100 locations, highlighting key global and regional factors influencing these costs.

Several global factors that contribute to the rising cost of IPMI, include:

• Global Inflation: Rising global inflation leads to higher medical trend rates, increasing treatment costs and, consequently, premium rates. This trend is evident in 99 out of 100 locations surveyed in the report.
• High Healthcare Utilization: Increased healthcare utilization, despite inflated medical costs, also drives up IPMI premiums. This trend is influenced by factors like increased health awareness post-COVID and a shift towards preventive healthcare. However, overutilization and overprescription of treatments in certain regions exacerbate this issue.
• Insurer Consolidation and Exits: Insurers are consolidating or exiting local markets due to high claims-loss ratios resulting from inflation and increased healthcare utilization. This trend reduces consumer choices and makes it difficult for individuals and businesses to obtain global or multijurisdictional coverage.

Regional Variations in Factors Affecting IPMI Costs

While the global factors mentioned above impact IPMI costs worldwide, their influence and other region-specific factors vary across different regions:

Asia

• Hong Kong: Rising medical costs, high post-COVID policy utilization, and a surge in outpatient claims due to the lifting of COVID restrictions contribute to Hong Kong's position as the second most expensive location for IPMI for the fourth consecutive year.
• China: An economic downturn, increased family insurance claims (primarily due to post-COVID respiratory diseases), and insurer consolidation and exits are driving up IPMI costs in China.
• Singapore: While average IPMI premiums in Singapore decreased slightly due to individuals opting for higher deductibles and less coverage, the market faces consolidation, leading to fewer consumer choices.
• Malaysia: A weakened ringgit, making imported medical equipment more expensive, and an increase in service taxes contribute to rising IPMI costs in Malaysia.
• Thailand: While Thailand has introduced new visas and loosened visa requirements to attract individuals, rising medical costs are also a concern.

Oceania

• Australia: The community-rated health insurance system in Australia ensures affordability and consistent premiums. However, employers must consider the Fringe Benefits Tax (FBT) when funding health insurance benefits, as it can impact overall costs.

The Middle East

• Dubai: Overutilization and overprescription of treatments, non-disclosed pre-existing conditions, and increasing costs for TPAs and facilities are driving up IPMI premiums in Dubai.

Europe

• United Kingdom: Consumer Duty rules requiring insurers to justify costs, insurer consolidation (like Aviva's acquisition of AIG's UK life insurance business), and declining confidence in the National Health Service (NHS) leading to increased utilization of private healthcare are contributing to rising IPMI costs in the UK.

The Americas

• United States: Rising treatment costs due to increasing wages for healthcare professionals, high pharmaceutical costs, and clinical workforce shortages, along with increased regulatory pressure, are the primary drivers of rising IPMI premiums in the US.
• Mexico: Poor infrastructure and lack of investments in the Latin American market, coupled with undisclosed pre-existing conditions, contribute to rising IPMI costs in Mexico.

The Role of Technology

While technology offers potential for cost mitigation and improved user experience in IPMI, its adoption and impact vary across regions:

• Developed Markets: Developed markets like Singapore are leading in integrating technology for claims filing, benefits management, and offering telemedicine services.
• Developing Markets: Developing markets like Indonesia lag in adopting technology, which could hinder their ability to contain costs and enhance customer experience.

Flexible Benefits

Flexible benefits are gaining popularity as a cost-saving measure, particularly in Singapore, Hong Kong, and the US. They offer employers greater cost control and cater to the diverse needs of employees. However, the complexity and cost of administering flexible benefits programs can be a barrier for some companies.

Conclusion

The global IPMI market navigates a complex interplay of factors impacting premium costs. While inflation and high utilization are challenges, technological advancements, flexible benefits, and government intervention offer potential solutions. Regional nuances highlight specific market dynamics and opportunities for insurers, employers, and individuals to adapt and optimize healthcare strategies.

Read the complete Pacific Prime report here.