The State of Health Insurancepacificprime.cn/assets/landing/sohi-2020/SOHI-2020-report.pdf · What...

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


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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1

3

4

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26

52

54


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



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.


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.


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.


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.


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 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


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


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 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 main factors driving plan costs

Increased challenges

with fraud regulation

Increased cost of

healthcare


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.


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


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.


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 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.


Global health insurance

trends and challengesConsiderations 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 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.




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.


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.


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.




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.


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.



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


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.


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.


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


Patrick Graham


“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.”


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


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).


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


at Aetna Insurance Hong Kong Ltd


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


at Pacific Prime Singapore


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


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


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


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


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 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.


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.


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 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.


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.


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.


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 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


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.


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.


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%.”


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.


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


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.


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


All information contained within this document is accurate at the time of its publishing.

Ref 2020-05-PP-SOHI

https://www.pacificprime.com/

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