International private medical insurance (IPMI) provides employees with long-term travel obligations access to broader healthcare services. The global IPMI market has become very competitive. Expectations are that the market will continue to grow. In this article, Milliman’s Joanne Buckle and Neha Taneja take a look at some key pricing and experience rating items for group IPMI issuers to consider.
Here is an excerpt:
Dealing with multiple geographies, changing regulations, various health systems, diverse demographics and movement of the insured population results in a number of additional complexities when compared to rating a traditional PMI policy. Here are some of the key factors IPMI providers need to consider:
- Local data limitations: The wealth of data that a traditional health insurer holds on domestic PMI policies is usually insufficient for pricing an IPMI product, because:
- IPMI policies usually offer a more much comprehensive benefit package.
- Differences in the socio-economic profile of the target market, resulting in markedly different benefit features and claims experience.
- Distinct claiming patterns due to the international nature of the benefits.
- Variation in utilisation patterns by country and nationality.
- Portability offered under an IPMI policy allows full access to benefits wherever the employees are and it is difficult to predict where different services will be consumed.Obtaining reliable and relevant data with a desired level of granularity can be challenging making it difficult to get any credible results on which to base sound conclusions.
- Geographical area of coverage: This is considered one of the key rating factors for an IPMI policy as claims costs can vary significantly between countries. For example, most insurers provide separate cover for ‘worldwide excluding US’ and ‘worldwide including US’, because healthcare costs are typically much more expensive in the United States than anywhere else in the world. Most insurers would classify countries into different regions/levels/zones that have broadly similar costs and healthcare systems for more accurate rating. However, constructing such classifications is difficult because:
- Limited claims experience for some countries and lack of data for others makes the classification statistically less sound.
- Even countries with similar costs may have different types and quality of healthcare services, disease trends and state healthcare systems which can make it difficult to group countries into particular zones. For example, insurers may experience lower claims ratio in countries with well-functioning state healthcare systems, which allow access for temporary residents. The rules on whether an overseas national is eligible to access the local state healthcare system are complex and vary by destination country, as well as nationality. In addition, the likelihood that an employee will access state coverage depends on the quality of the state healthcare system, as well as the nationality and cultural preferences of the employee.
- Volatility in exchange rates can result in the pricing zone relativities becoming rapidly obsolete.
All of these factors are likely to have a significant impact on the claim frequencies and costs. As a result, trying to price cover accurately for a multinational company with employees residing in multiple countries across the globe is quite a task.