International private medical insurance must comply with different countries’ regulations, so offering a global scheme is complex.
IF YOU READ NOTHING ELSE, READ THIS…
- Local regulations may dictate what an international private medical insurance scheme must cover in some regions.
- International insurers may not be able to operate in some countries because of licensing rules, so must partner a local provider.
- The benefits that employees expect or require will vary between locations.
Internationally mobile employees remain an integral part of many multinational organisations’ business strategies, particularly when they are looking to establish a presence in new markets.
Gold-plated expatriate benefits packages may be behind us, but many expats still expect their employer to take care of both their, and their families’, welfare while they are away from their home country. International private medical insurance (IPMI) therefore remains core to expat benefits packages. So the challenge is on for employers to source affordable and comprehensive IMPI in the face of inflationary pressure and rising provider costs.
An obvious solution may be to off er a single global scheme providing equal benefits to employees irrespective of their location. Mark Harris, a senior associate consultant at Mercer, says: “From purely financial perspective, [employers] can leverage premiums on a global basis and, all things being considered, they are going to generate cost savings vis-à-vis having multiple plans across multiple geographies.”
But a single global IPMI scheme is complex to implement and run. Justin Crossland, senior consultant in the international consulting group at Towers Watson, says: “With international medical benefits, you have very different offerings from different providers and different capabilities in different countries and different regions. So when you try to consolidate that, it becomes much harder. You may be able to tailor to some degree and have different options, but policies still may not be easily consolidated.”
Local regulatory requirements are a particularly big obstacle for employers to overcome. In Germany, for example, under statutory minimum requirements, employers must provide for long-term nurse care costs, which is similar to hospice care in the UK. However, Mercer’s Harris says: “None of the international insurers, because they are medical insurers, offer that longer-term nurse insurance, so if an [employer] happens to have multiple expatriates in Germany, and it places the medical benefits with an international insurer, it would have to buy this longer-term nurse care on a standalone basis.”
Meanwhile, in Abu Dhabi, PMI must include a full refund for maternity care.
Kevin Melton, sales and marketing director at Axa PPP International, says employers should tailor their policies to ensure such cover is not offered in countries where it is not required, to help minimise costs.
“If [employers] want full maternity cover in certain countries, hospitals would view a full refund [benefit] as an opportunity to charge more,” he says. “So if [an employer] has an £8,000 or £10,000 limit on maternity, lo and behold, the bill will come to £8,000 or £10,000.” This practice will negatively impact an employer’s premium when it renews its policy, says Melton.
Local regulations and legislation preventing international insurers from operating in some locations can also hinder the provision of a single IPMI scheme. In some regions, such as China and Abu Dhabi, PMI can only be provided by a locally licensed insurer, even if evidence of cover is a prerequisite for obtaining a working visa. To overcome this, IPMI providers typically partner local insurers or administrators in such regions.
Melton adds: “Regulatory [environments] will have an impact on tables of benefits, what you can and cannot do, and it just means that you can’t have consistency across the whole world. [If an insurer is] working with a local partner, it will probably want to have a percentage of the risk retention, it may wish to have lower benefits or maybe have a different view on the risk.”
Employers must also consider international sanctions. US-based insurers must operate within the Office of Foreign Assets Control (Ofac) list, while those based in the UK must adhere to European Union (EU) sanctions. Although insurers are permitted to provide cover for employees within sanctioned countries, they cannot settle claims because it is not permitted to pay money into or out of these regions.
EU-sanctioned countries currently include Iran, Sudan, Somalia and the Congo. Marco Bannerman, head of global partnerships at Aetna International, says: “It is nigh on impossible to have a one-size-fits-all policy for every single region of the world. The Ofac and EU sanctions would straightaway cause an [employer] problems.”
The complexities involved in keeping on top of local market regulations and requirements could lead to consolidation in the market, with some insurers opting to specialise in certain regions of the world. Sarah Dennis, international healthcare director at Jelf Employee Benefits, says: “It is getting more technical. Local markets are complex and not as straightforward as people may think.”
Employers need to ensure they understand what they are buying and whether they really need that particular product.
“It is about understanding the complexities to educate [employers] to help them understand whether they can have a global policy,” adds Dennis. “It is about clearly defining to [employers] that they have to facilitate a duty of care. If they don’t, they are going to have a high turnover of staff.”
Sally Hart, executive director, International Benefits Network
The challenges of offering international PMI
An expatriate assignment is a substantial investment for the employer and a significant life change for the employee, so it is critical to get things right, and health insurance is a key factor in the reward package.
Employers must balance cost and benefits. International health insurance is expensive, and costs can be managed by introducing individual excess amounts or by limiting cover where appropriate.
Size matters to providers. Organisations with more than a few expatriates may be able to have medical history disregarded; those with more than 100 may be able to create a customised package. But those with only one or two expats may find it hard to find a provider.
Clear communication is key. An expat needs the peace of mind to know exactly what is covered, and a good plan should provide a 24/7 support line in the expat’s own language.
Local knowledge is critical. Most providers package insurance by region, but it is vital to review the actual facilities available in each country the assignee will visit. Good local advice will ensure a high standard of care and all regulatory requirements are met.