Mr McGrigor has worked with international health insurance companies such as Aetna, Bupa, and Cigna. He established a strategy and M&A advisory firm called the McGrigor Group 15 years ago focusing on health related insurance and health services where he has personally been involved with over 400 projects.
Learn more about his experiences and his valuable insights about the IPMI industry in his full interview below.
A: McGrigor Group is primarily a boutique strategy and M&A advisory firm. Our industry focus is fairly narrow, namely, health-related insurance and health services, albeit that both these categories are currently expanding fast e.g., to dread disease covers and to wellness, digital health, etc. The unusual bit is that we work on a global basis from Latin America, through Russia to Australia. In the last three years, we have opened two more divisions: a publishing one which packages a unique worldwide view on our segments; and a speciality one which is more operational in nature and to date designs solutions for internationally minded health patients or expats with particular health needs.
To handle this spread of projects, we utilise a staffing model which combines a core of full-time, Europe-based expert health consultants with a worldwide group of regionally-based, health industry contractor- associates.
Over 15 years at McGrigor Group and five years previously we have done over 400 projects in these areas both for multi-billion dollar insurers and service companies and even start-ups.
James is also the current chair of the International Committee of the Population Health Alliance in the US.
A: In the very corporate markets such as the US, UK, Germany and France and even in the more individual dominated parts of the world e.g. Africa, Asia, of course, there was always a certain amount of direct business, especially to brands which were synonymous with health e.g.,BUPA, Cigna.
But going back 15 years or so the broker channel was the biggest channel globally. Large companies used the EBC’s while others used a growing corp of specialist IPMI brokers, either directly or via a master broker agreement. This channel remains very strong, especially in the large and SME sectors.
In some emerging and less mature insurance economies, insurance sales forces have maintained a hold on sales e.g. in China, Russia, India, etc. It takes time to build broker knowledge, especially in employee benefits.
From around 2010 onwards with the growth of the internet, online brokers have emerged and particularly the online channel for the major IPMI players. These have taken a considerable share of new buyers, especially in emerging markets, as the customer base is young and tech savvy.
One other reason for this shift is that companies are improving their digital presence and their sales techniques e.g. instant quotes, call backs, etc. Clearly by getting rid of the 10-20% of the intermediaries, there is a lot of money to play with to attract customers.
Bank assurance distribution models have generally not worked well so far with the relatively recent exceptions in Hong Kong and parts of Asia.
A: There are three very clear challenges ahead for IPMI companies: rising costs, significant competition and tougher regulation. Medical claims are increasing in number and size per claim. Fraud continues. In some places, hospitals have too much power due to undersupply. The customer gets wiser and more demanding, and providers face tougher liability climate. On top of that, medical inflation shows little sign of slowing down. So insurers must find ways to effectively manage costs so that they do not price themselves out of the market.
There was a time when most IPMI players were not global, but that is over. The market is becoming mature in terms of competition with many players present in most markets.
In addition, local health insurers are encroaching into the cross-border or higher end PMI markets. Meantime, there appears to be plenty of capacity available to support smaller Managing General Agent (MGA’s). This clearly puts pressure on price while driving up standards in other support areas and this squeezes margins.
In general, it is becoming harder to sell offshore. This increases complexity and costs. And while the direction of travel is clear - towards more local regulation e.g. Indonesia - many countries are very hard to predict in exactly what they will implement and when. Look at the Middle East and recently the US. Duty of care to employees, high penalties e.g. based as a % of income, and an attitude which could be called anti-insurer all contribute to insurers becoming very risk averse in territory and product design.
A: Yes, I have noticed two things which indicate that M&A is hotting up these last 18 months. Firstly, there has been high interest from financial buyers meaning private equity. Both IMG and MSH went down this road, to ABRY Partners and Ardian respectively. In both cases, many of the other bidders were also PE companies. This shows that these buyers see a strong future for the mid-sized players, perhaps because they can be more nimble, and also because they can attract other smaller MGA’s to sell out because they have not competed historically and also offer continuing employees a similar mentality. Of course, some other mid-sized players have gone to industry players such as Best Doctors being bought by Now Health, but to a degree, this is almost like a PE deal in that Philip James, the owner of Now Health is a serial entrepreneur.
A second trend is that smaller MGA’s had become targets when they were usually deemed too small before. A La Carte (ALC) has recently been sold to IMG, and there are other deals afoot. This perhaps recognises that while these smaller companies can continue to grow fast in selected territories through relationship and closer to market skills they do need low costs/high-quality support in terms of systems, cost containment which would be too expensive and time-consuming to build internally.
A: We were delighted to launch the first in our 3 part report series on Population Health Management late last year. It is titled: The Global Market for Population Health, 2016. This was the culmination of over two years of research, with interviews of many key players in this space, reviews of academic papers and case studies, into 190 pages and 70 figures and tables.
The purpose of the report was to address the problem of where does IPMI/PMI go globally? With rising demand and costs driven by the ‘perfect storm’ of ageing, the explosion in NCD’s, more expensive treatments, grasping providers, etc. most payers, whether insurers or governments, will be sunk. Yet we have a wealth of solutions from HRA’s, EAP, case management to behavioural health coaches and wellness programs, and the digital tools and computing power to harness them better. But many insurers seem unconvinced or simply unable to innovate.
So firstly the book lays out the case for what can be done: i.e., professional implementation of population health management. More than 30 tools are profiled in terms of their ROI. The key lessons of the past 30 years are summarised into a best practice approach. Then, it shows the many players who could have a role to play, what some others are doing, who are the customers and what the market size is by region. The point is this is a huge challenge but also a huge opportunity. The faster, more forward thinking players will hopefully grab this chance.
We are very pleased that the report has been excellently received to date, particularly in the insurance community. One of the biggest EB insurers globally told us ‘this pulls together such a wealth of information and proof that it had really helped us in our thinking, plans and their business case’.
The report can be purchased from McGrigor Group and is available as a hard copy, via various online licenses or off-line via our bespoke App. For more information, please contact McGrigor Group at email@example.com.