We’ve had the privilege of having Mr Neil Raymond, the CEO and Founder of Pacific Prime for an interview. Mr Raymond started Pacific Prime over 16 years ago, and it is now one of the biggest IPMI brokerage companies in the Asia-Pacific and UAE, with the biggest line of IPMI partners such as Allianz, BUPA, AXA, Cigna, and many more.
In our conversation with Mr Raymond, we talk about the latest ACA-compliant plans arranged with Cigna, what drove Pacific Prime to pursue the demand for ACA-compliant IPMI plans, the findings of the 2016 Cost of International Health Insurance report, and his own views about the latest trend in the IPMI providers and brokerage industry.
A: We are an insurance broker, we’ve got operations in a number of countries around the world with a staff of about 500. We do offer a variety of insurance solutions, but we specialize in employee benefits and health insurance, particularly International Private Medical Insurance.
I started the company 16-17 years ago, and it’s grown into its current position which has been quite an exciting journey. Our focus on IPMI represents a big part of our turnover both for individuals and corporates.
A: Given the fact that Donald Trump has now been elected, it is hard to say how long the ACA will be around for. That said, the ACA as it currently stands presents challenges for both Americans who leave the US and for those (expats) who are moving to the US.
ACA mandates stipulate fairly strict requirements for those living in the US or spending a certain amount of time in the US, and up until now, there were no suitable solutions for individuals, especially those who are leaving or going to the US, who also want to secure international coverage. These new ACA-compliant plans have been designed for individuals who are living in the US, but want coverage outside the country, or for those living outside of the USA who also want to be ACA-compliant under a single plan on their tax returns.
Historically up to this point, you had to buy two plans. If you bought a plan while living in the USA, then you won’t be covered outside the USA. There’s been no unified solution, which means Cigna is the first major US insurer to bring plans to market for individuals that will address both of the coverage demands of those inbound to the US and those outbound from the US.
A: It’s really been a question of availability. Up until Cigna launched this plan on the 1st of November, there were no real solutions to address this problem. In my experience, it’s not so much of a problem for those going into the US, rather it’s a pressing issue for outbound Americans or outbound US taxpayers, because even if you have a green card, and you’re not from America, you’re still subject to the ACA mandates.
The point for us is that there are a large number of Americans and US tax payers in the countries where we operate, around Asia-Pacific and the Middle-East that need an ACA-compliant plan, or who are spending more than 30 days a year in the US and are not a bona fide foreign resident. This means they need an ACA plan.
The lack of viable coverage in one plan has been a problem for these types of individuals, and there has been no solution until now. The reason it’s taken so long for plans like Cigna’s new product, is that companies like Cigna have had to negotiate with the US authorities about getting this plan approved. It has been a long process for them to actually get this plan to market.
A: A few interesting things, first of all, everywhere is more expensive this year than last year. If you compare all the countries we look at in the report, the most obvious statement is that everywhere has gone up, and prices have increased by more than the standard rate of inflation of global consumer prices of 4%. Many of the major countries in this report are going up somewhere between 7 and 12%.
The second thing to note is that there is a tremendous disparity between the most expensive countries and the least expensive. At the top of that, you have the USA, China, Hong Kong, Singapore, etc. and the disparities between those countries and the countries at the bottom of the list are still very significant.
What is interesting is the gap between the US and the rest of the world has narrowed slightly, I think that this is largely due to the increasing cost of accessing the best medical facilities in places like China, Hong Kong, Singapore, Dubai etc. The gap between the US and the rest of the world is narrowing slightly, but the disparity between the top end and the bottom end is still very significant and what that means is that the cost of healthcare provision in places like most of Africa and parts of Southeast Asia is still below the cost of healthcare provision treatments in places like Hong Kong or the US.
What we also see is quite a lot of volatility in certain countries moving up and down our ranking. Certain countries have become considerably more expensive over time. A good example of that probably this year is Dubai. The recent healthcare reform has caused the cost of health insurance to rise fairly substantially as insurers release plans that meet the requirements in terms of the coverage that’s been specified by the government and therefore, the plans are more comprehensive than before.
So the UAE, particularly Dubai has jumped up the list, there are also other countries that have moved; Japan has moved, Canada has moved, and
I think these are trends as countries change their legislation, they change their compliance requirements. This has a substantial impact on the cost of their health insurance.
A: Yes, the challenge is very significant, every insurer has had to go back and essentially redesign the product, redesign the pricing model. Many insurers are struggling to work out the correct pricing model.
We’re not against the reforms, in many ways, the reforms are a good thing for individuals in Dubai. What we are trying to encourage is insurers to participate. There are several leading international insurers who still haven’t launched individual plans in the UAE because it’s very challenging to price and build plans for this market.
To encourage insurers to participate, we’re providing lots of feedback about what works, what doesn’t work, where the plans are getting high utilisation and where the plans are underutilised. I think our job is to help insurers engage with the new reforms and understand how to build and price those plans. On the flip side, our job is to encourage a dynamic market, so we have options and choices for our clients.
A: I think that slowly but surely there is an erosion or decrease of the traditional expatriate market, the plans that were typically sold to individuals or companies sending expats abroad from Europe or America. We’re seeing slower growth, if not a stagnation in this type of policyholder.
What we are seeing is the growth in the local high net worth nationals who are increasingly buying these types of plans.
To me, it fundamentally comes back to the point that the developing countries around the world, be that Indonesia, Nigeria, Kenya, Jordan or wherever, are not going to develop high level socialised healthcare systems like Europe. Consequently, if you are a high net worth individual in these countries, you are going to want to access the best medical facilities in your country or worse case scenario, if you have a serious illness, you want to go to Singapore, you want to go to Hong Kong, you want to go to Dubai, London, or the US for medical treatments. Subsequently, you are also going to want to secure cover at top facilities that will cover increasingly costly care,
I also think that there is a growing segment of high net worth individuals in developing countries who can afford to buy high-quality medical insurance that will give them access to the best medical facilities around the world, and that’s a pretty compelling argument to them, because their national healthcare systems are not likely to develop in a way that they would need or want to meet their requirements.
A: I think that what we’ve seen over the last 10 years is that most of the leading international insurers, certainly those with a substantial healthcare business globally, have all entered the international private insurance market in a far more serious way. 15 years ago for example, Allianz wasn’t in this market, 10 years ago Cigna wasn’t really in the international market, yes they insured a lot of the American companies going overseas, but they didn’t really have a presence outside of the States to grow their business. So what we’ve seen is, the major insurers, certainly not all of them, but most of them, are trying to enter the international market and that’s increased the competition for all the smaller competitors.
The other thing that you’re seeing is that compliance requirements have risen dramatically over the last 10-15 years, making it harder for smaller independent companies to operate.
It is because of these two reasons, the level of competition from big international players and the increasing compliance issues, we have seen a drive to consolidation. The smaller independent players are essentially getting absorbed by the bigger players looking to grow.
A: I’m very happy to say that we have very ambitious plan to grow and we are very fortunate in the sense that we have a good understanding of our business. We know how to grow and how to offer better services to our clients. From our perspective, the consolidations seen in the insurers market, has not been seen on the brokers side. That may follow, but for our team, we think we know how to be much bigger than we are today, and therefore, we’re very happy to try and pursue that path.
A: I think that we have a good business model and I think that can be expanded geographically. There are a few more countries we would like to move into, some in the Asia-Pacific region, some in the Middle-East, some in other fields, so there are plans for us to grow geographically.
I think in terms of working for corporates, it’s important that we have a larger footprint so we can offer our services to corporates on a more geographical basis.
I also think that there are lots of opportunities for us to try and develop more efficient and effective products for our clients. We plan to work with our insurers to develop better solutions so that our clients can deliver their healthcare benefits more effectively. So, I think there are lots of ways to grow geographically and in terms of products and services, and I think we’ll be trying to pursue all of those over the next five years.