New and longstanding drivers of international health insurance inflation in 2017

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International health insurance premiums saw an inflation rate of 9.2% in 2016 – the exact same percentage as 2015, and a marked increase from the 2014 inflation rate of 7.1%. So, why do health insurance premiums keep going up every year? To answer this question, global insurance broker Pacific Prime launched an in-depth report investigating the key factors influencing international private medical insurance (IPMI) inflation.

Titled: International Private Medical Insurance Inflation – 2017, the study reveals both longstanding and emerging drivers of health insurance prices in 2016-17 and beyond.

Longstanding drivers of health insurance inflation

According to Pacific Prime, one of the most significant forces behind IPMI inflation is the rising cost of medical care, which is primarily driven by the following factors:

  1. New medical technology: The healthcare sector ranks among the top in terms of demand for new medical technology, the costs of which can be sky high. For example, a new CT scanner costs up to USD 2.5 million.
  2. An imbalance of health care resources: All the countries included in Pacific Prime’s report are experiencing a common trend: an aging population, and a steady rise in the number of high net worth individuals utilizing private health care. Combine this with a shortage of medical facilities, and it is easy to see why medical care costs are increasing.
  3. Increased compensation for healthcare professionals: Doctors are one of the highest paid skilled professionals. For instance, the average salary of a primary care doctor in the United States is USD 200,000, and these salaries are expected to keep increasing. The main explanation behind this is because education and licensing costs are rising, leaving doctors and other medical staff with significant liabilities to be paid through rising salaries; shifting costs onto those seeking treatment.
  4. Healthcare overutilization: Pacific Prime has identified a trend towards the overutilization of available medical treatments. One explanation for this is the increase in the number of countries with mandatory health insurance and state-provided health care.

While the above factors will continue to make up a large part of the explanation behind why health insurance premiums are rising, the report also addresses 3 new drivers that Pacific Prime believes will have an impact on premiums throughout 2017 and beyond.

3 New trends influencing health insurance prices in 2017

In addition to the above long-standing drivers, Pacific Prime found three newly emerged drivers of health insurance inflation:

Global economic uncertainty
In many ways, tough global economic conditions affect international health insurance inflation through flow-on effects; British expats being paid in pounds are now finding themselves worse off following Brexit, and an increasing number of countries are choosing to hire locals instead of foreign workers as their GDP slows.

Changing population dynamics
2016 has seen significant changes in expat populations, traditionally the target market for international health insurance products. For example, British, American, and Australian expat numbers have dwindled significantly in Hong Kong, by 10.64% in the last half of 2015 and throughout 2016. At the same time, many countries are seeing the number of high net worth individuals demanding international health insurance products is growing, thus explaining why IPMI inflation held steady.

Increasing availability of technology
Tech trends, such as online portals, mobile apps, and the use of big data, are things to look out for in the future in terms of what influences your premium prices. Service standards, healthcare costs, and claim habits are seeing insurers utilize the power of big data to combat unprofitable underwriting. This may be a factor that will help act negatively on premium inflation or help hold premium increases at a steady pace.

Get the report for free today
To learn more about the key insights generated from Pacific Prime’s report, click here to download the full PDF version. Alternatively, click here to view the interactive web version of the report.

About Pacific Prime
Pacific Prime – a global health insurance intermediary that leverages its close relationships with over 60 leading insurance providers to offer the best value insurance solutions to individuals and corporate clients. Contact their team of experts today for impartial advice, and a free quote.



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