Medical insurance for high net worth customers in Asia
The medical insurance landscape in Asia has never before looked so exciting. The average growth rate in per capita health spending in Asia, in real terms, was 4.9% per year from 1998 to 2008. (Figure 1)
This presents an opportunity to tap increasing demand and spending on health care, in particular the High Net Worth (HNW) customer segment, which has emerged as an important segment. Swiss Re estimates that in China alone, the top 0.1% of urban households will contribute over 3% to the total medical insurance premium in the country. (Figure 2)
Emerging significance of the high net worth customer segment
In 2009, the size of the high net worth1) individual (HNWI) population in Asia-Pacific was as large as that of Europe (at 3.0 million),2) accounting for 30% of the world’s HNWI population (Figure 3). HNWI spending in health and wellness has continued to increase, making this the top lifestyle spending category in 2009.3)
Understanding the high net worth customer
It is therefore important to understand this customer segment in order to penetrate it.
HNW customers are characterised by their demand for a high level of cover and best-in-class service. They are also looking for comprehensive cover. Instead of buying cover for hospitalisation, critical illness, and travel health separately, the HNW customer expects a one-stop package that covers all of his health insurance needs.
The HNW customer also expects benefits such as a 24-hour emergency helpline, medical second opinion services, and medical concierge services, among others. Wellness and lifestyle management features are increasingly being embedded into products for HNW customers.
Challenges in penetrating this niche segment
The lack of available data on the HNW claims experience, which would serve as a basis for realistic and sustainable pricing, is a key issue for insurers. With a small volume of policies and high levels of cover, the volatility of the claims experience may be another challenge. Finding multiple reliable partners to provide the non-insurance services and international coverage that are bundled into a HNW product can be difficult, especially for a new player.
One way to overcome these barriers to entry would be to find the right partner that can help to design, develop, and price medical insurance products for the HNW customer segment.
Getting the right partner
Swiss Re has recently worked with insurers to help them launch high-end medical products. We helped to design, launch, and price new versions of clients’ insurance products to cater to HNW customers, both for individual as well as corporate sales. We also supported clients on their underwriting and claims processes, and offered consultancy services on the most appropriate partners for the claims management and service aspects.
As can be seen, the potential of the HNW market segment is enormous. However, insurers who wish to tap into this segment may face a variety of challenges, none of which are insurmountable with the right partner to support them in the sharing of risk, experience, and expertise. Swiss Re has been at the forefront of high-end customer segment and product development globally and in Asia. It has built partnerships with leading health care and health care-related service providers that enable their clients (and their customers) to access the best care and treatment – be it through access to medical advice from the world’s leading doctors and medical institutions, 24-7 helplines, or other services. In addition, Swiss Re has built a good base of data and expertise to enable the pricing, design, and management of HNW products in a robust and sustainable way.
Annual average real growth in per capita health expenditure, 1998-2008
Source: OECD (2011) Health at a Glance: Asia / Pacific 2010, OECD Publishing
Medical Insurance client segmentation in China
Note: Chart numbers may not add up due to rounding
Source: Capgemini Lorenz curve analysis, 2010
1) Individuals with net liquid assets of US$1million or more
2), 3) World Wealth Report 2010, Cap Gemini / Merrill Lynch
Published February 2011
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