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Why AXA Leaving The Middle East Is A Big Deal

In this article, iPMI analyst Ian Youngman, author of the IPMI market leading report, International Health Insurance 2021 talks about how AXA has left the Middle East and why the press announcements underplay how big a deal this is.

AXA has almost completed an exit from Abu Dhabi, Bahrain, Dubai, Oman, Qatar, Saudi Arabia and all UAE states.

It still has a presence in Lebanon but a local TPA manages health insurance.

That it has sold to a local group – is huge. That the local group is part owned by a Canadian group  seem incidental until you get that Canada goes its own way from the USA and Europe in global politics.

There is a shift to local regional groups in Asia, Europe and the Middle East.

The Middle East was once the go to place for brokers and insurers in health insurance- it is being replaced by Africa and South America- and China.

With compulsory health insurance in many countries the region has almost peaked. The competition is hot and with increasing regulation and competition from local insurers, making a profit may be Ok now but not in five years time.

Expats are being replaced- often by law- with locals. Most expats are not the “white middle class Europeans and Americans" that you still see pictured in IPMI brochures – but low paid Asians and Africans- with an increasing number of professional Chinese.

Some US and European insurers and brokers also see that as the US and Europe are losing influence in the region- to be replaced by China, Iran and Russia.

That the US, UK and some European allies tried to import their democratic and business models into Afghanistan and Iraq for 20 years and dismally failed- does have a knock on effect on insurance groups.

Insurers may think they are above politics, but what your country does to other nationalities does rebound onto your company in those countries - we do not live in a bubble.

Insurers and brokers may still make money out of health insurance in the region but rising healthcare costs and increased regulation is going to make it harder.

Many Gulf countries are still trying to move away from dependence on oil to other industries but from being cash oil rich they are all – to some degree- struggling. Many saw tourism and inbound international investment as their saviours – Covid has damaged the first and there are not enough international investors to go round as they too see better long-term potential in Africa. China or Latin America.

What is certain is that other insurers will follow AXA out of the region as they look at their 5 year strategies on where they want to stay, move into, expand, or exit.

For the author it means daily work updating my country and company databases - to ensure my IPMI market reports are up to date.

Looking back at what happened in the last five years and extrapolating that forward is how many reports still work – but that process is so out of date.

RELATED READING: International Health Insurance 2021

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iPMI Market Sizing With Ian Youngman, Author, International Health Insurance 2021

Global, national and company IPMI figures are more an art than a science.

Many reports claim to have figures but they are either so ancient as to be useless, or guestimates.

There are NO official IPMI figures anywhere – but I have only been looking for 30 years!

Country figures

In most countries health insurance is not a separate sector so country health insurance figures are often estimates by insurance associations rather than state statistics,

There are a few exceptions.

Even where they exist they mix PMI with IPMI and health cash and supplemental health – and sometimes other sectors such as critical illness, accident and short-term income protection,

Company figures

Very few insurers now publish country-by-country statistics on health insurance

Even where they exist they mix PMI with IPMI and health cash and supplemental health – and sometimes other sectors such as critical illness, accident and short-term income protection- and in one major case life insurance.

There are many reasons why the figures are not published.

The three key ones are commercial confidentiality that most companies may struggle to separate out IPMI by country, and currency/tax.

In the last five years of massive currency fluctuations, companies have learnt to massage the figures to look the best they can.

Global insurers also seek to minimise local and own country taxes and ‘ avoid” paying more than they have to- so they move real and book money around. Round and round the money goes – where it stops nobody knows. Amazon and Google are not the only global companies that do the magic money trick.

For insurers there are rules on offshore and onshore- so many countries only allow business to be placed in the country itself and with rules that it may have to be placed via a local insurer and/or broker- then there are rules on how much money an insurer can take out of a country.

So a simple IPMI product with a major insurer originating from a major broker may have the parent company, the local subsidiary, a local associate, the global broker location, the broker local subsidiary and a local associate- then confused further into where the insurer’s regional processing centre is.

Then – many insurers sell IPMI via MGAs- so you then add another mix of where the MGA is based and where the local office is!

So you may have choice of up to 8 countries as to where the premium for one simple IPMI policy can be placed- even before the insurer starts moving it around in practice or theory to minimise currency and tax and legal issues,

Distribution

For IPMI most business is not direct with customers but via agents, independent agents, banks, employers, brokers and MGAs.

This adds a wonderful element of obfuscation on tracking country figures or even global ones!  

Another way

Insurers are falling over each other to tell us their strategies on coal, environment, equality, diversity, employee involvement and other soft issues. As company reports are filled up with this PR stuff, actual produced figures get less and less. I have often to check investor briefings and other stuff not aimed at the public to get the figures I have.

The reports provide what information there is on countries and companies but if you are looking for country by country IPMI figures then split down by insurer- these have not existed for many years and detail gets less each year.

Adjusted figures

In most weeks I read a few detailed financial reports from insurers.

In most weeks this drives me to need a drink.

The latest phrase is  “ adjusted” – to seek to give a better comparison with previous figures.

The longer the explanation for the adjustments, the more complex the adjustment of sales, costs and profits.

Every company seeks to put the best spin on their results.

Estimates

I have lost count of the number of people who suggest that I should be able to estimate global or national IPMI figures as they have read of reports that claim to have these figures.

To make an estimate you need decent baseline figures.

Many estimates are the equivalent of betting that horse A will win the next race.

At least 90% of any figures or facts on anything on the web are rubbish.

If I used or believed much of the "information" I read daily then I would confidently say that Trump is still president, Germany won WW2, 20 years in Afghanistan was not a disaster and that politicians always tell the truth.

The future

I can analyse trends but the cut and paste boiler-plate reports that say country x will see health insurance premium will grow by 20% a year, or IPMI will grow by X % a year by the next decade – are the insurance equivalents of all those adverts that promise to reverse hair loss, make you more attractive, or will make you wealthy.

Events can cause even simple future estimates to be rubbish- such as tourism figures for 2020 and 2021 that the pandemic turned to farce.

Analysing historic figures to predict future numbers is very dangerous- as the investment warning that also applies to any sports team goes "Past performance is no guarantee of future results".

International Health Insurance (IPMI) 2021 Report

There are now 80 million expatriates, 5 million international students, 4 million temporary foreign workers, and 18 million high net worth individuals of which 2.7 million are ultra high net worth. All of these are targets for international private medical insurance.

International health insurance for expats, third country nationals, domestic nationals and global nomads is a 3 volume iPMI market report updated in 2021 with even more companies and more countries.

Overview:

Expats and local workers of global companies and HNW individuals may no longer have the option of flying home or another country for medical treatment so may have to rely on local healthcare.

Global insurers have national and international healthcare networks that have a better capability for telemedicine than local insurers.

In almost every country the state healthcare network is under never before experienced pressure so access to private healthcare is increasingly essential. In some countries, expats will be at the back of the queue for state healthcare. In some countries, even access to private healthcare may be strained and hospitals may have to prioritise healthcare for long-term partners such as insurance companies over one-time private patients.

An increasing number of insurers are moving from being health insurers to healthcare providers protected by health insurance. With a linked move to Artificial Intelligence and teleconsultation, the world of IPMI is changing.

The fragile and volatile state of global stock markets is of concern to insurers who may already be vulnerable while offering opportunities to potential buyers of insurers and health insurance books of business. The environment for mergers and acquisitions among health insurers remains favourable as they continue to seek out diversification and growth opportunities.

Read International Health Insurance (IPMI) 2021 Report, click here.

 

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What Is Happening To Migrant Workers? You May Be Surprised

Ian Youngman, author of the IPMI market leading report, International Health Insurance 2021, reads the 148 page LABOUR MIGRATION IN ASIA: IMPACTS OF THE COVID-19 CRISIS AND THE POST-PANDEMIC FUTURE report from the OECD, so you do not have to.

The report is full of figures but far more useful are the comments and trends. I will pick out a few pointers that jumped out and attempt to interpret them.

PAST and PRESENT

With the spread of the pandemic, a number of factors combined to reduce deployment of labour migrants in Asia. Asian countries introduced visa issuance and border restrictions to control the spread of the pandemic. Some Asian countries suspended deployment to destinations affected by the pandemic. Business closures and slowdowns led to reduced demand. Commercial flight schedules limited opportunities to travel even when other restrictions were not in place.

Most destination countries have been slow to reopen so this continued well into 2021.

RELATED READING: International Health Insurance (IPMI) 2021

The main form of migration from Asian countries is temporary labour migration, usually directed to non-OECD countries. In 2019 the flow of workers for employment abroad reached 4. 9 million. The main driver behind a rebound in 2019 was a sharp increase in the flows between South Asia and Saudi Arabia.

The Philippines remains the top Asian origin country of overseas workers. In 2019, more than 1.5 million OFWs were deployed.

Bangladesh is the second main country of origin with 700,000. 2017. Pakistan was third in 2019, following a sharp increase in the number of registered workers for overseas (+63%) compared to 2018. India also saw an increase in worker emigration (+8%) but the total reached in 2019 (370,000) remains low compared to the levels observed in the past 10 years. Outflows from Viet Nam have steadily increased since 2012, by around 10,000 per year, and stood just above 150,000 in 2019. Viet Nam is now confirmed as one of the top origin countries.

The number of Asian temporary migrants going to Japan and the Republic of Korea, the two Asian countries belonging to the OECD, has been increasing sharply in recent years.

Few think of Japan or Korea as destinations for expats.

Highly skilled migrants coming to OECD countries have increasingly come from Asian origin countries. Indian nationals dominate the United States, the main temporary permit for skilled migrant workers,

Few think of the USA as an expat destination needing IPMI.

The myth that educated Westerners become expats while only poorly educated Asians are temporary workers ignores the massive educational advances in Asia, Africa, and China. Some companies need to amend their literature and marketing messages.

One of the main components of international migration is for study. The number of international students in the world increased by 4% in 2018 and reached 5.6 million. Among them, 2.9 million were Asian, which represents another rise of Asia’s share as a region of origin, to 52%. Asia has also gained share as a region of destination in recent years; in 2018, its 800,000 international students enrolled comprised 14% of the global total. China is the top Asian destination and expands its lead in the region every year. In 2019, more than 260,000 students were enrolled in the PRC’s tertiary education institutions. Japan is the other major Asian destination country and also sees a steadily growing number of international students (183,000 in 2018). Further behind, the Republic of Korea follows with 85,000 international students in 2018 (+20%). Malaysia ranks fourth and is the only major country to see a decline. In 2019, Malaysia hosted only 82,000 international students, compared to 124,000 in 2016. In Singapore and in India, enrollments are stable at around 50,000 international students.

Asia has always been the main region of origin of international students in OECD countries. The number of Asian students enrolled in OECD universities jumped 8% in 2018 to approach 2 million, more than half of total enrollment.

Too few IPMI providers have student policies, rather than offering standard IPMI ones. The market is often left to specialists. There is an assumption that is European or American students going within Europe or Asians to Europe. Few think of the destinations above. Why not a rolling monthly student policy for the duration of their course with options to continue if they stay in the country to work?

FUTURE

Short-term policy changes and longer-term structural shifts in demographics and the nature of work were already forcing planners to consider how to prepare for new challenges. Medium and longer-term factors will help shape labour migration in Asia in the next 15 years. Underlying trends could reshape the map—some of these are certain, while others are less sure.

From 2022 Gulf Cooperation Council (GCC) countries, the main destination of labour migrants, may see slack demand. The limited reserve of skills in the GCC countries means that nationalisation of the labour market will likely only affect a part of deployment; these countries cannot wean themselves from their reliance on migrant workers in the short term.

But political pressure to give good jobs to locals and only keep the scud jobs for worker migrants is heavy in some countries. There are too many global IPMI providers in the Gulf region so static or reduced demand and squeeze on price will hit those that do not offer cover to locals hardest.

The picture for EU countries presents a mixed situation. Lower demand post-pandemic in EU OECD countries could limit migration opportunities for Asian migrants. But more proactive recruitment of international students and highly qualified workers could lead to an uptick in flows from Asia, particularly to European countries with an ageing and declining population that need temporary or permanent immigrants to work.

China is actively pursuing a transformation from an export-oriented, low skilled, and labour- intensive economy to a science, technology, and innovation-based economy, a transition that demands highly skilled workers. To this end, the government is introducing specific schemes and policies to attract educated and skilled international migrants, as well as PRC professionals working overseas. In 2018, the PRC introduced a new visa category for foreign talent to support the PRC’s proactive research and development strategy.

China has become a major destination for international students. It has multiplied the number of scholarships for international students as well.

Singapore is another non-OECD country attracting qualified foreign talent. In addition to creating special work visa categories targeting researchers and scholars, a government agency facilitates outreach to skilled foreigners and potential Singaporean returnees including students, highly skilled professionals and workers, entrepreneurs, and investors.

By 2035, the PRC and other non-OECD countries in Asia may become magnets for top global talent, inducing talent to move, stay and raise families, attracted by the quality of life, better economic prospects and salaries compared to OECD countries. As the competition for talent gets tougher, OECD countries may find it increasingly difficult to attract or retain skilled workers, while remaining reliant on immigrants to supplement their labour force in the face of aging populations.

Many companies are targeting China, fewer target Singapore, but how are they covering this new generation that moves there as expats but never goes home?

YOU CAN WORK ANYWHERE

Digitisation and the increasing cross-border movement of data and information facilitate new forms of the global division of labour and migration in which work is independent of any requirement to be in a specific physical location.

Virtual migration is a particularly growing phenomenon as online and remote work platforms are enabling people to perform work for overseas employers under the legal, temporal, and cultural frameworks of destination countries without having to move country.

Another growing phenomenon arising from technological advances, digital infrastructure developments, and new employment models is digital nomadism—a novel mode of lifestyle-centric and location-independent labour migration in which workers (digital nomads) combine online labour and potential mobility to maintain a lifestyle of permanent travel, working remotely in cultural and nature hotspots around the world. Asian countries, and especially Southeast Asian countries (e.g., Thailand, Indonesia, Malaysia, Vietnam, and Singapore) tend to be among the most popular destinations for digital nomads.

Some countries have introduced remote work, freelance, or digital nomad visas (or some extensions in their existing types of visa to accommodate remote workers), including Australia, Georgia, and Thailand in Asia and the Pacific; Germany, Czech Republic, Portugal, Norway, and Estonia in Europe; and Costa Rica and Mexico in Latin America.

This produces a new type of expat- one who is from Country A, works for a company in Country B but lives as a digital nomad in Country C. Most countries encouraging digital nomads demand that they have international health insurance while others demand they join the state health insurance scheme. So there is a demand for top up as well as standard IPMI.

As digital nomads develop from to include individuals working for a corporation in a third country insurers will have to change their thoughts and wording on local care, repatriation and cross-border care.

RELATED READING: International Health Insurance (IPMI) 2021

 

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