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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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Understanding PMI And IPMI Market Size Per Country

One of the most frequently asked questions we get asked at iPMI Magazine is what is the size of market for PMI and iPMI by country, and globally?

Before we answer that, answer the following 2 questions:

If a Frenchman living in London buys an IPMI policy from a French broker who uses an Irish insurer that is part of a German group for cover in a Gulf state where insurance has to be fronted/shared by a local insurer; Which or how many of these 5 countries do you book the premium into? Which currency do you measure it in?

If an American living in Cuba buys an IPMI policy from a Bermuda broker for a job in Trinidad and uses a UK insurer that works from a local office in the USA but pays claims from a global claims centre in Romania, how many of the 6 countries do you book premium and claims to?

It isn't so simple is it?

Coupled with the following facts breaking down the market size for PMI and IPMI is a complex if not impossible task:

Back-in-the-day Insurers would publish detailed by product or by country info but now they try to avoid it, as it is competitive gold dust.

Many country figures only cover onshore health insurance and not offshore so can mislead you when looking at the market value in countries that do not demand local cover.

Some big European and American global insurers only publish on a vague regional basis, or on types that lumps health in with life and accident covers.

In many smaller countries the offshore IPMI market is far bigger than any onshore PMI or IPMI market - and in some countries there is no domestic health insurance at all.

Few countries demand annual insurer returns by product and those that do ask for vague health, accident and protection figures. The definition of protection is so vague, it is open to interpretation. 

Currency conversion is a huge problem too - 2015 figures from various big insurers show that income and profit figures can vary by plus or minus 30% depending on what currency and what conversion rates are used.

Internet Facts

In the complex world of IPMI there is no space for "Internet Facts".

Facts from a country, insurer or trade body, are generally reliable but even "official" figures have to be watched as within Health there can be hospital cash or top-up covers and other non full PMI or IPMI figures.

Where governments demand returns on health insurance or there are official competition enquiries then there are some excellent numbers to crunch.

Understanding The PMI And IPMI Report Market

Unfortunately in 2016 there are so many sub-standard boiler plate healthcare, insurance and expatriate reports. They claim to have health insurance country figures, but when you shell out thousands of pounds of R & D budget, and look for yourself, they mix accident and health and protection together; and strangely they all seem to predict growth for the next five years of 20% a year.

We have seen reports that profile the top ten insurers' and base the country figures just on the rough claimed figures- where the top ten miss out more than half the market.

There are reports which show insurers country market share but the total always seems to add up to well over 100%!

So, how can we understand the size of the PMI and IPMI market?

International And Expatriate Healthcare And Insurance 2016 is the only reliable source of information that can be trusted to answer your question and even then there are still some gaps. But this is critical: this report deals in facts, not crystal balls.

The 2016 edition is the result of over a decade of specialist research and report writing and is the answer for insurers, brokers and corporations who struggle to break the market down.

Where there is decent data available, it is included and all data has been carefully researched, checked and verified with no outlandish or generic claims made. Past performance is not always a representation of future results.

2016 IPMI Report Facts And Features That Will Help You Size The Market:

Download the 2016 report information kit, click here.

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UnitedHealth Group Reports 2016 First Quarter Results

UnitedHealth Group has reported 2016 first quarter results.

“Our commitment and determination to constantly improve how we serve customers and consumers in health benefits and services is reflected in consistent, market-leading organic growth and strong levels of customer retention in the first quarter,” said Stephen J. Hemsley, chief executive officer of UnitedHealth Group.

Based on the first quarter results and business trends, the Company now expects 2016 revenues of approximately $182 billion and adjusted net earnings in a range of $7.75 to $7.95 per share. The increase in the outlook for adjusted net earnings of $0.15 per share is due to changes in the expected income tax rate and intangible amortization. Management affirmed its outlook for strong cash flows from operations of up to $10 billion.

OVERVIEW

  • UnitedHealth Group first quarter 2016 revenues of $44.5 billion grew 25 percent or $8.8 billion year-over-year. Growth was broad-based and reflected growing market demand for the Company’s product and service offerings. UnitedHealthcare revenues grew 10 percent and Optum revenues grew 54 percent, with revenue growth of 20 percent or more at each Optum business.
  • First quarter earnings from operations were $3 billion and adjusted net earnings grew 17 percent year-over-year to $1.81 per share. As expected, the first quarter net margin of 3.6 percent decreased 40 basis points year-over-year, due principally to an increased level of pharmacy care services business.
  • First quarter 2016 cash flows from operations of $2.3 billion were 1.4 times net earnings.
  • The consolidated medical care ratio increased 30 basis points year-over-year to 81.7 percent in the first quarter of 2016, reflecting the extra calendar day of service in the quarter. Prior year medical reserve development was $360 million, compared to $140 million in the first quarter of 2015, and first quarter 2016 medical cost trends were well-controlled and consistent with management expectations.
  • The first quarter 2016 operating cost ratio of 15.2 percent decreased 110 basis points year-over-year primarily due to changes in business mix.
  • The first quarter 2016 tax rate of 39.8 percent decreased 350 basis points year-over-year from 43.3 percent in first quarter 2015, due to the adoption of a new accounting standard. Under the new standard, certain corporate tax benefits related to stock-based compensation programs are recorded through the tax provision. This new standard, which added roughly $0.06 per share to net earnings due to the concentration of activity in the first quarter, is expected to have considerably less earnings impact in the remaining quarters of 2016.
  • First quarter 2016 days claims payable of 51 days increased 4 days year-over-year and 1 day sequentially; days sales outstanding of 16 days increased 3 days, due to increased government receivables and business mix.
  • The Company’s financial position is strong, with a debt to total capital ratio of 49 percent at March 31, 2016. The Company expects this ratio to decrease during the second half of 2016 as debt levels are reduced. First quarter 2016 annualized return on equity was 19 percent, an increase of 1 percentage point year-over-year.
  • UnitedHealth Group repurchased 4.2 million shares for $0.5 billion in first quarter 2016, at a weighted average price of $119 per share.

UnitedHealthcare continues to consistently grow as more customers choose its products and services, due to the combination of distinctive service, product innovation and integrated clinical and network value they offer. UnitedHealthcare has developed a balanced mix of business across the commercial, government and international markets, reflecting its deliberate strategy of diversifying and serving the breadth of needs in those markets.

  • UnitedHealthcare grew organically over the past year to serve 2 million more people in the U.S. medical benefits markets, with well-diversified growth across commercial, Medicare and Medicaid offerings. First quarter growth contributed 1.3 million people to this total, helping UnitedHealthcare’s first quarter revenues grow $3.3 billion or 10 percent year-over-year to nearly $36 billion.
  • First quarter 2016 earnings from operations for UnitedHealthcare of $1.9 billion were roughly even with first quarter 2015, as strong growth largely offset a 60 basis point reduction in operating margins to 5.2 percent. The year-over-year margin decrease was driven by increased quarterly costs from an extra calendar day of service and public exchange performance, partially offset by reserve development.

UnitedHealthcare Employer & Individual

  • UnitedHealthcare Employer & Individual grew to serve approximately 700,000 more people in the first quarter and 1 million more people year-over-year. First quarter growth was well-balanced, with growth of more than 300,000 people in risk-based and nearly 400,000 people in fee-based offerings, including increases in people served through the fee-based national account, public sector, mid-sized employer, small employer and individual segments of the market.
  • First quarter revenues of $12.8 billion grew $1.4 billion or 12 percent year-over-year, driven by growth in the number of people served and price increases matching medical cost trends for risk-based products.

UnitedHealthcare Medicare & Retirement

  • First quarter 2016 UnitedHealthcare Medicare & Retirement revenues of $14.1 billion grew $1.3 billion or 10 percent year-over-year, due to consistent growth in services to seniors:
    • In Medicare Advantage, UnitedHealthcare grew to serve 325,000 more seniors year-over-year, a 10 percent increase, including nearly 300,000 seniors in the first quarter.
    • Medicare Supplement products grew 7 percent to serve 270,000 more people year-over-year, including 165,000 in the first quarter.
    • UnitedHealthcare’s stand-alone Medicare Part D program served 5 million people at March 31, 2016. UnitedHealthcare partially offset its planned 2016 pull-back in subsidized Part D products with an acquisition that broadened its Part D product portfolio, resulting in a net decrease of 70,000 people served in the first quarter.

UnitedHealthcare Community & State

  • First quarter 2016 UnitedHealthcare Community & State revenues of $7.7 billion grew $823 million or 12 percent year-over-year due to strong overall growth and an increasing mix of higher need members.
  • In the past year, UnitedHealthcare grew to serve 410,000 more people in Medicaid, an increase of 8 percent, including 145,000 more people in first quarter 2016. UnitedHealthcare continues to receive and implement new state-based awards, including serving 55,000 people as of January 1, 2016 under the New York Essential Plan and more than 200,000 people as of April 1, 2016 through the new Iowa Health Link program. UnitedHealthcare received a superior score on the re-procurement and program expansion serving Nebraska’s Medicaid program in 2017.

Optum is a health services business serving the broad health care marketplace, including payers, care providers, employers, governments, life sciences companies and consumers. Using advanced data analytics and technology, Optum’s people help improve overall health system performance: optimizing care quality, reducing costs and improving the consumer experience and care provider performance.

Optum’s growth continues to reflect its differentiated capabilities and comprehensive solutions for stakeholders broadly across the health care system, both domestically and abroad.

  • First quarter 2016 Optum revenues of $19.7 billion grew $6.9 billion or 54 percent year-over-year. Optum earnings from operations grew 49 percent or $364 million year-over-year to $1.1 billion, with solid operating margins from all business segments. Strong growth in pharmacy care services increased operating earnings and reduced Optum’s overall operating margin, which decreased by 20 basis points year-over-year to 5.6 percent.
    • OptumHealth revenues of $4 billion grew $709 million or 22 percent year-over-year due to growth in its health care delivery businesses, including expansion in neighborhood care centers. OptumHealth served 79 million consumers at March 31, 2016, for growth of 8 million people or 11 percent year-over-year.
    • OptumInsight revenues grew 20 percent to $1.7 billion in the first quarter of 2016, driven by growth in technology services, care provider revenue management services and payer services.
      OptumInsight’s revenue backlog grew to $11 billion at March 31, 2016, an increase of 21 percent year-over-year. Revenue backlog growth rates will fluctuate quarter to quarter, based on the timing of contract awards.
    • OptumRx revenues of $14.3 billion grew 72 percent year-over-year, driven by both acquisitions and organic growth. In total, OptumRx grew script fulfillment by 71 percent to 252 million adjusted scripts in the first quarter of 2016.
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Air Freight Growth Slowed To 2.2% In 2015

Global air freight markets showing cargo volumes measured in freight tonne kilometers (FTKs) expanded 2.2% in 2015 compared to 2014. This was a slower pace of growth than the 5.0% growth recorded in 2014. The weakness reflects sluggish trade growth in Europe and Asia-Pacific.

After a strong start, air freight volumes began a decline that continued through 2015, until some improvements to world trade drove a modest pick-up late in the year. Cargo in Asia-Pacific, accounting for around 39% traffic, expanded by a moderate 2.3%. The key markets of Europe and North America, which between them comprise around 43% of total cargo traffic, were basically flat in 2015. Latin America suffered a steep decline (-6.0%) while the Middle East grew strongly, up 11.3%. Africa also saw modest growth of 1.2%. The freight load factor (FLF) was at times the lowest for some years, falling to an average 44.1% compared to 45.7% in 2014, driven down by weak demand and capacity expansion.

“2015 was another very difficult year for air cargo. Growth has slowed and revenue is falling. In 2011 air cargo revenue peaked at $67 billion. In 2016 we are not expecting revenue to exceed $51 billion. Efficiency gains are critical as the sector adjusts to shortening global supply chains and evermore competitive market conditions. We have to adjust to the ‘new normal’ of cargo growing in line with general rates of economic expansion. The industry is moving forward with an e-freight transformation that will modernize processes and improve the value proposition. The faster the industry can make that happen, the better,” said Tony Tyler, IATA’s Director General and CEO.

The industry’s key challenges will be discussed in detail at the World Cargo Symposium (WCS) in Berlin, 15-17 March. The world’s largest gathering of air cargo professionals, the 10th WCS will bring together 1,000 delegates under the theme of ‘The Value of Air Cargo’ to debate solutions for strengthening air cargo and the vital service it performs for the world economy.  
 
Dec 2015 vs. Dec 2014FTK GrowthAFTK GrowthFLF
International 0.7% 6.6% 47.4
Domestic 1.4% 6.2% 30.8
Total Market 0.8% 6.5% 43.9
YTD 2015 vs. YTD 2014FPK GrowthAFTK GrowthFLF
International 2.5% 6.4% 47.6
Domestic 0.1% 4.6% 29.6
Total Market 2.2% 6.1% 44.1

Regional Analysis in Detail

The global freight growth rate in December was 0.8% compared to December 2014. Within that range there were considerable regional fluctuations. 

African airlines FTKs declined by 8.4% in December although for 2015 as a whole the region grew by 1.2%. The FLF in 2015 was 29.7%, the lowest of any region. The underperformance of the Nigerian and South African economies was a challenge throughout the year, but trade growth to and from the region was sufficient to drive a modest expansion in FTKs.

Asia-Pacific carriers were basically flat in December, expanding just 0.1%. For the whole of 2015, the region grew 2.3%. The FLF for 2015 was 53.9%, the highest of any region. Cargo expansion in the region has been hampered by a shift in Chinese economic policy to favour domestic consumption. A mid-year fall of 8% in trade to/from emerging Asia also led to declines but this appears to have bottomed out, with a rebound in the second half of the year.

European airlines grew by 1.2% in December but the performance for 2015 in total was a fall of 0.1% compared to 2014. The FLF in 2015 was 44.9%. Economic conditions in the Eurozone have been subdued, leading to suppressed demand for air freight, but imports have improved in recent months.

Latin American carriers continued the weak performance of recent months, declining by 6.2% in December and by 6.0% for 2015 as a whole. This was the weakest performance of any region. The average FLF for 2015 was 38.3%. Economic and political conditions in Brazil have worsened, and regional trade activity has been volatile.

Middle Eastern carriers grew 4.0% in December and for 2015 in total the region expanded 11.3% compared to 2014. The FLF was 42.8% for 2015. The region enjoyed a strong year as network expansion into emerging markets was supported by economic growth in local economies. Political instability and the fall in the oil price may impact on some economies in the region but growth as a whole remains robust enough to support further expansion in 2016.

North American airlines saw FTKs expand 1.4% in December compared to December 2014. For the year as a whole, North America grew just 0.1%. The 2015 FLF was 34.3%. Growth in 2015 faded after a strong start that was flattered by the West Coast ports strike. Recently there have been mixed signals from economic data, indicating an uncertain outlook for air freight in the coming months.
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VIDEO: Demand For Air Travel In 2015 Surges To Strongest Result In 5 Years

Global passenger traffic results for 2015 shows demand rose 6.5% for the full year compared to 2014. This was the strongest result since the post-Global Financial Crisis rebound in 2010 and well above the 10-year average annual growth rate of 5.5%. While economic fundamentals were weaker in 2015 compared to 2014, passenger demand was boosted by lower airfares. After adjusting for distortions caused by the rise of the US dollar, global airfares last year were approximately 5% lower than in 2014.

“Last year’s very strong performance, against a weaker economic backdrop, confirms the strong demand for aviation connectivity. But even as the appetite for air travel increased, consumers benefitted from lower fares compared to 2014,” said Tony Tyler, IATA’s Director General and CEO.

Annual capacity rose 5.6% last year, with the result that load factor climbed 0.6 percentage points to a record annual high of 80.3%. All regions experienced positive traffic growth in 2015. Carriers in the Asia-Pacific region accounted for one-third of the total annual increase in traffic.

Dec 2015 vs. Dec 2014RPK GrowthASK GrowthPLF
International 5.6% 5.9% 78.1
Domestic 5.1% 4.2% 79.9
Total Market 5.4% 5.3% 78.8
YTD 2015 vs. YTD 2014RPK GrowthASK GrowthPLF
International 6.5% 5.9% 79.7
Domestic 6.3% 5.2% 81.5
Total Market 6.5% 5.6% 80.3

International Passenger Markets

International passenger traffic rose 6.5% in 2015 compared to 2014. Capacity rose 5.9% and load factor rose 0.5 percentage points to 79.7%. All regions recorded year-over-year increases in demand.

  • Asia Pacific carriers recorded a demand increase of 8.2% compared to 2014, which was the largest increase among the three largest regions. Demand was stimulated by a 7.3% increase in the number of direct airport connections in the region, resulting in time-savings for travelers. Capacity rose 6.4%, pushing up load factor 1.3 percentage points to 78.2%.
  • European carriers’ international traffic climbed 5.0% in 2015. Capacity rose 3.8% and load factor increased 1.0 percentage point to 82.6%, highest among the regions. The healthy result in part was attributable to a pick-up in consumer spending in the Eurozone as well as a moderate increase in flight frequencies. Traffic growth slowed toward the end of the year owing to strikes at Lufthansa and the shutdown of Russia’s Transaero.
  • North American airlines saw demand rise 3.2% in 2015, broadly unchanged from the growth achieved in 2014. Capacity rose 3.1%, edging up load factor 0.1 percentage points to 81.8%.
  • Middle East carriers had the strongest annual traffic growth at 10.5%. As a result, the share of international traffic carried by Middle East airlines reached 14.2%, surpassing their North American counterparts (13.4%). Capacity growth of 13.2% exceeded the demand gains, pushing down load factor 1.7 percentage points to 76.4%.
  • Latin American airlines’ traffic rose 9.3% in 2015. Capacity rose 9.2% and load factor inched up 0.1 percentage points to 80.1%. While key regional economies, particularly Brazil, have been struggling, overall traffic has been robust.
  • African airlines had the slowest annual demand growth, up 3.0%, although this was a significant improvement over the 0.9% annual growth achieved in 2014. With capacity up just half as much as traffic, load factor climbed 1 percentage point to 68.5%. International traffic rose strongly in the second half of 2015, in conjunction with a jump in trade activity to and from the region.

Domestic Passenger Markets

Domestic air travel rose 6.3% in 2015. All markets showed growth, led by India and China but there was wide variance. Capacity rose 5.2% and load factor was 81.5%, up 0.9 percentage points over 2014.
 
Dec 2015 vs. Dec 2014RPK GrowthASK GrowthPLF
Australia 3.2% 1.2% 77.9
Brazil -5.4% -4.0% 80.1
China P.R. 8.2% 8.2% 76.7
​India 25.0​% ​25.2% ​87.5
​Japan 1.2​% ​-2.9% ​64.7
Russian Federation ​​-3.4% -8.0% ​70.0
US 4.9% 4.1​​% ​84.1
Domestic 5.1% 4.2% 79.9
  • Brazil’s domestic air travel rose just 0.8% in 2015, reflecting the country’s deteriorating economic situation. Traffic trended downward throughout the year.
  • US domestic traffic climbed 4.9% last year, helped by solid economic growth. This was the fastest rate of increase since 2004 and the first time since 2003 that domestic traffic growth surpassed international growth. The load factor reached a domestic record high of 85.4%.
The Bottom Line: “Aviation delivered strong results for the global economy in 2015, enabling connectivity and helping to drive economic development. The value of aviation is well understood by friends and families whom aviation brings together, by business travelers meeting clients in distant cities, and particularly by those for whom aviation is a lifeline in times of crisis.
 
“It is very disappointing to see that some governments still wrongly believe that the value of taxes and charges that can be extracted from air transport outweighs the benefits—economic and social—of connectivity. The most recent example is the dramatic increase in the Italian Council Tax levied on air passengers. This 33-38% hike will damage Italian economic competitiveness, reduce passenger numbers by over 755,000 and GDP by EUR 146 million per year. An estimated 2,300 jobs a year will be lost. At a time when the global economy is showing signs of weakening, governments should be looking for ways to stimulate spending, not discourage it.”
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Insurance Companies And Products As We Know Them Today Will Have To Evolve

That's according to Griselle Chernys, CEO, at Wellaway, who took an executive seat on a recent iPMI Magazine round table business forum.

Although global risks have changed dramatically, medical inflation and the cost of employee benefits continues to cause concern. In the most recent iPMI Magazine Round Table Business Forum we spoke with leading C-Level executives from the world of International Private Medical Insurance about the rising cost of healthcare and medical inflation.

An AON report report shows that in 2015, medical costs are expected to increase by 10.15 percent before plan design changes and vendor negotiations—6 percentage points higher than the average inflation rate. In 2014, the global average medical trend was 10.34 percent. While the global average medical trend is expected to decline, three regions--Asia Pacific, Europe and Latin America--are projected to see an uptick in rates for 2015.

Talking to the IPMI round table group about the Aon Hewitt report Griselle Chernys, CEO, at Wellaway told us, “I think that the data is pertinent and probably correct. Healthcare is a commodity that providers will control and deliver as they want, especially in the private sector with IPMI coverage. Hospitals and physicians have the upper hand in the delivery and pricing, thus the need for integrated services. As I heard a physician administrator in a hospital say once, during some insurance pricing negotiation, “this is our price and if you do not like it, I would like to see you admit and deliver the medical care the member needs." As long as the relationship of providers and insurance is antagonistic, a solution will not be able to achieved. More and more hospitals and physicians will develop and deliver health plans via their medical facilities and I predict that the multi-hospital system will develop internationally as it has happened in the USA or as we see with Hospiten and the like.

Insurance companies and products as we know them today will have to evolve.”

ANDREW APPS, HEAD OF GLOBAL HEALTHCARE, BELLWOOD PRESTBURY added, “Competition between iPMI insurers is intensifying and will continue to do so as new entrants dip their toe into the market and dream of taking a slice of the ever expanding market. Price cutting particularly amongst the employer-sponsored plans is inevitable as the larger players jockey for position and greater market share, all of which is good for the employer in the short term at least. As the saying goes, there is always someone out there who will take the risk. But there has to come a point where underwriters have to make a return on their investment. At this point premiums have to rise and with the relationship between insurers and medical service providers becoming all the more strained as medical treatment fees increase, that day is not too far away. This makes the job of the adviser /broker all the more important."

ROMAN BEILHACK, CEO, GLOBALITY HEALTH said,Employers are operating in an environment where they need to provide high levels of healthcare for their employees, sometimes due to statutory requirements and other times due to the natural tendency of employers to look after the well being of their workforce. Employers are typically under pressure to keep their operating costs low and when they review their budgets during their annual business planning cycles they will aim to minimise the cost of employee benefits. Due to these cost pressures, there may be situations where employers will downgrade the insurance coverage so that they can afford a plan rather than removing the plan altogether. Globality seeks to find solutions for their clients in these situations.

The global average inflation rate is interesting for comparing one year to the next. However, when it comes to employer-sponsored plans then the specific features of those plans should be considered. This means considering the locations of the insured members, the benefit levels, the treatment providers and network access. Referring to a single global average can be misleading for many employers.”

One of the most common questions we hear within the IPMI industry is: how will the cost of international private medical insurance rise in the next 5 years?

ROMAN BEILHACK, CEO, GLOBALITY HEALTH told us, “Costs are expected to continue to rise at levels above general price inflation. There are continual advances in medical science with new treatments and medicines being developed all the time. It is normal that insured members will demand the best treatments and services available, particularly for expatriates. In order for insurers to offer these new treatments then there will inevitably be premium increases.

However, insurers should not use this as an excuse to increase premiums beyond what is necessary. As can be seen recently, Globality is holding 2016 rates at 2015 levels for many categories of its business."

ARJAN TOOR, MANAGING DIRECTOR, CIGNA GLOBAL IPMI added, “Medical inflation is driven by unit cost, i.e. the price of each service; and utilization, that is how many and what type of services are used. As the world’s health care standards continue to rise and the range of treatment facilities and breadth of treatment options available continues to increase, it is without doubt that both unit cost and utilisation will also continue to increase.

It’s our job as the insurer to understand these risks and continually evolve our proposition to protect our customers from the impacts of medical inflation as far as possible. We’re continually working on initiatives to help minimize the impact of inflationary volatilities including investments in expanding our medical network and claims teams globally, meaning we can counteract medical inflation spikes to a certain extent as we build long-term relationships with hospital groups. It’s a lot about experience as well - it’s imperative that our claims advisors know the expected cost of a hip operation in Singapore, for example, and can ask the right questions to ensure the costs are appropriate.

Ultimately, it’s impossible to say exactly how premium costs will rise over a 5 year period, but our focus will continue to be on driving forward our mission of helping the people we serve improve their health, well-being and sense of security.”

ANDREW APPS, HEAD OF GLOBAL HEALTHCARE, BELLWOOD PRESTBURY commented, “If I had a crystal ball, it would be easy to answer this; however, the reality is that no one really knows to what extent iPMI premiums are going to rise over the next few years. What is certain is that premiums will continue to increase due to the rising cost of medical treatment along with the ever popular demand for private medical treatment.

That said, increased competition amongst the iPMI providers has, to some degree, helped to keep premiums palatable for most policyholders (putting to one side the notion that nobody likes to see their premiums increase), with average year on year increases running between 5-10% depending upon where a person is living and working. How long this will continue is anyone’s guess, but the market is hotting up with yet more new provider entrants trying their hand.”

GRISELLE CHERNYS, CEO, WELLAWAY added, “The cost of international private medical insurance will rise dramatically and this will be driven by the development and demand for new treatments, pharmaceuticals and technology. Longevity is also playing a role in the inflation and utilization of medical services which creates more demand and demand will drive costs.”

TO READ THE COMPLETE ROUND TABLE, THE RISING COST OF GLOBAL HEALTHCARE, CLICK HERE.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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