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The key drivers behind the state of international health insurance premiums in China are that insurers are more capable of differentiating high-cost providers and the government is setting new regulations that have an effect on medical costs.
One of the main reasons why China's premiums are going through a correct phase is that a number of insurers have become better at determining high-cost providers in their hospital networks. Omitting high-cost providers and providing coverage at standard private clinics allows insurers to offer a cheaper plan.
Another reason explaining the decrease in China's average premium this year could be that the Chinese government removed the 15% mark-up on drugs provided by public hospitals. They also set regulations to limit the number of people involved in medical and pharmaceutical distribution, thereby reducing medical product costs as well.
Changes in demographics, such as the growth of High Net Worth and Ultra High Net Worth individuals, continue to play a major role in the growing demand for private healthcare, thereby causing a significant growth in medical costs.
The global phenomenon for 2019 is that medical rates greatly outpace general inflation. Some of the primary medical cost drivers include population aging, poor lifestyle habits, and declining health.
Insurers around the world are dealing with the ever-evolving and expanding regulatory requirements. Some changes to regulations are due to consultations with key stakeholders, while others seem to be a result of enforcement rather than negotiation.
An increasing amount of insurers are using technology to improve their anti-fraud processes, which could have an upward impact on premiums at the beginning. However, it will hopefully have a downward effect on premiums later on due to the dramatic drop in medical insurance fraud.
The growing use of technology in the insurance industry is both transforming and disrupting IPMI plans across the globe. Insurtech presents many opportunities for cost savings and loss prevention.
97% of the countries in the report have witnessed a growth in premiums since last year, with just three countries witnessing a decline. Australia and Singapore experienced significant jumps in both individual and family plan rankings, while Canada replaced Hong Kong as the second most expensive country for IPMI.
The Americas remains a dominant region in the top 20 most expensive countries. Some countries share the same ranking since they have the same average premium. Reasons for the region’s dominance include increasing demand for IPMI products, higher medical costs, and insurers tend to group countries with similar characteristics and use the same premium.
After years of significant increases, China is now witnessing a correction period. This year, several prominent insurers in the country did not increase their premium. In fact, others even reduced their premium, which caused a decrease in individual and family premiums.
21 countries in Africa witnessed inflation rates of at least 15% for individual plans, while another 10 saw inflation rates of 15% or higher for family plans. Factors that play a role in inflation in the region include higher disposable income and a growing middle-class population.