SE Asian health insurers face soaring costs
SE Asian health insurers face soaring costs
KUALA LUMPUR (Reuter): A booming demand for health care
services in Southeast Asia is threatening the long term stability
of insurers who face soaring costs and rising claims, Industry
executives said on Thursday.
"Until the insurance industry starts to work more closely with
the hospitals then there will be some long term problems of
profitability that will stay with the market for some time," said
Duncan Lord, Asia Pacific health manager at Swiss Reinsurance in
Singapore.
Lord told the second Association of Southeast Asian Nations
(ASEAN) Insurance Congress in Kuala Lumpur that health had
emerged as one of the most potentially profitable sectors of
insurance business in the region, but also one of the most prone
to excessive costs.
"Costs are running well above consumer price inflation in many
countries and this is a real issue for insurers," he said.
Lord said the rise was a combination of consumer price
inflation, rising medical technology costs and the belief in some
quarters that insurers supplied unending sources of revenue which
could stifle the market in its infancy.
Industry analysts estimate health spending to be about three
percent of gross domestic product on average in ASEAN, which
groups Brunei, Myanmar, Indonesia, Laos, Malaysia, the
Philippines, Singapore, Thailand and Vietnam.
They say around five percent of total insurance premiums is
spent on health insurance products.
This figure is set to grow dramatically as pressure mounts on
governments to improve health care provision and they turn to the
private sector rather than embark on massive public spending
rounds, they say.
In Thailand, where private health insurance has a 15-year
track record, the market is now at risk of collapse in the wake
of a boom in luxury health care that caters only for about 10
percent of the population.
"Nearly all Thai health insurers have registered a loss on
both their individual and group plans," Nipit Piravej, senior
vice president of medical insurance at Ayudhya CMG Life Assurance
in Bangkok, told delegates.
Nipit said an unregulated referrals system and a lack of
control on the appropriate use of expensive medical technology
had "created a lot of improper services, inefficient resource
utilization and poor outcomes", for insurers.
One major factor fueling the cost explosion was the growth of
an affluent middle class, said Henry Herrera of Asia Life
Assurance Corp in the Philippines.
"These people are not interested in no-frills services from
government providers in over-crowded hospitals with out-dated
equipment," he said.
Instead they demanded private suites and the latest
technological body scans for even the simplest of ailments, he
said.
"Health insurance is almost a status thing. It's certainly a
big element of the buying process in some countries," said Lord.