Asia: Emerging markets' private health premiums to double by 2020
Source: Asia Insurance Review | Apr 2015
As income levels in emerging markets rise and people want and can afford more healthcare, private health insurance (PHI) premiums in emerging markets are set to double by 2020, according to Swiss Re sigma study.
The money to pay for healthcare in emerging markets has traditionally come from the government via taxation revenues and from private individuals who often make significant contributions from their household savings. However, reliance on these two channels of healthcare financing is becoming increasingly challenging. There are growing strains on public coffers and at the same time, more advanced technologies and medicines are pushing up the price of healthcare services.
“Consumers will increasingly be purchasing PHI because it provides a means to pay for level of healthcare services they need,” said Swiss Re’s Chief Economist Kurt Karl. In this way, it can supplement and/or complement public sector health services by helping consumers pay for treatments not covered by or available from state-sponsored schemes. For governments, PHI has the potential to be a main channel of healthcare expenditure. However, it is under-used. In 2012, PHI covered less than 10% of total healthcare spending in the main emerging markets.
Reimbursement-type products expected to grow at CAGR of 15.4%
There are two main types of PHI product. The first is reimbursement-type, with which the insured is paid back the costs incurred in hospital and other treatment. The second are fixed-benefit products, whereby the insured receives a lump sum at the onset of specific conditions. Fixed-benefit products include critical illness, disability income and hospital cash insurance.
In emerging Asia, premiums from reimbursement-type product is expected to grow from US$9.4 billion in 2013 to $31.8 billion in 2020 at a CAGR of 15.4%, the strongest of all emerging regions, according to the “Keeping healthy in the emerging markets: insurance can help” study.
Fixed-benefit products are also popular. For example, cancer insurance has attracted widespread interest in many markets in the region following the success of cancer products in South Korea and relapse products in
Japan.