Pacific Cross International has over 65 years experience providing insurance product success across Asia.
Profitability for an Insurance company is a critical measurement and it is always a question asked by the Board of Directors when looking at any business expansion or development of unchartered areas. What is the risk and when can we make profit from this venture? Historically health insurance has been difficult to predict profitability and many companies have been disappointed with this product. So it is natural to be very cautious in trying to enter this market.
Unlike Life Insurance, health insurance is used every year and normally within the first months after purchase, fundamentally the insurance company must expect claims regularly every year and thus the business has a certain amount of risk associated with it.
The question we are often asked is how to minimize the risk?
A few general statements and a quick list of areas to concentrate on;
Having the necessary business volumes assist the company to withstand the impact of both large and small claims.
Having a mix of individual clients and employer sponsored business also allows the risk to be spread as individual clients are fully underwritten and do not change companies so quickly, where employer sponsored plans will move periodically. This means a slower business growth but in the longer term it is a stronger base.
- careful policy wording to help prevent fraud
- careful premium calculations based on the benefits to be offered
- the territory where coverage is offered and the associated medical prices
- relationships with the medical providers
- solid underwriting assessment
- claim investigations
- specifying a certain client market where it is desired to operate and thus saying no or not being competitive in markets where the company may not want to do business
- proper assessment at renewal time in order to ensure the product is operating according to the pricing assumptions
Thus it is reasonable to say that concentrated management of the business is a key success factor. The product operates best when there is a dedicated team focused on the development, implementation and review of the product. This requires a high need for specific expertise. Managing the risk health insurance presents is done at every step of the process; from product development, policy wording, and pricing, underwriting assessment, claims adjudication, renewal, direct billing, pay and claim.
Across Asia, Pacific Cross has this expertise.
In addition the sales team responsible for the distribution of the product plays a key role in ensuring the client is given a true reflection of what health insurance is and is not. What it can do and what it cannot do. The product also operates best when it is designed to serve a specific market, with a specific set of benefits and premiums that relate to that market. This way the usage and satisfaction levels can be anticipated.