By Rebecca Ng, News Editor, A.M. Best
HONG KONG (BestWire) - Proposed government-driven medical reforms together with an aging population and rising medical costs in Hong Kong is generating a new business model for group life and medical insurance segments among international companies in the wake of the global financial crisis.
"We have seen that the market size and market value of the medical insurance business in Hong Kong has been growing over the last year as domestic employment has become strong after the financial crisis," said Alan Merten, vice president of employee benefits for Manulife (International).
Employer-provided medical benefits have been an important source of health care for most of the working population in Hong Kong. The Hong Kong Federation of Insurers reported the number of group medical customers rose by 3.47% from 2007 to 2008, which according to Merten means "a growing potential of the group medical market is anticipated."
With the increasing awareness of public health care and retirement preparation along with social structural changes, people in Hong Kong are now changing their views on medical and health protection. To take advantage of this, Merten said group life and medical providers need to enhance their efficiency and help employers provide better benefits to "attain employees."
To capture the market opportunities, Hong Kong-based Manulife (International) recently formed a long-term business partnership with Munich Health, a unit of the global reinsurer Munich Re, aiming to "double its premiums and customer base in the next five years," said Merten.
Through this cooperation, Munich Health will provide worldwide knowledge of medical insurance, including spanning data analysis, risk management, new underwriting tools and techniques, to complement Manulife's local experience in dealing with employers and distributors of employee benefits products. The reinsurer will gain knowledge of the local market in return, according to Manulife.
William Bossany, general manager of Munch Health China, said the company sees this partnership as a positive development as it allows Munich Health to "further expand the health insurance offerings to the working public" while preparing for "imminent" changes to the health insurance environment in Hong Kong.
In the face of challenges such as the increasing needs of the elderly and those in need of management of lifestyle conditions, Bossany said the company believes the partnership can contribute to the evolution of the Hong Kong health insurance market.
In March, the Hong Kong Federation of Insurers met the secretary for the Food and Health Bureau of Hong Kong and the domestic legislative council of the insurance sector to discuss the development of a proposed voluntary private health care insurance scheme. The establishment of the new insurance program is still under consideration.
Munich Health already provides this kind of market partnership and "consultative reinsurance" in various Asian markets, noted Bossany. "China is one of our largest consultative reinsurance markets."
The consultative reinsurance, which according to Bossany is a service and partnership-oriented approach compared with traditional capacity reinsurance, and allows the company to bring more specialized health knowledge to local markets.
He said the company will continue this approach because it sees the need and demand for specialized health expertise throughout Asia, in particular, as "fast-expanding markets are seeking such knowledge."
"We see that health insurance as a growing need in Asia and demand is rising," said Bossary. "Health care reforms in these regions are helping fuel the interest in new products, services and wellness programs."
The German reinsurer will also help its clients with "long-term business expansions in Hong Kong, China and North Asia," he added.
This kind of partnership is a first for Manulife in Asia, Merten said. Hong Kong is a "test-type" of the market as the insurer saw its local customers "tend to try new things."
Manulife's group insurance business held a 34% market share based on the number of in-force policies under group business in Hong Kong, according to the Hong Kong Federation of Insurers 2008 medical insurance business statistics.
Manulife (International) is a unit of Canada-based Manulife Financial Group. Funds under management by Manulife Financial and its subsidiaries were C$440 billion (US$433 billion) as at Dec. 31, 2009.
Munich Health is one of the three business segments within Munich Re, alongside primary insurance and reinsurance. The brand, which encompasses both levels of risk transfer, was established in May 2009.
Its purpose is to pool the international health expertise in primary, reinsurance and risk management. Currently, Munich Health serves insurers in more than 40 countries and primary insurance clients in more than 100 countries.
For the financial year 2009, the reinsurance group recorded a profit of 2.56 billion euros and premium income of 41 billion euros.
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Rebecca Ng is a news editor of Hong Kong at A.M. Best reporting financial insurance news for Asia Pacific. She has been writing reports for topics on insurance, reinsurance and takaful sectors, as well as market and regulatory trends across the region. Ng is now writing for BestWeek Asia Pacific, BestWires and Best's Review, under A.M. Best. She can be reached at Rebecca.Ng@ambest.com.
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