Is the Asian Tiger stilled?
James McGrigor, MD McGrigor Group and Rhiannon Kerr, Editor of McGrigor Insights, shared the key findings from the Group’s latest research into the Asian international private medical insurance market, which identified a new opportunity for growth
Covid impact by market
Despite declines in the numbers of resident expats and increased price sensitivity, the new report from McGrigor Group, International Private Medical Insurance: China, Hong Kong and Singapore: 2014-2024, forecasts continued but longer term IPMI/high end PMI growth, post the Covid decline, fuelled by affluent local demand, combined with the appearance of a massive new segment of interest to international insurers – ‘PMI plus’.
Overall, Asia was the least impacted region of any by the Covid pandemic in terms of gross written premium (GWP) growth. Partly, this was the result of less steep gross domestic product (GDP) declines – especially for China – than those seen in other regions (see chart 1).
IPMI GWP continued to grow at 6.75 per cent (at Constant Exchange Rates, CER) in 2020, although this was a significantly slower rate than in the previous five years, when the region experienced around 15 per cent combined annual growth rate (CAGR). The most highly impacted segment was corporates, which shrank in volume in terms of the number of lives by around eight per cent, with SMEs also shrinking but by less, at around four per cent. Renewal rates remained high, but numbers by plan fell. The most successful segment was individual with a volume growth of 10 per cent, containing both expats and locals.
Two aspects ultimately counteracting the numbers decline were firstly, the continued price increase at three per cent (in 2020), although this was considerably lower than Medical Cost Inflation (MCI) at around 8.7 per cent and secondly, the exchange rates. In the course of 2020, the Chinese yuan strengthened against the US dollar by around seven per cent. This had an ‘inflating’ effect on the overall region’s IPMI market when comparing it to dollar values of other regions, as China is such a significant proportion of the Asian regions’ IPMI market.