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Why are IPMI premiums in Thailand increasing?
If you have had health insurance for more than one year chances are very high that you saw a premium increase each and every year. This can be a little frustrating, especially when you go to renew and are assessed a fairly large increase over what you paid last year. In fact, questions around why IPMI premiums in Thailand have increased are among the most common that our Client Relationship Management teams receive.
That is why we release a yearly report on international private medical insurance (IPMI) inflation. In this article, we take a look at premium inflation in Thailand and the key drivers behind why you might pay more when you renew your plan.
First, a quick look into the latest IPMI Inflation report
Now in its fifth year, this year’s report – aptly titled International Private Medical Insurance Inflation Report – 2018 – focuses on medical insurance inflation in ten countries (including Thailand) and takes into account premiums from eight top insurers in the industry.
To make the report easier to digest, we have split it up into four key sections:
- Average inflation on a global scale
- Average inflation by insurer
- Global drivers of IPMI inflation
- Breakdown of inflation – by region and country
You can read more about the report in this blog article, or visit the report’s website to download your free copy.
Inflation of IPMI premiums in Thailand
One of the key components of understanding why your premiums are increasing is by how much premiums have increased on average in the country where you purchased cover. From the latest version of the report, we can see that IPMI Inflation in Thailand in 2017 averaged 7.4%.
The graph above shows not only inflation in 2017 but also historically, back to 2009. We can see that inflation has ranged from around 6.5% to slightly over 10%. This is interesting as it shows that, while there is some variance, premiums tend to increase by a relatively small band each year.
In fact, if you were to take the CAGR (Compound Annual Growth Rate) of premiums in Thailand from between 2009 and 20017, we find that they have increased by an average of 7.33% year-on-year.
What does this mean to me?
Simply put, you can expect that plans will increase by at least an average of 7.33% each year (assuming there are no major changes to the industry, country, demand, etc.). Some years will see higher inflation, others will see lower, but they will increase.
What is causing IPMI inflation in Thailand?
When discussing why IPMI premiums in Thailand are increasing, we can break down the reasons into two main categories: Global and regional. Global IPMI inflation drivers are those that apply across boundaries and are present on a continual basis (they will always have an impact on inflation). As you can guess, regional drivers are those that impact inflation in Thailand only.
Global/continual IPMI Inflation drivers relevant to Thailand
While all of the global inflation drivers mentioned in our report do have an impact on premiums, there are three global/continual drivers that are present in, and have had an impact on your premiums in Thailand.
1. You’re getting older
Most insurers will base their premiums on a number of different factors like medical history and benefits desired, but age is always among the most important determinant of premiums.
This is because as you age the chances of you developing costly ongoing medical conditions like cancer increase. Due to this, older people are generally more risky to cover (they will tend to submit more claims). Insurers offset this risk by charging older people higher premiums.
The general trend among IPMI insurers around the world is to offer premiums on a yearly basis. This means that when you look at an insurer’s rate table you will see a premium for each age. Some insurers, however, follow a band system where certain age ranges will pay the same premium and see an increase when they move into a new band. This results in seemingly large increases.
2. There is a medical resource imbalance
According to the CIA Factbook, just shy of half of the population in Thailand is between the ages of 24 and 54. This points to the fact that the country is generally aging and is starting to demand more medical care.
The concern here is that there might not be enough medical professionals to meet this increasing need. For example, the World Bank’s latest figures (from 2015) report that there are 0.47 physicians for every 1,000 people in the country. Compare this to the global average of 1.857 and it is clear that there is a bit of an imbalance.
Increasing demand, along with lower resources to meet it, inevitably results in higher prices and we are seeing this trend in Thailand. Insurers will most often react by not only working with hospitals and professionals to try to offset costs but also increasing premiums in order to offset the increased cost.
3. There is continued reliance on hospitals for primary care
This is a common issue seen in many countries where IPMI is popular. Think about when you are sick in Thailand and need to see a doctor. Where do you go? Most people, when they need to see a doctor, will likely just go right to the nearest hospital. While there is nothing inherently wrong with this, it does put stress on hospital resources (and exacerbates the issue discussed above!).
As this article in the Bangkok Post points out, the prevalence of affordable healthcare pushed people towards hospitals for all sorts of care including minor ailments. This has led to longer wait times and has forced hospitals in some cases to close due to insolvency. In turn, this impacts medical insurance premium inflation.
IPMI inflation drivers specific to Thailand
When talking about IPMI premiums in Thailand and the factors behind why they are increasing it also helps to look at any regional/local drivers that are present. The fact of the matter is, however, inflation in 2017 was actually lower than in other years.
This trend was actually recorded globally in 2017 and is primarily due to one insurer adjusting premiums downward in 2017 in order to make their plan more competitive. Thailand, however, was one of the few countries where this insurer did not record negative inflation.
To explain the lower inflation figure in 2017 in Thailand, we can turn to the economy and general political situation in the country. The government has taken steps to invest in massive infrastructure projects and improving healthcare access in the country. We believe that this, combined with a slight economic slowdown in 2016 and 2017, has led to lower inflation figures.
It is important to be clear here that premiums still did increase. However, some conditions have allowed insurers to maintain or at the very least ensure that IPMI premiums in Thailand do not increase at an accelerated rate.
To learn more about IPMI inflation in Thailand and on a global scale, read our report today. Or, contact the team at Pacific Prime Thailand who can work to help ensure that premium increases are manageable.
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