The rapidly growing international schools sector has created significant opportunities for employee benefits providers around the world, with health insurance bills running into the millions for some of the biggest private education groups.
But, say experts in the sector, a changing insurance landscape is raising concerns about rising costs, and whether schools – under pressure to keep tuition fees down – are going to continue to be able to meet them.
More than four million pupils now attend English-language international schools globally, up from fewer than one million 15 years ago, according to the International School Consultancy Group (ISC).
ISC says this quadrupling of pupil numbers reflected greater demand for continuity of curriculum, language and examinations by expatriate parents, who have taken their school-aged children with them after being posted abroad.
Over the last 20 years, in fact, some of the UK’s best-known public schools have sought to capitalise on the overseas appetite for a British-style education. One of the first, some 20 years ago, was Harrow, one of Britain’s most prestigious public schools. Its original satellite campus in Bangkok now educates around 1,400 pupils, and the school went on to launch additional outposts in Beijing, in 2005, and in Hong Kong, in 2012.
Another well-known British school, Marlborough College, opened a school in Malaysia four years ago, and says it aims to grow pupil numbers there to about 1,250 by 2022.
Others that have opened foreign outposts include Dulwich College (pictured above is its Shanzhou, China facility), Repton School, Brighton College, Haileybury, Shrewsbury, Sherborne, Bromsgrove and Wellington College. King’s College Wimbledon plans to open three schools in China, the Daily Telegraph reported recently.
Schools aimed at American expats are also opening outside of the US, and existing American-curriculum-based schools expanded, in response to demand by parents who are keen to see their children attend American universities one day. There are also schools for children of other nationalities, though fewer than those that offer an English-language curriculum.
Meanwhile, not all the parents seeking an international school education for their children are expats; wealthy locals in many markets are adding pressure on the best of these schools for places, helping to keep demand and tuition fees high.
Fresh market for PMI
The rapid expansion of this sector, not surprisingly, has led to a strong demand for teachers, and in turn, for employee benefits, notably private medical insurance (PMI).
Even as international schools are wooing young, recent college graduates in the UK, US, Australia, Ireland and other English-speaking countries, in an effort to fill their teaching vacancies at the beginning of each term, insurers and specialist school insurance brokers are wooing these same institutions with PMI packages designed to cover the teachers being hired.
That they are having at least some success in selling such policies was reflected in new research from Finaccord, the London-based research provider. It found that the global international health cover sector posted a compound annual growth rate of 11.1% between 2011 and 2015, “comfortably ahead” of that for health insurance in general, which grew at a compound rate of only around 4.8% during the same period, according to Finaccord consultant David Bowles.
The total global market for health cover among expatriates and students was worth about US$12.98bn in gross written premiums last year, including about US$2.78bn in new policies bought during the 12 months of 2015, the Finaccord data showed.
For international schools, being able to offer private medical insurance has long been a crucial recruitment tool, as well as a form of reassurance to teachers unsure about trading the comforts of their home country for the uncertainties of a not-yet-developed market.
The problem, say experts in the international private medical insurance sector, is that many international schools are struggling to fund the level of healthcare coverage many of their teachers are expecting, as regulatory changes and the rising cost of healthcare globally are driving rates up.
An example of how badly things can go wrong was the case of a British-Irish teacher who broke both his legs and suffered other injuries last July in Thailand, after a truck smashed into his moped. According to the local English-language Chiangrai Times, the teacher “was unable to return home for eight weeks, and was left with a £25,000 bill for medical and travel costs, after he was told his insurance had expired”.
“I didn’t realise I was supposed to renew [my insurance] policy every month,” the 33-year-old teacher was quoted as saying.
“And the insurance provided by my work didn’t cover me either. I hadn’t read the small print.”
As if it weren’t enough for schools to have to make sure the coverage they’re offering is the best they can for the money, meanwhile, experts warn that they also need to keep a constant eye on the regulations in the jurisdictions in which they’re operating.
Take Dubai, for example. In 2014, the emirate introduced new rules requiring all employers to have health insurance in place for all of their employees. In the first year (2015) only large companies were expected to comply, but this year, even those with fewer than 100 employees fall under the legislation.
Mark Harris, a principal at consultancy Mercer Marsh Benefits, stressed the importance of complying with such rules, but also warned that schools in Dubai cannot afford to take their eye off the ball once they’ve set things up. “These laws are continuously changing,” he said.
“If you’re sending somebody to a country [where presently] there’s no need for admitted local medical insurance, that might not be the case in six months’ time.
“It’s therefore important [for schools] to partner with insurance companies/consultants that have a large global footprint, to mitigate this issue.”
Andy Seale, regional general manager for the UK, Middle East, Italy and Scandinavia at insurer Allianz Worldwide Care, echoed Harris’s observations, and noted that the issue of providing medical care to schools, and staying up-to-date with the regulations, was making “a lot of the insurance industry anxious” as well.
Although the international schools/education sector is, according to Seale, one of the most expensive for health insurance, due to the locations of most of the schools, there are ways such institutions can lower their premiums without affecting coverage. These, he noted, include reducing excesses on highly-utilised benefits; restricting access to the most expensive healthcare facilities; and restricting or removing certain benefits, such as dental and optical care.
Employees also need to be aware that the more they claim on a policy, the more the premiums go up, he added.
Another option, according to Harris, is for schools operators to consolidate larger numbers of contracts.
“We have a large book of business, and we can actively review the current cost of cover, compared with our wider client base – that helps assist with the negotiation strategy for the cost of cover for the next year with the incumbent insurance company,” Harris added said.
In the end, though, Seale said, education companies have to find their own balance between offering their staff competitive incentives and making savings, and he warned it won’t be easy.
“Taking people out of the UK and posting them to Asia and the Middle East,” he noted, requires an “attractive” benefits package.
“All of the time that competitive nature is there, so it is difficult for schools to take a hard line approach in reducing benefits. Medical costs will continue to go up.”