Pacific Prime: iPMI inflation fell to 7% in 2017

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Inflation in the international private medical insurance sector fell by 2.2 percentage points in 2017, to 7%, according to Pacific Prime, a Hong Kong-based medical insurance broker, which closely tracks the statistics. 

In its latest annual report, where it notes that premiums in the global private medical insurance industry in 2016 grew by an average of 9.2%, Pacific Prime identifies what it says are the six “key [iPMI] inflation drivers” – and two of these were new in 2017: changing population dynamics, and the increasing adoption of non-industry specific technology.

The other four usual inflation drivers were, as in the past: new medical technology; an imbalance of healthcare resources; increased compensation for healthcare professionals; and healthcare “over-utilisation”.

As the following chart shows, the Pacific Prime database goes back to 2009. However, it notes in


an introduction to its findings that this year, it is using as its source for its consumer price inflation (CPI) data the International Monetary Fund’s numbers, which it believes “to be a more reliable source” than what it has been using previously, which has resulted in “slightly different CPI figures” this year compared with previous reports.

In their preface the Pacific Prime report’s authors also stress that all the premiums they use “are based on individual health insurance plans” and that all the figures they mention are numerical averages and are not weighted either year-on-year or by the size of the insurer in question.

Individual insurers: average premium increase data

Of the eight major insurers Pacific Prime looks at in its report, Cigna Global came in with the lowest average premium increase worldwide in 2017, while Aetna International had the lowest five-year-average IPMI inflation (see chart, below). (Worth stressing, Pacific Prime says here, is that these results don’t mean that these providers necessary offer the lowest premiums, but simply that these premiums grew by the least in 2017.)

The reason for Cigna Global’s “drastic decreases in its premium inflation rate in 2017”, Pacific Prime says, is that it “tweaked [its] plans in certain locations to be more competitive and in line with market rates”, as may be seen in this chart from the report, below.


The four key markets in which Cigna Global was able to significantly cut its premium inflation rate were China and Singapore, in both of which countries it fell by 9.9%; Indonesia, where it declined 12.8%; and the UK, down 10.8%.

Says the report: “The large decreases seen in these countries are intriguing to say the least, especially when taking into account that the average 2017 premium inflation rates in the aforementioned locations were 6.3%, 6%, 5.3% and 6.4%, respectively.

“These changes are a good reason why policyholders should review their plan’s premium increases annually.

“The relatively large decrease in Cigna Global’s overall premium inflation rate forms a large part of the explanation as to why the global iPMI inflation rate fell to an all-time low in 2017.

If we were to exclude Cigna Global from our premium inflation calculations, the average iPMI inflation rate in 2017 was 8.5%; closer, yet still 0.7 percentage points lower than the 2016 rate of 9.2%.”

The Pacific Prime report’s authors at this point again note that while Cigna Global had the lowest premium inflation in 2016, this did “not mean they offer the cheapest plans”.

‘Emerging trends to watch’

Two emerging trends that had an impact on premiums in 2017 and which are likely to affect them in 2018, Pacific Prime says, are an increase in compliance – for example, the implementation of mandatory insurance coverage requirements in Dubai, and the introduction of risk-based capital frameworks “throughout many locations in Latin America and Asia Pacific” – and “a more favourable global economy” than was the case in 2016.

“Against an improving international backdrop, GDP growth in emerging and developing economies gained momentum in 2017, strengthening from a “post-crisis” low of 3.5% in 2016 to a projected 4.1% in 2017, and 4.5% in 2018.”

To read and download the 50-page report on Pacific Prime’s website, click here. 

To read an earlier story about a previous Pacific Prime report, click here.