2nd Colloquium Supplemental Private Medical Supplemental Private Medical Indemnity Insurance Insurance Indemnity in Latin Latin America America in By Act. Eduardo Lara di Lauro Milliman México Salud, S.A. de C.V. eduardo.lara@milliman.com Dresden, Germany – April 29, 2004.
Supplemental Private Private Medical Medical Supplemental Indemnity Insurance Insurance in in Latin Latin America America Indemnity CONTENTS III. Mexico Case I. General Overview / Background a. System & Participants a. Economics & b. Supplemental Private Demographics Medical Indemnity Insurance b. Statistical Data IV. Trends / Challenges II. Systems & Models a. Healthcare a. Private Healthcare b. Health Insurance b. Insurance Sector c. Opportunities for c. Health Insurance Actuaries Industry Final Comments
Indemnity Insurance Insurance in in Latin Latin America America Indemnity I. General Overview / Background Where we are …
Indemnity Insurance Insurance in in Latin Latin America America Indemnity I. General Overview / Economics & Demographics World’s Share (1) Population 2000 515 M 8% (1) Territory 20.5 M 14% (sq Km) GDP 2000 2.0 Trillions 6% (1) Free Trade Market +10 Trillions in GDP (+20 Bilateral agreements) (1998) (2) USA Trade with LA + 200 B (2) Exports to USA +100 B Sources (1) World Bank; (2) USA Dept. of Commerce 1995
Indemnity Insurance Insurance in in Latin Latin America America Indemnity I. General Overview / Economics & Demographics GDP Growth : From 1% (1981 - 1990) to +3% (1991 - 2000) Foreign Investment : From less than 11B to 53B (1994 -1999) to 75B (2000) <1990 2000-Year Brazil 1B to 33B Mexico 4B to 13B Argentina 2B to 12B Chile 0.7B to 4B Colombia 0.4B to 2B Venezuela 1.7B to 4B Peru - 7M to 0.7B Inflation Rate : Under Control – Between 10 - 3% in most countries. Economy/Tax Reforms still to come to ensure sustained growth and employment and consequently more access to Health Services and Insurance. Sources World Bank 2001
Indemnity Insurance Insurance in in Latin Latin America America Indemnity I. General Overview / Economics & Demographics Concept/ /Year Year 80 - - 85 90 85 90 - - 95 95 V% V% 95 - - 00 00 V% V% Concept 80 95 Crude Birth Rate%o 30.9 25.9 (16) 22.9 (12) Crude Death Rate%o 7.9 6.9 (13) 6.4 (7) Urban Population % 65.1 74.3 14 75.3 1 Life Expectancy (years) 65.0 68.0 8 69.8 3 Infant Mortality %o 59.0 43.0 (27) 35.5 (17) Polio, DPT, BCG Vaccine % 59.4 87.5 47 89.3 (1) 2 Sources PAHO 1998 & 2000; WHO 1998 (1) Aggregated
Indemnity Insurance Insurance in in Latin Latin America America Indemnity I. General Overview / Economics & Demographics HEALTH EXPENDITURE AS % OF GDP Public (1990 - 1998) Private (1990 - 1998) 3.2 3.3 3.0 2.6 2.8 1.9 2.4 1.7 Asia Latin America World Developing Asia Developing Latin America World Pacific Pacific Countries Countries Sources World Bank 2001
Indemnity Insurance Insurance in in Latin Latin America America Indemnity I. General Overview / Economics & Demographics HEALTH EXPENDITURE AS HEALTH EXPENDITURE % OF GDP Per Capita $ (1990 - 1998) Total (1990 - 1998) 6.5 $561 5.6 $452 4.7 4.1 $179 $151 Asia Latin America World Developing Asia Developing LatinAmerica World Pacific Pacific Countries Countries Sources World Bank 2001
Indemnity Insurance Insurance in in Latin Latin America America Indemnity I. General Overview / Health Services (1990 - 1998) In-patient admission rate Hospital Beds per 1000 people Physicians per 1000 people as % population 3.3 1.6 9% 2.5 2.5 1.5 1.5 2.2 7% 1.2 4% 2% Developing Countries Latin America Asia Pacific World Sources World Bank 2001
Indemnity Insurance Insurance in in Latin Latin America America Indemnity I. General Overview / Insurance Sector LA Market is the fastest growing in the world Market penetration still low Enormous potential Japan 10.9% Regional CAGR (1990 - 1999) 8.8% US North America 5.0% Europe 8.2% Latin America 12.1% Spain Western Europe 9.0% 6.7% East Asia 11.0% World 4.0% 7.8% 2.3% 2.1% 2.05% 2.0% World total 5.0% 1.9% 1.9% (2) Chile Col. Brz. Arg. Ven. Mex. Latin America (1) • Life Insurance Market from 0.5% of GDP (80’S) to above 2.0%* (90’S) . Sources: (1) Swiss Re./Sigma 6 2001 (2) ASSAL 2000
Indemnity Insurance Insurance in in Latin Latin America America Indemnity I. General Overview / Insurance Sector Size: US$ 39 Billions (1) Population covered (4) Equivalent to Premium (2) L/R (3) Life: 35% of SS population and (Share) 19% of country population Life 26% 66% Health: 6% of SS population and Pension 15% 77% 3.2% of country population Health 12% 63% Non Life 47% 51% Drivers: Bancassurance, Pension & Health Reform, Mandatory Insurance, Consolidation, Privatizations Sources: ASSAL 2000 (1) Incl. 18 countries. Estimated for Bol., Col., C.R, Cuba, Ec. D.R (2) Incl. 10 countries; (3) Incl. 9 countries (excl. Argentina) (4) Based on Mexico data (AMIS & CNSyF 2000)
Indemnity Insurance Insurance in in Latin Latin America America Indemnity I. General Overview / Health Insurance Sector Existing Products Products : Existing Major Medical Great variation - country to country. E.g. Mexico MME means + 90%; Colombia & Peru mean less than 10% HMO Type Great variation - country to country. E.g Colombia HMO means + 90%; Mexico less than 8% Critical Illness In its infancy, as rider to life policies and few stand alone known as “High Cost Illness” LTC Unknown – Poor infrastructure Trigger for recent product development and future growth is Pension Social Security Reforms: Health Workmen’s Comp.
Indemnity Insurance Insurance in in Latin Latin America America Indemnity II. Systems & Models a. Healthcare Delivery Systems b. Private Health Insurance • MCOs Examples: • Argentina • Chile • Colombia • Brazil
Indemnity Insurance Insurance in in Latin Latin America America Indemnity II. Systems & Models Importance of Latin America Importance of Latin America � In 1999, ten countries have adopted some SS scheme with public & private mix. � Eight of them are in LA. � SS schemes are dominant in LA.
Indemnity Insurance Insurance in in Latin Latin America America Indemnity II. Systems & Models Countries with Social Security Year # of Countries 1940 33 1949 44 1958 58 1969 97 1979 123 1989 135 1999 167 2000 189
Indemnity Insurance Insurance in in Latin Latin America America Indemnity II. Systems & Models MODEL FEATURES COUNTRY BISMARK Financing Through SS Argentina Mix Delivery Public & Private Brasil Equity - Universal Coverage Chile Colombia Ecuador Mexico Peru Uruguay Venezuela SHEMASHKO Exclusively Public Financing Cuba & Delivery, there is no private sector.
Indemnity Insurance Insurance in in Latin Latin America America Indemnity II. Systems & Models Although there is a public health sector in each country, their mix and participation determ the development of private health health insurance insurance products products . private Thus, we could find: � Substitute products, where the membership is voluntary. � Complementary products, where the public coverage is not comprehensive or with deficiencies. � Double coverage, where the public coverage is mandatory but the people wants to pay private insurance with same coverage.
Indemnity Insurance Insurance in in Latin Latin America America Indemnity II. Systems & Models COUNTRY SYSTEM COVERAGE Argentina Mandatory health insurance Comprehensive through private health insurance Coverage companies (Obras Sociales), which also offer “Complementary Coverage”. Brazil Mandatory Federal SS Universal through governmental Coverage infrastructure. Private insurers (4 types) offers “Double Coverage-payment”.
Indemnity Insurance Insurance in in Latin Latin America America Indemnity II. Systems & Models COUNTRY SYSTEM COVERAGE Chile Mandatory health insurance. People Comprehensive have to opt for the State System Coverage (FONASA ) or private health insurance companies (ISAPRES), which also offer “Complementary Coverage”. Colombia Mandatory health insurance Comprehensive through private health insurance Coverage companies (EPS). Private insurers offer “Complementary Coverage”
Indemnity Insurance Insurance in in Latin Latin America America Indemnity II. Systems & Models O R G A N I Z A T I O N COUNTRY PRIVATE PUBLIC Argentina Obras Sociales Super Intendencia Brazil Operadoes, Ins Cos. SSS, ANS Chile ISAPRES FONASA Colombia EPS Super Intendencia
Indemnity Insurance Insurance in in Latin Latin America America Indemnity III. Mexico Case a. System & Participants b. Private Insurance Market c. Supplemental Private Medical Indemnity Insurance d. Products & Coverage
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