Tuesday, October 15, 2013

Happy Anniversary (of Your International Medical Plan)

Renewal Rates & Why Azimuth May Make You Feel Like Sending Flowers

Frank Sinatra
(not his best day)
Sometimes what initially seems like an attractive deal, turns out to be a really disastrous choice.  You probably know what I mean.  Things like the Yugo, the Segway and the Lyle Lovett/Julia Roberts marriage all come to mind. Do you think they would have had kids or foals? Sometimes choosing among international medical insurance can be a mystery worthy of a Scooby-Doo episode when you don't know the reasons behind why new business premium rates vary between different plan choices.  As a general rule, annually renewable international major medical insurance plans for individuals and families, such as the standout Meridian Series from Azimuth Risk Solutions, are pretty enticing compared to any US domestic health insurance product. Makes you happy you're an expat, huh? It's incredibly important though, to understand what things will be like for someone insured on a plan in the longer term.  Particularly if you could envision being insured on the plan for several years.  One thing prospective applicants should know is how renewal premiums are calculated by the insurance provider they are considering.  

Many, if not all, of Azimuth's competitors calculate their renewal premiums on a 'class' basis.  This means that every insured member receives the same percentage increase (you really didn't think your premium was going to go down did you?) at the time of their policy renewal.  So, whether you've had no claims, $100 in claims or $100,000 in claims, you get the same percentage increase at your time of renewal.  It's easy, but at the same time it doesn't make a lot of sense does it?  At Azimuth, we take a different approach. Nobody outside of an asylum likes renewal rate increases, so our challenge was to find a way to be as fair and sensible as possible.  Because it had to be sensible they sent me to get sandwiches when they created it.  Because I'm pretty easily bought off, I took no offense.  However malleable my reaction to insult may be, please know I'm not cheap.  After all, I got a Big Mac. None of this cut-rate value menu stuff for me.  Ha! Like they're so smart.  I had to go to some other food peddler for weird stuff like Salad Ni├žoise and Filet Mignon sandwiches.  I've never even fished for a Mignon.
I'm funny to you?
Funny how? Like a clown?
Those big brain box folks came up with a renewal process that even makes sense to me.  
We section our renewal rates into 4 different categories: 1. insureds with no claims submitted; 2. people with modest claims; 3. members with larger claims; 4. large ongoing claims.   We then apply some other factors, such as whether the claims have been acute, such as appendicitis or if the condition is chronic in nature, as in the case of hypertension.  We mix in some special sauce...wait, no we don't. That must have dripped off of my Big Mac.  Whatever the case, the result is lower increases for those who utilize less of their insurance and higher for those that do.  

It's good to know also that Azimuth does not engage in another practice found in the market.  Some companies will simply increase rates only upon those who've had large payable claims.  Clients get sick or hurt, the claims are paid, but at renewal, the client may be temporarily blinded upon seeing the massive premium increase that has been applied.  Okay, so the blindness part may be a rumor, but the renewal price tag can be brutally high.  Instead, Azimuth does a high wire act worthy of Nik Wallenda.  We are obsessive about keeping premiums affordable for healthy clients while paying eligible expenses for those members who've been unfortunate to incur significant medical bills and have used insurance for its designed purpose.  We do our best to avoid crushing rate increases for clients in every category.  Many of the clients who purchase the Meridian Series are buying with the idea that he or she will remain insured with us for many years.  So if they don't have any claims submitted, it's highly likely their renewal premium increase will be small. Pretty much Muggsy Bogues small. But there will be an increase.  This is because our insured members are typically on the plan for a number of years, thus it's pretty likely they will generate health claims at some point.  Consider also that cost of medical care continues to creep upward and everyone gets another year older.  Statistically every year older and every move into a higher age band increases the risk that medical claims will magically appear.  Particularly if you happen to be the Roy part of Siegfried & Roy. The good news is that we don't require our members to play with fully grown tigers.  

PS. Insurance is the Brussels sprout of subjects.  You know you need to understand it for your own good and I'll work to make it palatable (if it doesn't work, feed me to the dog under the table).  So, if you enjoy learning a little more about it in an (occasionally) entertaining way, then someone else might too.  Share the love via social media or get on the subscriber list.  After all - Don't cost nuttin' 


PPS. Living or traveling internationally now or soon?  Contact your insurance agent and demand to see what Azimuth Risk Solutions can do for you.  Or, visit www.AzimuthRisk.com to learn more