Consider which of these three healthcare insurance options will work best for your company.
Healthcare provision in Africa is an extremely important benefit to employees and employers alike. The greater focus on African healthcare over the last few years is mainly due to increased investment locally, and during that time the provision of healthcare services has evolved to meet the ever increasing healthcare demands.
African economies are expected to grow rapidly in the short term, and investment is increasing in these markets in order to benefit from this opportunity. Both multinationals and large corporates need to offer comprehensive employee benefits (such as health, risk and investment solutions) to local staff, and more specifically they are looking for a single pan-African solution that will meet these needs in one fell swoop. The ideal solution would comprise a standardised approach offering equitable HR policies and acceptable levels of quality across their African operations.
Working with just one employee benefit solutions provider also allows the international businesses to achieve economies of scale in procurement but frees them up from the administrative burden of dealing with multiple providers. African-centric or locally insured healthcare policies are now widely available and in some markets there is now often a mature offering, with plenty of viable options and alternatives alongside attractive pricing and strong networks. Global health insurers are also developing their offerings and propositions across Africa as organisations seek to develop their employee value proposition and provide such over to local nationals as well as expatriate staff and executives.
Working out which solution to provide to their African workforce is an issue many employers struggle with, but the text below concisely describes the three most common options, namely:
In this scenario, businesses manage risk by setting aside a pool of money to be used should an unexpected loss occur; and
Theoretically, you can self-insure against any type of loss. In practice, however, most people choose to buy insurance against potentially large, unusual losses.
2. ‘Admitted’ business – locally registered health insurance
In this option, a health insurance product compliant with local regulation and legislation is registered with an in-country insurer;
The in-country insurer insures the products in the appropriate country and issues a policy to the client;
The in-country insurer either takes on the risk in its entirety or passes on part of it to a captive cell which then 100% reinsures to an A-rated reinsurer; and
The health product is administered either through an in-country and local third party administrator (TPA). There are a number of benefits to using TPAs, including offices in the required location with staff speaking the local language, and provider networks that can offer treatment on a credit basis.
3. ‘Non-Admitted’ business – international health insurance
Under this arrangement, the health insurance product is registered offshore through an international insurer;
The health insurance policy is issued offshore to the client but it is important to note that this means the product is neither licensed locally nor compliant with local regulation;
No credit is available at national providers, meaning that members must pay for services themselves and then claim back these expenses from their employers; and
The health product is administered virtually via an international office. Premiums are collected into an international bank account and membership packs dispatched to a central collection point. As noted above, outpatient claims are handled by member reimbursement (i.e. there are no in-country provider networks or credit facilities).
Which is appropriate for your business?
Knowing which of these alternatives is more appropriate for your organisation and employees will require some assistance from, and analysis, by a specialist broker or financial planner/advisor who can advise on these types of solutions. Ultimately, the key factors will be headcount across the relevant countries and regions, the geographical split of the business and people, your company’s benefits philosophy, and the requirement for the provision of standardised benefits across your bases of operation.
Anne-Magriet Schoeman is the Talent/Country Leader at Mercer Consulting (South Africa) Proprietary Limited, www.mercer.com.
This article appeared in the September 2015 issue of HR Future magazine.