Now Health is a relatively young international health insurance company, which has, since it was founded in 2011, experienced a spectacular growth. Based in Hong Kong, with numerous regional offices, Now Health singles itself out by prioritising the emerging markets.
The CEO of Now Health, Martin Garcia, tells us about how the company came to be, and shares his views on the evolution of the international health insurance market.
Can you talk to us about how Now Health started, and the values upon which the company was founded?
When starting Now Health, the idea was to build a company which always puts the client first. Health insurance is of course, primarily, insurance. However, more importantly, , it’s about helping and supporting clients when they are unwell. It could be an uncomplicated illness with very few costs and claims that can be processed quickly, or it could be a complicated hospitalisation that the insured member would need help with, so that they experience it with a minimum of frustration, worries and paperwork. Bearing in mind that our products are often sold in emerging markets such as China, Vietnam, Latin America, Africa and the Middle East, countries where health care may not be readily available or easy to understand, our aim was to create a product that offered a good level of cover as well as a high quality of service, without making the price the most important criteria. Our main markets aren’t countries like France or the United Kingdom, where high quality healthcare is always within easy reach, it’s more “I’m ill in Kenya and need to have a triple bypass, where should I go? How can I get admitted to a good hospital with a well-recognised doctor?”
One issue which had really frustrated me during my previous experiences was the fact that there was no technology available allowing us to offer a fast and reliable service to our clients. We therefore devoted time to researching what was on offer within the international health insurance market in terms of technology and developed an online platform which, in my opinion, is unique and allows us to deal with everyday fast and efficiently. Working similarly to online banking, we use texts as well as iPhone and Android mobile apps to send our clients a maximum amount of information (e.g. ‘we have received your claim’, ‘we are currently processing your reimbursement’, ‘we have settled the bill for X amount with your hospital’). This way the client knows where we are with their claim at all times and do not need to call us to follow up, or to check that we have received it.
A second important point for us while developing Now Health was to establish a network of regional offices, which would allow us to be close to our members and be helpful when receiving large claims. For example, if you are in Asia, Hong Kong, China, or Singapore, the local office would speak the local language, be open during local working hours, and would have a real knowledge of local hospitals and health infrastructure in the region. We have also established offices in Europe and the Middle East for the same reasons.
We raised $30 million in order to launch Now Health. We started in putting everything together in 2009 and launched in January 2010 with 50 employees and no clients, which was a terrifying experience but one which allowed us to offer a high level of service from the start. We grew quickly and opened three new offices, one in the UK, one in Dubai, and one in Hong Kong (the headquarters also being based in Hong Kong). Since then we have also opened offices in China, Singapore, and Indonesia following the growth of the company.
Last year we also made our first acquisition when buying Best Doctors Insurance, which is an insurance company offering high end health insurance across Latin America. With this acquisition Now Health now have over 100,000 members in the world, 12 offices, and 400 employees. We are not an insurance giant, like insurers such as Allianz, Aetna, Cigna, etc., however among the smaller insurance companies, we are probably within the top three globally, with a strong growth rate and interesting development prospects.
You therefore have two types of clients: not only expatriates but also local nationals from emerging markets who would be interested international health insurance for the possibility to be able to seek treatment in a different country?
Exactly. Originally, international health insurance was created for expatriates. English companies reacted swiftly, responding to the gap in the market created when a lot of their citizens went abroad and found themselves needing an international health cover. American and French companies faced the same situation and started offering international health insurance to their expats too. Of course, the expatriate market is always growing, but it’s a market which will always be a niche market. It is generally those with a high purchasing power (high disposable income), who are mobile, and often entrepreneurs or employees of large corporations but they do not represent large or ever growing numbers.
For me, the most important issue is helping clients access to high quality healthcare with the most possible ease, whether it be the Chinese wanting to be treated in Hong Kong, or Indonesians seeking treatment in Singapore. Best Doctors in Latin America really is that: the majority of their clients aren’t expats, they are local nationals residing in countries such as Guatemala, Honduras, the Caribbean, Venezuela, and Mexico who wish to be treated privately, and where that treatment can sometimes be rather onerous. People often perceive certain areas as “centres of medical excellence”. For example, in Asia people will often seek treatment in Hong Kong or Singapore; in Africa people will often seek treatment in South Africa or even Europe; in Latin America people often want to be treated in the USA. Of our 110,000 members, expatriates no longer make up the majority. Indeed, it is more and more people who live in their home country but who want to be able to have the choice of being treated abroad.
For many years now, residents in Latin America have travelled to the USA for treatment if they have the means, even if there are high quality hospitals in their home country. So it seems that travelling for treatment is not a new phenomenon?
Yes and this fundamental principle is the same across the world, from China to Argentina. With healthcare being so expensive in the USA, people in Latin America have been buying international health insurance for a lot longer than residents of other countries, as very few people would be able to walk into an American hospital and say “I need treatment, please charge it to my credit card”. In Asia the idea of travelling for treatment has been around for a while, though people did tend to ‘self-insure’ as it was the more affluent who would seek their treatment abroad they would pay themselves. Though of course, these high net worth individuals represent only a small portion of the population. Now, with the growth of the middle classes in Asia this fundamental idea remains the same. What we have seen, in countries such as India, is the idea that “now that I have achieved a higher income and standard of living, I can prioritise other matters such as health insurance and education for my children”.
This is why we believe that there is a whole section of the market which until now has been unexplored, and we are one of the very first to really dive into this relatively untouched market. This is one of the reasons why, for us, it was very important from the start to have as global a footprint as possible. It’s true that while we have built our foundations on insurance policies for expatriates, we enjoy branching out and exploring other markets.
In the past people would often try and finance their health costs themselves, but today, with medical inflation and ever increasing medical costs, is it indispensable to have an international health insurance instead of paying your own healthcare costs as they arise?
Absolutely. It’s now being seen more and more as a form of financial planning. People look at insuring and protecting themselves as importantly as they do their other assets for financial protection; health insurance is becoming as common as car insurance, life insurance or home insurance. The ability to pay your own healthcare costs is not really an option anymore. In countries like Latin America, people have been buying health insurance for over 15 years because treatment in the USA has always been unaffordable. As such, residents of Latin America realised that insurance was important for two major reasons. The first being the fact that it removes the possibility that they will be responsible for the volatile American healthcare costs, and secondly the insurers were often able to negotiate a price with the hospitals that an individual just wasn’t able to. If you pay for your own treatment in the USA, without passing through an insurer, you are liable to pay up to 10 times more for the treatment than an insurer would.
In certain countries in Asia and Africa many people do still pay for their treatment themselves as healthcare remains relatively more affordable than in other countries. Gradually, however, with the increases in medical inflation people are starting to realise that this is not always the best long-term solution. As a result they have begun to consider health insurance as an essential, like car insurance or home insurance, and indeed have started to buy health insurance at an increasing rate.
Following these observations, what are Now Health’s most important projects? Do you have a plan of action?
Over the last 5 years, Now Health has opened offices and made acquisitions, therefore the next two years will be focused on consolidation, and investing time in developing our presence in China, Singapore, and Indonesia. We will also need to work on integrating our two companies, Now Health and Best Doctors; integrate our logistics and our systems so that our clients need only access one portal, one single logistical platform, whether they find themselves in Bogotá or Jakarta.
We are also planning to expand our product range, as for the moment we offer only high level cover. We would like to develop a middle line range of products, allowing us to reach an increased section of the market and attracting more clients, offering an increased flexibility and choice within our product range.
There are other markets where we could develop ourselves further. I have always seen India as a market with great potential and we are starting to receive a large increase in requests originating from Africa. I think it is very important to nurture opportunities wherever we find them. However, rather than opening an office in Africa, expanding into three new cities in China and consolidating ourselves further in regions where we are already based is higher up our priority list. Our development strategy is therefore to continue developing in countries where we are already established in order to consolidation our position in those areas.
And more generally, in your opinion what are the biggest short and long term challenges faced by the international health insurance market?
The potential for growth is still there. However, there are issues that everyone talks about: medical inflation, for example. In the emerging countries, especially Asia, medical inflation is around 10% to 15%. People’s incomes are clearly not indexed on this type of inflation. If you keep to the same type of policy and you have a 10% to 15% increase every year, there will come a moment when it is no longer affordable. Therefore, it is my opinion that we need to look at an increasingly at being able to offer more choice, more diversity and flexibility within our products, products that are modular, perhaps with a limited network within which we have much more control over the costs of treatment, all of which would allow us to offer more competitive and affordable premiums. Up until now, the majority of international insurers offered very similar products, we believe it is important to start offering products tailored to the needs of certain markets.
Instability of healthcare costs remains a risk. The strength of the US Dollar in emerging markets has significantly increased. In Mexico, where we have a large portion of the market, our clients pay for their policies in US Dollars, and while we have not significantly increased our rates, the peso has decreased in value by up to 30% or 40% compared to the US dollar. The same situation has occurred in Malaysia. This phenomenon is happening in many emerging markets; suddenly people who had previously had the means to consider investing in a health insurance are no longer able to do so. Whilst this has not had a significant impact on our own book of business in the past couple of years it is important to remain proactive, and where possible look to offering policies in local currencies.
Finally, insurance is really an endeavour in education. Explaining to people that they do not necessarily have to “self-insure” themselves by paying for their own healthcare costs, that health insurance really does represent a good value product, because a group of 110,000 people are definitely going to be able to negotiate better rates with hospitals than an individual. This is another challenge that we are currently facing.
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