The Tribune

• Driven by 10-14% medical care price hikes

• While reinsurance costs increase by 7-10%

• BIA chairman: ‘We’re not passing it all on’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian companies and individuals are facing “across the board” increases in health insurance premiums as a result of up-to double digit increases in medical and reinsurance costs, it was revealed yesterday.

Julian Rolle, the Bahamas Insurance Association’s (BIA) chairman, confirmed to Tribune Business that coverage costs are under growing pressure from rising treatment prices as well as higher charges levied by reinsurers. Bahamian health insurance underwriters purchase cover themselves from international reinsurers to help manage risk, share the load and take on more clients.

“You’re absolutely correct,” he told this newspaper, when asked if private health insurance costs are increasing. “The cost of healthcare has risen across the region by 10-14 percent. That is the increase across the entire provider system, including the medication. That’s the average. That’s the current increases we are seeing from the providers The cost of medication has also continued to increase.

“The reinsurers have also been telling us it’s increasing. It’s not just the cost of the care, but the cost of reinsurance has also increased. I think that number has increased, give or take, somewhere in the range of 7-10 percent.” Bahamian companies who purchase group health insurance policies for their staff, as part of employee benefits packages, as well as persons with individual coverage have been feeling the impact as renewals and quotes for 2024 are issued.

This newspaper understands some businesses have received renewal notices containing double-digit premium increases that are broadly in line with the care and reinsurance rises referred to by Mr Rolle, as underwriters seek to mitigate increased payouts through higher top-line revenue.

The BIA chair, who is also managing director at BAF Financial, told Tribune Business he was unable to provide specific figures or percentages for how much healthcare insurance costs have risen because the increase varies between different policyholders.

Factors determining the size of the increase, Mr Rolle explained, will be past performance, meaning the level of claims payouts that a health insurance carrier has previously incurred on specific group and individual policies. Demographic factors, such as the ages of those insured and whether any suffer from chronic non-communicable diseases, will be key in deciding the level of risk and, accordingly, the premium price and increase.

“It would depend on the performance of the group,” Mr Rolle added. “If you take everybody in total, it’s about the amount of usage as a pool. There’s been increased usage.” He disclosed that some of this increase relates to procedures, operations and treatments that were delayed and pushed back due to the strain imposed on healthcare systems by the COVID-19 pandemic.

“There’s still pent-up demand for procedures that were held in abeyance or put off in COVID. We’re still seeing some of that,” the BIA chair said. “Let’s say you have an issue with your back. In COVID, a lot of that stuff was pushed out 18-24 months. It’s just a rise in the amount of usage and the costs continue to increase.”

Group policies that produce a better (lower) claims outcome will “receive a lower increase” in premium than those with high payouts. “It’s going to be on a group by group, individual by individual, basis,” Mr Rolle said. “They’re facing an overall price increase from service providers, and the reinsurance necessary to cover them. It’s going to result in higher premiums across the board.”

Rising private health insurance costs, together with the wider inflationary and cost of living pressures, also threaten to make coverage increasingly unaffordable for both companies (groups) and individuals. Those who elect not to renew, and do without, will likely be forced to seek care from an already over-burdened public healthcare system as well as potentially switch to the Government’s National Health Insurance (NHI) scheme.

Mr Rolle, though, said Bahamian health insurance underwriters are working to absorb some of the treatment cost increases and not pass the full burden on to consumers. “The industry as a whole is trying to keep the cost down,” he told Tribune Business. “We’re not trying to pass on as much as is given to us.

“The industry is doing its best to keep the cost lower... Certainly, each of the members of the industry would reach out to our larger healthcare provider partners to obtain discounts to keep the costs down, but there is only so much they can do. Each of the members in the industry reaches out to providers to obtain discounts to pass them on to consumers.”

Mr Rolle said it was impossible to determine whether current cost pressures will be short-lived, or if they will last into the medium and long-term. Urging Bahamians not to drop private coverage, given the potential health and financial risks involved, he added: “The industry will say we would still hope the general public remains insured.

“We don’t want people in a position where they don’t insure, and are doing our best to ensure that doesn’t happen. Health insurance is still key to being able to afford healthcare, especially in emergency circumstances. It’s certainly not something to take lightly.”

The Insurance Commission of The Bahamas’ 2022 annual report revealed that $299.609m worth of gross health insurance premium revenues were generated last year, split between $71.737m worth of individual policies and $227.872m worth of the group variety. Net premiums written, once $23.262m of total reinsurance was deducted, equalled $276.347m.

Total policyholder benefits, meaning funds paid out by insurers to cover care costs incurred by their clients, stood at just over $195m. These were broken down into $27.045m for individual policyholders, and $167.956m for group clients. Health insurers were shown as having made $55.236m in collective total underwriting income for 2022, split into $29.152m on individual coverage and $26.084m for groups.

Health insurance accounted for 62 percent of “long-term” insurance premiums written in The Bahamas during 2022, a definition that also includes life coverage and annuities. “Group health premiums decreased by $14.8m (6.1 percent) to $227.9m,” the Insurance Commission reported.

“This reduction is largely due to the elimination of the Government’s COVID-19 Travel Protection Policy in June 2022. Individual health insurance premiums written increased by $18.5m (34.6 percent ) during the year to $71.7m.”