WILLIS GROUP


there has been a shift towards private sector healthcare products. Michael Feighan of Chubb Accident and Health spoke about these private sector trends in a session at the 2010 Self Insurance Institute of America Conference, and provided a list of new products emerging in Asia as well as in Europe and North America: “Mini-med, critical illness, cancer, broken bones/ emergency care, accident-only coverage, medical tourism and medical travel, and hospital cash.” The rise of these products signals a demand from individuals and employees that may require employers to enhance benefit plans and shoulder increased costs.


2. Coding norms are not prevalent Many carriers’ information systems are old, or originally designed to pay motor and life claims, not medical ones. Separate benefit category fields may not exist and definitions and claims processing rules may differ, such as in the case of bundling of claims or use of default codes. In addition, the types of procedure or diagnostic codes that are common in the US are seldom seen elsewhere.


3. Definitions of premium and loss vary Pooling networks have historically reported results on a calendar-year paid basis, and not on an insurance accounting basis that is required for proper captive records and claims trend analysis.


The data challenges may make some captive owners reluctant to reinsure global medical programmes. But the captive can be the agent of change. Deutsche Post DHL and other global benefit captives have found that an understanding of how data are handled (or mishandled) gives the captive the ability to interpret and troubleshoot reports, and subsequently to influence and direct progress in report content and format.


Butler advised a less-is-more approach when dealing with medical claims data, and suggested a set of summary statistics that can help


Figure 2: Less-is-more medical claims report


captive owners and HR managers flag emerging claims issues (see Figure 2). In this example, per-member-per-year (PMPY) payments grew by 19 percent and the statistics indicate a sharp increase in use of outpatient services, which directs the company to focus on this feature of Country X’s local benefit plan.


Employer global medical benefit liabilities are expected to grow and it is incumbent on corporate risk managers and human resources managers to do all they can to identify the risk exposures, so they can implement methods and procedures to rein in costs. Much like the role it has played for other corporate risks, the captive can be a focal point for aggregating and controlling the information needed to manage and price medical risk. Captives are ideally positioned to serve an important role as agents of change. Captives as reinsurers can influence how medical insurance is structured and delivered locally to global employers. As captive consultant Hugh Rosenbaum has always said: “Captive business is the best business.” l


Kathleen Waslov is senior vice president and senior resource consultant within the Captive Consulting and Multinational Employee Benefits department of Willis in North America. She can be contacted at: kathleen.waslov@willis.com


CICA | Forty years of captive leadership 61


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